Document:

Exhibit 10.1

 

$700,000,000.00

 

CREDIT AGREEMENT

 

dated as of October 24, 2007,

 

among

 

LINENS ‘N THINGS, INC.

and

LINENS ‘N THINGS CENTER, INC.,

as US Borrowers,

 

LINENS ‘N THINGS CANADA CORP.,

as Canadian Borrower,

 

LINENS HOLDING CO.

and

THE OTHER GUARANTORS PARTY HERETO,

as Guarantors,

 

THE LENDERS PARTY HERETO,

 

GE CAPITAL MARKETS, INC., 

as Arranger and Bookmanager,

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as US Administrative Agent and US Collateral Agent,

 

GE CANADA FINANCE HOLDING COMPANY,

as Canadian Administrative Agent and Canadian Collateral Agent

 

WELLS FARGO RETAIL FINANCE, LLC,

as Syndication Agent

 

BANK OF AMERICA, N.A. and MERRILL LYNCH CAPITAL,
  a Division of Merrill Lynch Business
Financial Services Inc.,

as Co-Documentation Agents

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
  2

  
	
  SECTION
  1.01.

  	
  Defined Terms

  	
  2

  
	
  SECTION
  1.02.

  	
  Classification of Loans and Borrowings

  	
  55

  
	
  SECTION
  1.03.

  	
  Terms Generally

  	
  56

  
	
  SECTION
  1.04.

  	
  Accounting Terms; GAAP

  	
  56

  
	
  SECTION
  1.05.

  	
  Resolution of Drafting Ambiguities

  	
  57

  
	
  ARTICLE II.

  	
  THE CREDITS

  	
  57

  
	
  SECTION
  2.01.

  	
  Commitments

  	
  57

  
	
  SECTION
  2.02.

  	
  Loans

  	
  58

  
	
  SECTION
  2.03.

  	
  Borrowing Procedure

  	
  60

  
	
  SECTION
  2.04.

  	
  Evidence of Debt; Repayment of Loans

  	
  64

  
	
  SECTION
  2.05.

  	
  Fees

  	
  65

  
	
  SECTION
  2.06.

  	
  Interest on Loans

  	
  66

  
	
  SECTION 2.07.

  	
  Termination and Reduction of Commitments

  	
  68

  
	
  SECTION
  2.08.

  	
  Interest Elections

  	
  68

  
	
  SECTION
  2.09.

  	
  [Intentionally Deleted]

  	
  70

  
	
  SECTION
  2.10.

  	
  Optional and Mandatory Prepayments of Loans

  	
  70

  
	
  SECTION
  2.11.

  	
  Alternate Rate of Interest

  	
  74

  
	
  SECTION
  2.12.

  	
  Yield Protection

  	
  75

  
	
  SECTION
  2.13.

  	
  Breakage Payments

  	
  77

  
	
  SECTION
  2.14.

  	
  Payments Generally; Pro Rata Treatment; Sharing of Setoffs

  	
  77

  
	
  SECTION
  2.15.

  	
  Taxes

  	
  79

  
	
  SECTION
  2.16.

  	
  Mitigation Obligations; Replacement of Lenders

  	
  84

  
	
  SECTION
  2.17.

  	
  Swingline Loans

  	
  85

  
	
  SECTION
  2.18.

  	
  Letters of Credit

  	
  87

  
	
  SECTION
  2.19.

  	
  Increase in Commitments

  	
  94

  
	
  SECTION
  2.20.

  	
  Determination of Borrowing Base

  	
  96

  
	
  SECTION
  2.21.

  	
  Determination of Canadian Borrowing Base

  	
  99

  
	
  SECTION
  2.22.

  	
  Collection Allocation Mechanism

  	
  102

  
	
  ARTICLE III.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  105

  
	
  SECTION
  3.01.

  	
  Organization; Powers

  	
  105

  
	
  SECTION
  3.02.

  	
  Authorization; Enforceability

  	
  105

  
				

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.03.

  	
  No Conflicts

  	
  105

  
	
  SECTION
  3.04.

  	
  Financial Statements; Projections

  	
  106

  
	
  SECTION
  3.05.

  	
  Properties

  	
  106

  
	
  SECTION
  3.06.

  	
  Intellectual Property

  	
  107

  
	
  SECTION
  3.07.

  	
  Equity Interests and Subsidiaries

  	
  108

  
	
  SECTION
  3.08.

  	
  Litigation; Compliance with Laws

  	
  109

  
	
  SECTION
  3.09.

  	
  Agreements

  	
  109

  
	
  SECTION 3.10.

  	
  Federal Reserve Regulations

  	
  109

  
	
  SECTION
  3.11.

  	
  Investment Company Act

  	
  109

  
	
  SECTION
  3.12.

  	
  Use of Proceeds

  	
  110

  
	
  SECTION
  3.13.

  	
  Taxes

  	
  110

  
	
  SECTION
  3.14.

  	
  No Material Misstatements

  	
  110

  
	
  SECTION
  3.15.

  	
  Labor Matters

  	
  110

  
	
  SECTION
  3.16.

  	
  Solvency

  	
  111

  
	
  SECTION 3.17.

  	
  Employee Benefit Plans

  	
  111

  
	
  SECTION
  3.18.

  	
  Environmental Matters

  	
  112

  
	
  SECTION
  3.19.

  	
  Insurance

  	
  113

  
	
  SECTION
  3.20.

  	
  Security Documents

  	
  113

  
	
  SECTION
  3.21.

  	
  [Intentionally Omitted]

  	
  114

  
	
  SECTION
  3.22.

  	
  Anti-Terrorism Law

  	
  114

  
	
  SECTION
  3.23.

  	
  [Intentionally Deleted]

  	
  115

  
	
  SECTION
  3.24.

  	
  Executive Offices; Location of Material Inventory

  	
  115

  
	
  SECTION
  3.25.

  	
  Accuracy of Borrowing Base

  	
  115

  
	
  SECTION
  3.26.

  	
  [Intentionally Omitted.]

  	
  116

  
	
  SECTION
  3.27.

  	
  Common Enterprise

  	
  116

  
	
  ARTICLE IV.

  	
  CONDITIONS TO CREDIT EXTENSIONS

  	
  116

  
	
  SECTION
  4.01.

  	
  Conditions to Effectiveness of this Agreement

  	
  116

  
	
  SECTION
  4.02.

  	
  Conditions to All Credit Extensions

  	
  120

  
	
  ARTICLE V.

  	
  AFFIRMATIVE COVENANTS

  	
  121

  
	
  SECTION
  5.01.

  	
  Financial Statements, Reports, etc

  	
  122

  
	
  SECTION
  5.02.

  	
  Litigation and Other Notices

  	
  124

  
	
  SECTION
  5.03.

  	
  Existence; Businesses and Properties

  	
  125

  
				

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.04.

  	
  Insurance

  	
  126

  
	
  SECTION
  5.05.

  	
  Obligations and Taxes

  	
  127

  
	
  SECTION
  5.06.

  	
  Employee Benefits

  	
  127

  
	
  SECTION
  5.07.

  	
  Maintaining Records; Access to Properties and Inspections; Annual
  Meetings

  	
  128

  
	
  SECTION
  5.08.

  	
  Use of Proceeds

  	
  128

  
	
  SECTION
  5.09.

  	
  Compliance with Environmental Laws; Environmental Reports

  	
  129

  
	
  SECTION
  5.10.

  	
  [Intentionally Deleted]

  	
  129

  
	
  SECTION
  5.11.

  	
  Additional Collateral; Additional Guarantors

  	
  129

  
	
  SECTION
  5.12.

  	
  Security Interests; Further Assurances

  	
  131

  
	
  SECTION
  5.13.

  	
  Information Regarding Collateral

  	
  131

  
	
  SECTION
  5.14.

  	
  Post-Closing Collateral Matters

  	
  132

  
	
  SECTION
  5.15.

  	
  Affirmative Covenants with Respect to Leases

  	
  132

  
	
  SECTION
  5.16.

  	
  Interest Rate Agreements

  	
  132

  
	
  ARTICLE VI.

  	
  NEGATIVE COVENANTS

  	
  133

  
	
  SECTION
  6.01.

  	
  Indebtedness

  	
  133

  
	
  SECTION
  6.02.

  	
  Liens

  	
  134

  
	
  SECTION
  6.03.

  	
  Sale and Leaseback Transactions

  	
  137

  
	
  SECTION
  6.04.

  	
  Investment, Loan and Advances

  	
  137

  
	
  SECTION
  6.05.

  	
  Mergers and Consolidations

  	
  138

  
	
  SECTION
  6.06.

  	
  Asset Sales

  	
  139

  
	
  SECTION
  6.07.

  	
  Acquisitions

  	
  140

  
	
  SECTION
  6.08.

  	
  Dividends

  	
  140

  
	
  SECTION
  6.09.

  	
  Transactions with Affiliates

  	
  141

  
	
  SECTION
  6.10.

  	
  [Intentionally omitted.]

  	
  142

  
	
  SECTION
  6.11.

  	
  Prepayments of Other Indebtedness; Modifications of Organizational
  Documents and Other Documents, etc

  	
  142

  
	
  SECTION
  6.12.

  	
  Limitation on Certain Restrictions on Subsidiaries

  	
  143

  
	
  SECTION
  6.13.

  	
  Limitation on Issuance of Capital Stock

  	
  143

  
	
  SECTION
  6.14.

  	
  Limitation on Creation of Subsidiaries

  	
  144

  
	
  SECTION
  6.15.

  	
  Business

  	
  144

  
	
  SECTION
  6.16.

  	
  Limitation on Accounting Changes

  	
  144

  
	
  SECTION
  6.17.

  	
  Fiscal Year

  	
  144

  
				

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.18.

  	
  No Further Negative Pledge

  	
  144

  
	
  SECTION
  6.19.

  	
  Anti-Terrorism Law; Anti-Money Laundering

  	
  145

  
	
  SECTION
  6.20.

  	
  Embargoed Person

  	
  145

  
	
  ARTICLE VII.

  	
  GUARANTEE

  	
  146

  
	
  SECTION
  7.01.

  	
  The Guarantee

  	
  146

  
	
  SECTION
  7.02.

  	
  Obligations Unconditional

  	
  146

  
	
  SECTION
  7.03.

  	
  Reinstatement

  	
  147

  
	
  SECTION
  7.04.

  	
  Subrogation; Subordination

  	
  148

  
	
  SECTION
  7.05.

  	
  Remedies

  	
  148

  
	
  SECTION
  7.06.

  	
  Instrument for the Payment of Money

  	
  148

  
	
  SECTION
  7.07.

  	
  Continuing Guarantee

  	
  148

  
	
  SECTION
  7.08.

  	
  General Limitation on Guarantee Obligations

  	
  148

  
	
  SECTION
  7.09.

  	
  Release of Guarantors

  	
  149

  
	
  ARTICLE VIII.

  	
  EVENTS OF DEFAULT

  	
  149

  
	
  SECTION
  8.01.

  	
  Events of Default

  	
  149

  
	
  SECTION
  8.02.

  	
  Rescission

  	
  152

  
	
  SECTION
  8.03.

  	
  Application of Proceeds

  	
  152

  
	
  ARTICLE IX.

  	
  COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS

  	
  153

  
	
  SECTION 9.01.

  	
  Collateral Accounts

  	
  153

  
	
  SECTION
  9.02.

  	
  Accounts; Cash Management

  	
  154

  
	
  SECTION
  9.03.

  	
  Inventory

  	
  158

  
	
  SECTION
  9.04.

  	
  Borrowing Base-Related Reports

  	
  158

  
	
  SECTION
  9.05.

  	
  Rescission of Activation Notice

  	
  160

  
	
  ARTICLE X.

  	
  THE ADMINISTRATIVE AGENTS AND THE COLLATERAL AGENTS

  	
  160

  
	
  SECTION
  10.01.

  	
  Appointment and Authority

  	
  160

  
	
  SECTION
  10.02.

  	
  Rights as a Lender

  	
  161

  
	
  SECTION
  10.03.

  	
  Exculpatory Provisions

  	
  161

  
	
  SECTION
  10.04.

  	
  Reliance by Agent

  	
  162

  
	
  SECTION
  10.05.

  	
  Delegation of Duties

  	
  162

  
	
  SECTION
  10.06.

  	
  Resignation of Agent

  	
  163

  
	
  SECTION
  10.07.

  	
  Non-Reliance on Agent and Other Lenders

  	
  163

  
				

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION
  10.08.

  	
  No Other Duties, etc

  	
  164

  
	
  SECTION
  10.09.

  	
  Indemnification

  	
  164

  
	
  SECTION
  10.10.

  	
  Overadvances

  	
  164

  
	
  SECTION
  10.11.

  	
  Concerning the Collateral and the Related Loan Documents

  	
  165

  
	
  SECTION
  10.12.

  	
  Field Audit, Examination Reports and Other Reports

  	
  165

  
	
  ARTICLE XI.

  	
  MISCELLANEOUS

  	
  166

  
	
  SECTION
  11.01.

  	
  Notices

  	
  166

  
	
  SECTION
  11.02.

  	
  Waivers; Amendment

  	
  168

  
	
  SECTION
  11.03.

  	
  Expenses; Indemnity; Damage Waiver

  	
  171

  
	
  SECTION
  11.04.

  	
  Successors and Assigns

  	
  173

  
	
  SECTION
  11.05.

  	
  Survival of Agreement

  	
  176

  
	
  SECTION
  11.06.

  	
  Counterparts; Integration; Effectiveness; Electronic Execution

  	
  176

  
	
  SECTION
  11.07.

  	
  Severability

  	
  177

  
	
  SECTION
  11.08.

  	
  Right of Setoff

  	
  177

  
	
  SECTION
  11.09.

  	
  Governing Law; Jurisdiction; Consent to Service of Process

  	
  177

  
	
  SECTION
  11.10.

  	
  Waiver of Jury Trial

  	
  178

  
	
  SECTION
  11.11.

  	
  Headings

  	
  178

  
	
  SECTION
  11.12.

  	
  Treatment of Certain Information; Confidentiality

  	
  178

  
	
  SECTION
  11.13.

  	
  USA PATRIOT Act Notice

  	
  179

  
	
  SECTION
  11.14.

  	
  Interest Rate Limitation

  	
  179

  
	
  SECTION
  11.15.

  	
  Lender Addendum

  	
  179

  
	
  SECTION
  11.16.

  	
  Obligations Absolute

  	
  179

  
	
  SECTION
  11.17.

  	
  Dollar Equivalent Calculations

  	
  180

  
	
  SECTION
  11.18.

  	
  Judgment Currency

  	
  180

  
	
  SECTION
  11.19.

  	
  Special Provisions Relating to Currencies Other Than Dollars

  	
  181

  
	
  SECTION
  11.20.

  	
  Intercreditor Agreement

  	
  181

  
				

 

v

 

	
  ANNEXES

  	
   

  
	
  Annex I

  	
  Applicable Margin

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.01(a)

  	
  Refinancing Indebtedness to Be Repaid

  	
   

  
	
  Schedule 1.01(b)

  	
  Subsidiary Guarantors

  	
   

  
	
  Schedule 1.01(c)

  	
  Existing Letters of Credit

  	
   

  
	
  Schedule 3.03

  	
  Governmental Approvals; Compliance with Laws

  	
   

  
	
  Schedule 3.09

  	
  Material Agreements

  	
   

  
	
  Schedule 3.19

  	
  Insurance

  	
   

  
	
  Schedule 3.24

  	
  Location of Material Inventory

  	
   

  
	
  Schedule 4.01(g)

  	
  Local Counsel

  	
   

  
	
  Schedule 5.14

  	
  Post-Closing Matters

  	
   

  
	
  Schedule 6.01(b)

  	
  Existing Indebtedness

  	
   

  
	
  Schedule 6.02(c)

  	
  Existing Liens

  	
   

  
	
  Schedule 6.04(a)

  	
  Existing Investments

  	
   

  
	
  Schedule 9.02

  	
  Accounts and Lockboxes

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Administrative Questionnaire

  	
   

  
	
  Exhibit B

  	
  Form of Assignment and Assumption

  	
   

  
	
  Exhibit C

  	
  Form of Borrowing Request

  	
   

  
	
  Exhibit D

  	
  Form of Compliance Certificate

  	
   

  
	
  Exhibit E

  	
  Form of Interest Election Request

  	
   

  
	
  Exhibit F

  	
  Form of Joinder Agreement

  	
   

  
	
  Exhibit G

  	
  Form of Landlord Access Agreement

  	
   

  
	
  Exhibit H

  	
  Form of LC Request

  	
   

  
	
  Exhibit I

  	
  Form of Lender Addendum

  	
   

  
	
  Exhibit K-1

  	
  Form of Revolving Note

  	
   

  
	
  Exhibit K-2

  	
  Form of Canadian Revolving Note

  	
   

  
	
  Exhibit K-3

  	
  Form of US Swingline Note

  	
   

  
	
  Exhibit K-4

  	
  Form of Canadian Swingline Note

  	
   

  
	
  Exhibit K-5

  	
  Form of Discount Note

  	
   

  
	
  Exhibit K-6

  	
  Form of Tranche B Note

  	
   

  
	
  Exhibit L-1

  	
  Form of Perfection Certificate

  	
   

  
	
  Exhibit L-2

  	
  Form of Perfection Certificate Supplement

  	
   

  
	
  Exhibit M-1

  	
  Form of US Security Agreement

  	
   

  
	
  Exhibit M-2

  	
  Form of Canadian Security Agreement

  	
   

  
	
  Exhibit N

  	
  Form of Opinion of Company Counsel

  	
   

  
	
  Exhibit P

  	
  Form of Intercompany Note

  	
   

  
	
  Exhibit Q

  	
  Form of Non-Bank Certificate

  	
   

  
	
  Exhibit S

  	
  Form of Borrowing Base Certificate

  	
   

  
	
  Exhibit T

  	
  Due Diligence Request

  	
   

  

 

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (this “Agreement”) dated as of October 24, 2007 is
among LINENS ‘N THINGS, INC., a Delaware corporation (“LNT”)
and LINENS ‘N THINGS CENTER, INC., a California corporation (“LNT Center” and together with LNT the “US Borrowers”
and each individually a “US Borrower”),
LINENS ‘N THINGS CANADA CORP., a Nova Scotia unlimited company (“Canadian Borrower” and together with US Borrowers, the “Borrowers”); LINENS HOLDING CO., a Delaware corporation  (“Holdings”);
the Subsidiary Guarantors (such term and each other capitalized term used but
not defined herein having the meaning given to it in Article I); the
Lenders; GE CAPITAL MARKETS, INC. (“GECM”), as lead
arranger (in such capacity, “Arranger”);
GENERAL ELECTRIC CAPITAL CORPORATION (“GE CAPITAL”),
as US swingline lender (in such capacity, “US  Swingline Lender”); GENERAL ELECTRIC
CAPITAL CORPORATION, as US administrative agent (in such capacity, “US  Administrative Agent”)
for the Lenders and the Issuing Banks and as US collateral agent (in such
capacity, the “US Collateral Agent”) for the
Secured Parties; GE CANADA FINANCE HOLDING COMPANY (“GE CANADA”),
as Canadian collateral agent (in such capacity, the “Canadian
Collateral Agent”; the US Collateral Agent and the Canadian
Collateral Agent are collectively referred to herein as the “Collateral Agents”) for the Secured Parties; GE CANADA, as
Canadian administrative agent (in such capacity, the “Canadian
Administrative Agent” together with the US Administrative Agent, the
“Administrative Agents”) for the Lenders
and the Issuing Banks, and GE CANADA, as Canadian swingline lender (in such
capacity, “Canadian Swingline Lender” and
together with US Swingline Lender, the “Swingline Lenders”).

 

WITNESSETH:

 

WHEREAS, Borrowers have
requested that Lenders extend revolving credit facilities to Borrowers of up to
Seven Hundred Million Dollars ($700,000,000) in the aggregate to provide (a)
working capital financing for Borrowers, (b) funds for other general corporate
purposes of Borrowers and (c) funds for other purposes permitted hereunder; and
for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein; and

 

WHEREAS, Borrowers have
agreed to secure all of their obligations under the Loan Documents by granting
to the Collateral Agents, for the benefit of Collateral Agents and the Secured
Parties, a security interest in and lien upon all of their existing and after-acquired
personal and real property; and

 

WHEREAS, Holdings is willing
to guarantee all of the obligations of Borrowers to Agent and Secured Parties
under the Loan Documents and to pledge to the Collateral Agents, for the
benefit of Collateral Agents and the Secured Parties, all of the Equity
Interests of its Subsidiaries to secure such guaranty; and

 

WHEREAS, capitalized terms
used in this Agreement shall have the meanings ascribed to them in Article I
and, for purposes of this Agreement and the other Loan Documents, the rules of
construction set forth in Article I shall govern. All Annexes,
Disclosure Schedules, Exhibits and other attachments (collectively, “Appendices”)
hereto, or expressly identified to this Agreement, are incorporated herein by
reference, and taken together with this Agreement, shall constitute but a
single agreement. These Recitals shall be construed as part of the Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter contained,
and for other good and valuable consideration, the parties hereto agree as
follows:

 

 

ARTICLE I.

DEFINITIONS

 

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

 

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

 

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

 

“ABR Loan” shall mean any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.

 

“ABR Revolving Loan” shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.

 

“Acceptance Fee” shall have the meaning assigned to such term
in Section 2.06(d).

 

“Account Debtor” shall mean any Person who may become obligated
to another Person under, with respect to, or on account of, an Account.

 

“Accounts” shall mean all “accounts” as such term is
defined in the UCC as in effect on the date hereof in the State of New York or
as defined in the PPSA, as applicable, in which such Person now or hereafter
has rights and shall include, without limitation, Credit Card Receivables.

 

“Acquisition”
shall mean the acquisition as evidenced by that certain Agreement and Plan of
Merger dated as of November 8, 2005 (as amended, supplemented or otherwise
modified from time to time, the “Acquisition Agreement”)
by and among Holdings, Linens Merger Sub Co and LNT which provided for the
acquisition of all of the business of LNT.

 

“Acquisition Consideration” shall mean the purchase
consideration for any Permitted Acquisition and all other payments by Holdings
or any of its Subsidiaries in exchange for, or as part of, or in connection
with, any Permitted Acquisition, whether paid in cash or by exchange of Equity
Interests or of properties or otherwise and whether payable at or prior to the
consummation of such Permitted Acquisition or deferred for payment at any
future time, whether or not any such future payment is subject to the
occurrence of any contingency, and includes any and all payments representing
the purchase price and any assumptions of Indebtedness, “earn-outs” and other
agreements to make any payment the amount of which is, or the terms of payment
of which are, in any respect subject to or contingent upon the revenues,
income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a
contingency shall be considered Acquisition Consideration only to the extent of
the reserve, if any, required under GAAP at the time of such sale to be
established in respect thereof by Holdings or any of its Subsidiaries.

 

“Acquisition
Documents” shall mean the Acquisition Agreement and all other
documents executed and delivered with respect to the Acquisition or the
Acquisition Agreement.

 

“Activation
Notice” has the meaning assigned to such term in Section 9.02.

 

2

 

“Adjusted LIBOR Rate” shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, (a) an interest rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) determined by the
applicable Administrative Agent to be equal to the LIBOR Rate for such
Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 minus
the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest
Period.

 

“Administrative Agent Fees”  shall
have the meaning assigned to such term in Section 2.05(b).

 

“Administrative Agents” shall have the meaning assigned to such
term in the preamble hereto.

 

“Administrative
Borrower” shall mean LNT Center, or any successor entity serving in
that role pursuant to Section 2.03(c).

 

“Administrative Questionnaire” shall mean an Administrative
Questionnaire in substantially the form of Exhibit A.

 

“Affiliate” shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the person specified; provided, however, that, for purposes of Section
6.09 , the term “Affiliate” shall also include (i) any person that directly
or indirectly owns more than 10% of any class of Equity Interests of the person
specified or (ii) any person that is an executive officer or director of the
person specified.

 

“Agents” shall mean the Administrative Agents and the Collateral
Agents; and “Agent” shall mean any of them.

 

“Agreement” shall have the meaning assigned to such term in the
preamble hereto.

 

“Alternate Base Rate” shall mean, for any day, a floating rate
equal to the higher of (a) the rate publicly quoted from time to time by The
Wall Street Journal as the “prime rate” (or, if The Wall Street Journal
ceases quoting a prime rate, the highest per annum rate of interest published
by the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled “Selected Interest Rates” as the Bank prime loan rate or its
equivalent), and (b) the Federal Funds Effective Rate plus 50 basis points per
annum. Each change in any interest rate provided for in the Agreement based
upon the Alternate Base Rate shall take effect at the time of such change in
the Alternate Base Rate. If the US 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 US Administrative Agent to obtain sufficient
quotations in accordance with the terms of the definition thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of
the preceding sentence until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the Base
Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Base Rate or the Federal Funds Effective Rate,
respectively.

 

“Anti-Terrorism Laws” shall have the meaning assigned to such
term in Section 3.22.

 

“Applicable Fee” shall mean, for any day, with respect to any
Commitment, the applicable percentage set forth in Annex I under the
caption “Applicable Fee”.

 

3

 

“Applicable Margin” shall mean, for any day, with respect to
any Revolving Loan or Swingline Loan, as the case may be, the applicable
percentage set forth in Annex I under the appropriate caption.

 

“Approved
Currency” shall mean each of dollars and Canadian dollars.

 

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

 

“Arranger” shall have the meaning assigned to such term in the
preamble hereto.

 

“Asset Sale” shall mean (a) any conveyance, sale, lease,
sublease, assignment, transfer or other disposition (including by way of merger,
amalgamation or consolidation and including any Sale and Leaseback Transaction)
of any property excluding (i) sales of Inventory in the ordinary course of
business, (ii) dispositions of Cash Equivalents and (iii) leases or subleases
of less than all or substantially all of the Stores, in each case, in the
ordinary course of business, by Holdings or any of its Subsidiaries and (b) any
issuance or sale of any Equity Interests of any Subsidiary of Holdings, in each
case, to any person other than (i) the Borrowers, (ii) any Subsidiary Guarantor
or (iii) other than for purposes of Section 6.06, any other Subsidiary.

 

“Assignment and Assumption” shall mean an assignment and
assumption entered into by a Lender and an Eligible Assignee (with the consent
of any party whose consent is required by Section 11.04(b)), and
accepted by the applicable Administrative Agent, in substantially the form of Exhibit
B, or any other form approved by the applicable Administrative Agent.

 

“Average
Excess Availability” shall mean, as of any date of determination,
the Excess Availability on the last Business Day of the fiscal quarter most
recently ended; provided, that, if an Activation Notice has been
delivered, the Average Excess Availability shall mean the weighted average amount
of Excess Availability for such quarter which shall equal the sum of each “Periodic Availability Amount” (defined below) calculated for
such quarter. As used herein, the term “Periodic Availability
Amount” shall mean with respect to any period of days in a quarter
for which a Borrowing Base Certificate is in effect, (a) the Excess
Availability amount determined by the Collateral Agents and Administrative
Agents based on (x) the information set forth in the Borrowing Base Certificate
as adjusted to reflect any change noted by the Collateral Agents pursuant to
the terms hereof, and (y) the outstanding Dollar Equivalents of the Loans and
LC Exposures as shown on the books of the applicable Administrative Agent, for
such period of days multiplied by (b) the fraction (expressed as a
percentage), the numerator of which is the number of days in such quarter for
which such Borrowing Base Certificate was in effect, and the denominator of
which is the number of days in such quarter. Average Excess Availability shall
be calculated for each fiscal quarter by the Collateral Agents and such
calculations shall be presumed to be correct, absent manifest error.

 

“BA
Equivalent Loan” shall mean a Canadian Revolving Loan made by a
Non-BA Lender.

 

“Bailee Letter” shall have the meaning assigned thereto in the
Security Agreement.

 

“Bankers’
Acceptance” shall mean a bill of exchange, including a depository
bill defined and issued in accordance with the Depository Bills and Notes Act
(Canada), denominated in Canadian dollars, drawn by the Canadian Borrower and
accepted by the Lender and shall include, where the context requires, a
Discount Note and a BA Equivalent Loan not evidenced by a Discount Note.

 

4

 

“Base Rate” shall mean, for any day, a rate per annum
that is equal to the corporate base rate of interest established by the US
Administrative Agent from time to time; each change in the Base Rate shall be
effective on the date such change is effective. The corporate base rate is not
necessarily the lowest rate charged by the US Administrative Agent to its
customers.

 

“BIA”
shall mean the Bankruptcy and Insolvency Act
(Canada) as such legislation now exists or may from time to time hereafter be
amended, modified, recodified, supplemented or replaced, together with all
rules, regulations and interpretations thereunder or related thereto.

 

“Blocked Account” shall mean shall have the meaning assigned to
such term in Section 9.02(b).

 

“Board” shall mean the Board of Governors of the Federal
Reserve System of the United States.

 

“Board of Directors” shall mean, with respect to any person,
(i) in the case of any corporation (including, for the avoidance of doubt, any
company incorporated under the laws of Canada (or any province or territory
thereof)), the board of directors of such person, (ii) in the case of any
limited liability company, the board of managers of such person, (iii) in the
case of any partnership, the Board of Directors of the general partner of such
person and (iv) in any other case, the functional equivalent of the foregoing.

 

“Borrowers” shall have the meaning assigned to such term in the
preamble hereto.

 

“Borrowing” shall mean (a) Loans of the same Class and Type,
made, converted or continued on the same date and, in the case of Eurodollar
Loans or Banker’s Acceptances, as to which a single Interest Period is in
effect, or (b) a Swingline Loan.

 

“Borrowing Base” shall mean at any time, subject to adjustment
as provided in Section 2.20, an amount equal to the lesser of (a) the
sum of, without duplication:

 

(i)            the book value of Eligible Accounts of US Borrowers
multiplied by the advance rate of 100%, plus

 

(ii)           (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the Cost of Eligible Inventory of US Borrowers and (B) during a Seasonal
Advance Period, the advance rate of 92.5% of the Net Recovery Cost Percentage
multiplied by the Cost of Eligible Inventory of US Borrowers, plus

 

(iii)          (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the Cost of all Eligible In-Transit Inventory of US Borrowers, and (B)
during a Seasonal Advance Period, the advance rate of 92.5% of the Net Recovery
Cost Percentage multiplied by the Cost of all Eligible In-Transit Inventory of
US Borrowers, plus

 

(iv)          the aggregate of all Incorporated Borrowing Bases, plus

 

(v)           (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the aggregate undrawn face amount of Eligible Letters of Credit of US
Borrowers and (B) at any time during a Seasonal Advance 

 

5

 

Period, the advance rate of
92.5% of the Net Recovery Cost Percentage multiplied by the aggregate undrawn
face amount of Eligible Letters of Credit of US Borrowers, minus

 

(vi)          a reserve in the amount of the Current Derivative Exposure,
minus

 

(vii)         upon five (5) Business Day’s prior written notice to US
Borrowers by the applicable Collateral Agents, any Reserves established from
time to time by such Collateral Agents in the exercise of their Permitted
Discretion, minus

 

(viii)        a reserve in the amount of the Tranche B
Deficiency Amount; and

 

(b)           the maximum amount of Revolving Credit Obligations (as
defined in the Senior Note Agreement) that are permitted in Section 4.09 of the Senior Note Agreement as
Permitted Debt thereunder minus the Canadian Exposure of all the Lenders
minus the Line Reserve allocated to US Revolving Commitments minus
the Tranche B Exposure.

 

The Borrowing Base at any
time shall be determined by reference to the most recent Borrowing Base
Certificate theretofore delivered to the Collateral Agents and the
Administrative Agents with such adjustments as Administrative Agents and
Collateral Agents deem appropriate in their collective Permitted Discretion to
assure that the Borrowing Base is calculated in accordance with the terms of
this Agreement. The parties understand that the exclusionary criteria in the
definitions of Eligible Accounts and Eligible Inventory, any Reserves that may
be imposed as provided herein, any deductions or other adjustments to determine
“lower of cost or market value” and factors considered in the calculation of
the Cost of Eligible Inventory or the book value of Eligible Accounts have the
effect of reducing the Borrowing Base, and, accordingly, whether or not any
provisions hereof so state, all of the foregoing shall be determined without
duplication so as not to result in multiple reductions in the Borrowing Base
for the same facts or circumstances.

 

“Borrowing Base Certificate” shall mean an Officers’
Certificate from Borrowers, substantially in the form of (or in such other form
as may be mutually agreed upon by Borrowers, Collateral Agents and
Administrative Agents), and containing the information prescribed by Exhibit
S, delivered to the Administrative Agents and the Collateral Agents setting
forth Borrowers’ calculation of the Borrowing Base, the Canadian Borrowing Base
and the Tranche B Borrowing Base.

 

“Borrowing Base Guarantor Intercompany Loan Amount” shall mean,
at any time, the amount which is the sum of (a) the net amount of any
intercompany advances (including Letters of Credit issued for the account or
benefit of a US Borrowing Base Guarantor) which are made and outstanding to or
for the account of a US Borrowing Base Guarantor from the Administrative
Borrower and (b) interest accrued and unpaid on such amount (from the date of
this Agreement for amounts outstanding on the date hereof and which remain
outstanding, and from the date of such intercompany advance for subsequent
advances) at the rate per annum equal to the Alternate Base Rate plus the
Applicable Margin in effect from time to time.

 

“Borrowing
Base Guarantors” shall mean the US Borrowing Base Guarantors and the
Canadian Borrowing Base Guarantors.

 

“Borrowing Request” shall mean a request by Borrowers in
accordance with the terms of Section 2.03 and substantially in the form
of Exhibit C, or such other form as shall be approved by the
Administrative Agents.

 

6

 

“Business Day” shall mean any day other than a Saturday, Sunday
or other day on which banks in New York City are authorized or required by law
to close; provided, however, that when used in connection with
(a) a Eurodollar 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 (b) a Canadian Revolving Loan, the
term “Business Day” shall also exclude any day on which banks in Toronto,
Canada are authorized or required by law to close.

 

“CAM Exchange”
shall mean the exchange of the Lenders’ interests provided for in Section
2.22.

 

“CAM Exchange
Date” shall mean the date on which (i) any event referred to in Section
8.01(g) or (h) shall occur, or (ii) an acceleration of the maturity
of the Loans pursuant to Section 8.01 shall occur.

 

“CAM
Percentage” shall mean, as to each Lender, a fraction, expressed as
a decimal, of which (i) the numerator shall be (without duplication) the
aggregate Dollar Equivalent of the Specified Obligations owed to such Lender
and such Lender’s participation in the aggregate LC Obligations immediately
prior to the CAM Exchange Date and (ii) the denominator shall be (without
duplication) the aggregate Dollar Equivalent (as so determined) of the
Specified Obligations owed to all the Lenders and the aggregate LC Obligations
immediately prior to such CAM Exchange Date.

 

“Canadian
Administrative Agent” shall have the meaning assigned to such term
in the preamble hereto.

 

“Canadian
Borrower” shall have the meaning assigned to such term in the
preamble hereto.

 

“Canadian
Borrowing Base” shall mean at any time, subject to adjustment as
provided in Section 2.21, an amount equal to the lesser of (a) the sum
of, without duplication:

 

(i)            the book value of Eligible Canadian Accounts of Canadian
Borrower multiplied by the advance rate of 100%, plus

 

(ii)           (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the Cost of Eligible Canadian Inventory of Canadian Borrower and (B) during
a Seasonal Advance Period, the advance rate of 92.5% of the Net Recovery Cost
Percentage multiplied by the Cost of Eligible Canadian Inventory of Canadian
Borrower, plus

 

(iii)          (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the Cost of all the Eligible Canadian In-Transit Inventory of Canadian
Borrower, and (B) during a Seasonal Advance Period, the advance rate of 92.5%
of the Net Recovery Cost Percentage multiplied by the Cost of all Eligible
Canadian In-Transit Inventory of Canadian Borrower, plus

 

(iv)          the amount, if any, by which the Borrowing Base exceeds the
US Revolving Exposure of all of the Lenders (but only to the extent that such
excess is not made available to US Borrowers), minus

 

(v)           to the extent not already deducted in the calculation of
the Borrowing Base, a reserve in the amount of the Current Derivative Exposure;
minus

 

7

 

(vi)          a reserve in the amount of the Priority Payables; minus

 

(vii)         upon five (5) Business Day’s prior written notice to
Canadian Borrower by the applicable Collateral Agents, any Reserves established
from time to time by such Collateral Agents in the exercise of their Permitted
Discretion; and

 

(b)           the maximum amount of Revolving
Credit Obligations (as defined in the Senior Note Agreement) that are permitted
in Section 4.09 of the Senior Note
Agreement as Permitted Debt thereunder minus the US Revolving Exposure
of all of the Lenders minus the Line Reserve allocated to the Canadian
Revolving Commitments minus the Tranche B Exposure.

 

The Canadian Borrowing Base
at any time shall be determined by reference to the most recent Borrowing Base
Certificate theretofore delivered to the Collateral Agents and the
Administrative Agents with such adjustments as Administrative Agents and
Collateral Agents deem appropriate in their collective Permitted Discretion to
assure that the Canadian Borrowing Base is calculated in accordance with the
terms of this Agreement. The parties understand that the exclusionary criteria
in the definitions of Eligible Canadian Accounts and Eligible Canadian
Inventory, any Reserves that may be imposed as provided herein, any deductions
or other adjustments to determine “lower of cost or market value” and factors
considered in the calculation of the Cost of Eligible Canadian Inventory or the
book value of Eligible Canadian Accounts have the effect of reducing the
Canadian Borrowing Base, and, accordingly, whether or not any provisions hereof
so state, all of the foregoing shall be determined without duplication so as
not to result in multiple reductions in the Canadian Borrowing Base for the
same facts or circumstances.

 

“Canadian
Borrowing Base Guarantor” shall
mean any Wholly Owned Subsidiary of the Canadian Borrower which may hereafter
be approved by the Administrative Agents and the Collateral Agents and which
(a) is organized under the laws of Canada (or any province or territory
thereof), (b) is currently able to prepare all collateral reports in a
comparable manner to the Borrowers’ reporting procedures and (c) has executed
and delivered to the applicable Collateral Agents such joinder agreements to
guarantees, contribution and set-off agreements and other Security Documents as
such Collateral Agents have reasonably requested so long as such Collateral
Agents have received and approved, in their reasonable discretion, (i) a
collateral audit and Inventory Appraisal conducted by an independent appraisal
firm reasonably acceptable to such Collateral Agents and (ii) all PPSA and
similar search results necessary to confirm such Collateral Agents’ first
priority Lien on all of such Canadian Borrowing Base Guarantor’s personal
property, subject to Permitted Liens.

 

“Canadian
Collateral Agent” shall have the meaning assigned to such term in
the preamble hereto.

 

“Canadian
dollars” or “Can$” shall
mean the lawful money of Canada.

 

“Canadian
Exposure” shall mean, with respect to any Lender at any time, the
Dollar Equivalent of the aggregate principal amount at such time of all
outstanding Canadian Revolving Loans of such Lender, plus
the aggregate amount at such time of such Lender’s Swingline Exposure to
Canadian Borrower.

 

“Canadian
Guarantors”  shall mean LNT
I, LNT II, LNT Partnership and each other person, if any, that executes or becomes
party to a Canadian Guaranty or other similar agreement guaranteeing the
Canadian Obligations in favor of the Canadian Collateral Agent.

 

8

 

“Canadian
Guaranty” shall mean each certain Guaranty Agreement dated as of the
Closing Date guaranteeing the Canadian Obligations addressed to the Canadian
Collateral Agent for the benefit of the Canadian Secured Parties by each
Canadian Loan Party governed by Canadian law, as the same may from time to time
be modified, amended, extended or reaffirmed in accordance with the terms
thereof.

 

“Canadian
Inventory” shall mean all of the Canadian Borrower’s and Canadian
Borrowing Base Guarantors’ now owned and hereafter existing or acquired raw
materials, work in process, finished goods and all other inventory of
whatsoever kind or nature, wherever located.

 

“Canadian
Loan Parties”  shall mean
Canadian Borrower and the Canadian Guarantors.

 

“Canadian
Minimum Availability Requirement” shall mean, at all times, an
amount equal to 10% of the sum of clauses (i) through (iii) of the Canadian
Borrowing Base.

 

“Canadian
Obligations” shall mean (a) obligations of Canadian Borrower and the
other Canadian Loan Parties from time to time arising under or in respect of
the due and punctual payment of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Canadian Revolving Loans and
Canadian Swingline 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 Canadian Borrower under this Agreement in respect
of any Letter of Credit or LC Acceptance, when and as due, including payments
in respect of Reimbursement Obligations, 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 (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
Canadian Borrower and the other Canadian Loan Parties under this Agreement and
the other Loan Documents with respect to obligations of Canadian Borrower and
the Canadian Guarantors, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of Canadian Borrower and the Canadian
Guarantors under or pursuant to this Agreement and the other Loan Documents
with respect to the obligations of Canadian Borrower, (c) the due and punctual
payment and performance of all obligations of Canadian Borrower and the other
Canadian Loan Parties under each Lender Hedging Agreement to which Canadian
Borrower and/or the other Canadian Loan Parties maybe a party, and (d) the due
and punctual payment and performance of all obligations of any Canadian Loan
Party in respect of overdrafts and related liabilities owed to any Lender, any
Affiliate of a Lender, the Administrative Agents or the Collateral Agents
arising from treasury, depository and cash management services or in connection
with any automated clearinghouse transfer of funds. Notwithstanding anything
herein to the contrary, the term “Canadian Obligations”
shall only refer to obligations of Canadian Borrower and Canadian Guarantors
hereunder and under the other Loan Documents and shall not refer to obligations
of US Borrowers and their US Subsidiaries.

 

“Canadian
Pledge Agreements” shall mean that certain Pledge Agreement dated as
of the Closing Date by LNT Center pledging sixty-five percent (65%) of its Equity
Interests in LNT I and LNT II to secure the US Obligations and pledging 100%
thereof to secure the Canadian Obligations  and those
certain Pledge Agreements dated as of the Closing Date by LNT I, LNT II, LNT
Partnership and Canadian Borrower pledging all of their Equity Interests in the
Canadian Borrower and the Canadian Guarantors, as applicable, to secure the
Canadian Obligations, in each case, addressed to the applicable Collateral
Agents for the benefit of the applicable Secured Parties, as the same may from
time to time be modified, amended, extended or reaffirmed in accordance with
the terms thereof.

 

9

 

“Canadian
Prime Rate” shall mean on any day the greater of:

 

(a)           a rate per annum that is equal to the
corporate base rate of interest established from time to time by Bank of
Montreal (or such other Schedule I Bank selected by the Canadian Administrative
Agent from time to time) as its reference rate then in effect on such day for
commercial loans made by it in Canada (it is understood and agreed that such
corporate base rate is not necessarily the lowest rate charged by the Canadian
Administrative Agent to its customers); and

 

(b)           the CDOR Rate in effect from time to
time plus 100 basis points per annum.

 

Any change in the Canadian
Prime Rate shall be effective as of the opening of business on the date the
change become effective generally.

 

“Canadian
Prime Rate Borrowing” shall mean a Borrowing comprised of Canadian
Prime Rate Loans.

 

“Canadian
Prime Rate Loans” shall mean any Canadian Revolving Loan or Canadian
Swingline Loan bearing interest at a rate determined by reference to the
Canadian Prime Rate in accordance with the provisions of Article II.

 

“Canadian Pro
Rata Percentage” of any Canadian Revolving Lender at any time shall
mean the percentage of the total Canadian Revolving Commitments of all Canadian
Revolving Lenders represented by such Lender’s Canadian Revolving Commitment.

 

“Canadian
Revolving Borrowing” shall mean a Borrowing comprised of Canadian Revolving
Loans.

 

“Canadian
Revolving Commitment” shall mean, with respect to each Revolving
Lender, the commitment, if any, of such Revolving Lender to make Canadian
Revolving Loans hereunder up to the amount set forth on Schedule I to the Lender
Addendum executed and delivered by such Lender or in the Assignment and
Assumption pursuant to which such lender assumed its Canadian Revolving
Commitment. The Canadian Revolving Commitment of each Revolving Lender is a
sub-commitment of its Revolving Commitment and, as such, may be (a) reduced
from time to time pursuant to Section 2.07 and (b) reduced or increased
from time to time pursuant to assignments by or to such Revolving Lender
pursuant to Section 11.04. The aggregate amount of the Lenders’ Canadian
Revolving Commitments on the Closing Date is $40 million.

 

“Canadian
Revolving Lender” shall mean a Lender with a Canadian Revolving Commitment.

 

“Canadian
Revolving Loan” shall mean a Revolving Loan borrowed by the Canadian
Borrower denominated in Canadian dollars or a Bankers’ Acceptance (and any
advances with respect thereto) denominated in Canadian dollars.

 

“Canadian
Secured Parties”  shall mean
the Canadian Administrative Agent, the Canadian Collateral Agent, each Lender
that holds Canadian Revolving Loans or has Canadian Revolving Commitments (in
its capacity as such) and the Canadian Swingline Lender.

 

“Canadian
Security Agreement” shall mean each certain Security Agreement dated
as of the Closing Date in favor of the Canadian Collateral Agent for the
benefit of the Canadian Secured Parties by Canadian Borrower and by each
Canadian Guarantor, which is governed by Canadian law, as 

 

10

 

the same may from time to time be modified, amended, extended or reaffirmed
in accordance with the terms thereof.

 

“Canadian
Swingline Commitment” shall mean
the commitment of the Canadian Swingline Lender to make loans pursuant to Section
2.17, as the same may be reduced from time to time pursuant to Section
2.07 or Section 2.17. The amount of the Canadian Swingline
Commitment shall initially be $5 million, but in no event shall exceed the
Revolving Commitment.

 

“Canadian
Swingline Lender” shall have the
meaning assigned to such term in the preamble hereto.

 

“Canadian Swingline
Loans” shall mean any loan made by the Canadian Swingline Lender
pursuant to Section 2.17(d).

 

“Capital Expenditures” shall mean, for any period, without
duplication, the increase during that period in the gross property, plant or
equipment account in the consolidated balance sheet of LNT and its
Subsidiaries, determined in accordance with GAAP, whether such increase is due
to purchase of properties for cash or financed by the incurrence of
Indebtedness, but excluding (i) expenditures made in connection with the
replacement, substitution or restoration of property pursuant to Section
2.10(d) and (ii) any portion of such increase attributable solely to
acquisitions of property, plant and equipment in Permitted Acquisitions.

 

“Capital Lease Obligations” of any person shall mean 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.

 

“Cash Collateral Account” shall mean a collateral account in
the form of a deposit account established and maintained by the Collateral
Agents for the benefit of the Secured Parties from the proceeds of Collateral
collected in the Collection Account that have not either been released to the
Borrowers or applicable Guarantor or applied immediately to outstanding
Obligations.

 

“Cash Equivalents” shall mean, as to any person, (a) securities
issued, or directly, unconditionally and fully guaranteed or insured, by the
United States, Canada or any agency or instrumentality thereof (provided that the full faith and credit of
the United States or Canada is pledged in support thereof) having maturities of
not more than one year from the date of acquisition by such person; (b) time
deposits and certificates of deposit of any Lender or any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any state thereof or the
District of Columbia or any province or territory of Canada having, capital and
surplus aggregating in excess of $500 million and a rating of “A” (or such
other similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) with maturities of not more than one year from the date of
acquisition by such person; (c) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (a)
above entered into with any bank meeting the qualifications specified in clause
(b) above, which repurchase obligations are secured by a valid perfected
security interest in the underlying securities; (d) commercial paper issued by
any person incorporated in the United States or Canada rated at least A-1 or the
equivalent thereof by Standard & Poor’s Rating Service or at least P-1 or
the equivalent thereof by Moody’s Investors Service Inc., and in each case
maturing not more than one year after the date of acquisition by such person;
(e) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (a) through (d)
above; (f) demand 

 

11

 

deposit accounts maintained in the ordinary course of business; and (g)
other bank accounts which contain funds that have not been swept to the
Concentration Accounts because of the need to meet compensating balance or
other fee requirements of a bank that provides a Blocked Account.

 

“Cash
Management System” shall have the meaning assigned to such term in Section
9.02.

 

“Casualty Event” shall mean any loss of title or any loss of or
damage to or destruction of, or any condemnation or other taking (including by
any Governmental Authority) of, any property of Holdings or any of its
Subsidiaries. “Casualty Event” shall include but not be limited to any taking
of all or any part of any Real Property of any person or any part thereof, in
or by condemnation or other eminent domain proceedings pursuant to any
Requirement of Law, or by reason of the temporary requisition of the use or
occupancy of all or substantially all of any Real Property of any person or any
part thereof by any Governmental Authority, civil or military, or any
settlement in lieu thereof, but shall not include a loss of title to the extent
covered by a title insurance policy.

 

“CDOR Rate”
shall mean, on any day, the annual rate of interest which is the arithmetic
average of the “BA 1 month” rates applicable to Bankers’ Acceptances issued by
Schedule I banks identified as such on the Reuters Screen CDOR Page at
approximately 10:00 a.m. (Toronto time) on such day (as adjusted by the
Canadian Administrative Agent after 10:00 a.m. (Toronto time) to reflect any
error in any posted rate or in the posted average annual rate). If the rate
does not appear on the Reuters Screen CDOR Page as contemplated above, then the
CDOR Rate on any day shall be calculated as the arithmetic average of the
discount rates applicable to one month Bankers’ Acceptances of, and as quoted by,
any two of the Schedule I banks, chosen by the Canadian Administrative Agent,
as of 10:00 a.m. (Toronto time) on such day, or if such day is not a Business
Day, then on the immediately preceding Business Day. If less than two Schedule
I banks quote the aforementioned rate, the CDOR Rate shall be the rate chosen
by the Canadian Administrative Agent.

 

“CERCLA” shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq. and all implementing regulations.

 

A “Change in Control” shall be deemed to have
occurred if:

 

(a)           Holdings at any time ceases to own
directly or indirectly 100% of the Equity Interests of Borrowers;

 

(b)           at any time a change of control
occurs under any Material Indebtedness;

 

(c)           prior to an IPO, the Permitted
Holders cease to own, or to have the power to vote or direct the voting of,
Voting Stock of Holdings representing a majority of the voting power of the
total outstanding Voting Stock of Holdings;

 

(d)           following an IPO, (i) the Permitted
Holders shall fail to own, or to have the power to vote or direct the voting
of, Voting Stock of Holdings representing more than 25% of the voting power of
the total outstanding Voting Stock of Holdings, (ii) the Permitted Holders cease
to own Equity Interests representing more than 25% of the total economic
interests of the Equity Interests of Holdings or (iii) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for
purposes of this clause such person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of an equal 

 

12

 

or greater percentage of
Voting Stock of Holdings than the percentage of Voting Stock that the Sponsor
and its Controlled Investment Affiliates own or have the power to vote or
direct the voting of after such IPO; or

 

(e)           following an IPO, during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of Holdings (together with any new directors
whose election to such Board of Directors or whose nomination for election was
approved by a vote of a majority of the members of the Board of Directors of
Holdings, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Holdings.

 

For purposes of this
definition, a person shall not be deemed to have beneficial ownership of Equity
Interests subject to a stock purchase agreement, merger agreement, amalgamation
agreement or similar agreement until the consummation of the transactions
contemplated by such agreement.

 

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

 

“Charges” shall have the meaning assigned to such term in Section
11.14.

 

“Chattel Paper” shall mean all “chattel paper,” as such term is
defined in the UCC as in effect on the date hereof in the State of New York, or
as defined in the PPSA, as applicable, in which any Person now or hereafter has
rights.

 

“Class,” when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans, Tranche B Loans or Swingline Loans and, when used in reference
to any Commitment, refers to whether such Commitment is a Revolving Commitment,
Tranche B Commitment, US Swingline Commitment or Canadian Swingline Commitment,
in each case, under this Agreement, of which such Loan, Borrowing or Commitment
shall be a part.

 

“Closing Date” shall mean the date of this Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.

 

“Collateral” shall mean, collectively, all of the Security
Agreement Collateral, the Mortgaged Property and all other property of whatever
kind and nature subject or purported to be subject from time to time to a Lien
under any Security Document.

 

“Collateral Agent” shall have the meaning assigned to such term
in the preamble hereto.

 

“Collection
Accounts” has the meaning assigned to such term in Section
9.02(d).

 

“Commercial Letter of Credit” shall mean any letter of credit
or similar instrument issued for the purpose of providing credit support in
connection with the purchase of materials, goods or services by US Borrowers or
any of their Subsidiaries in the ordinary course of their businesses.

 

13

 

“Commitment” shall mean, with respect to any Lender, such
Lender’s Revolving Commitment, Tranche B Commitment, Canadian Revolving
Commitment, US Swingline Commitment or Canadian Swingline Commitment.

 

“Commitment Fee” shall have the meaning assigned to such term
in Section 2.05(a).

 

“Companies” shall mean Holdings and its Subsidiaries; and “Company” shall mean any one of them.

 

“Compliance Certificate” shall mean a certificate of a
Financial Officer substantially in the form of Exhibit D or such other
form as may be acceptable to the Administrative Agents.

 

“Concentration
Accounts” shall have the meaning assigned to such term in Section
9.02(d).

 

“Confidential Information Memorandum” shall mean that certain
confidential information memorandum relating to the Senior Notes dated
as of February 8, 2006.

 

“Consolidated
Net Income” means, for any period, the aggregate of the Net Income
of LNT and its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that:

 

(i)            the Net Income (but not loss) of any person that is not a
Subsidiary Guarantor or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends or
similar distributions paid in cash (or converted into cash) to the US Borrowers
or a Subsidiary Guarantor;

 

(ii)           the Net Income of any Subsidiary will be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders; provided that if any such dividend or distribution is
actually received it will be included for the purposes of this definition;

 

(iii)          any increase in amortization and depreciation or any
one-time non-cash charges resulting from purchase accounting in connection with
any acquisition that is consummated on or after the date of this Agreement will
be excluded;

 

(iv)          the cumulative effect of a change in accounting principles
will be excluded;

 

(v)           any net after-tax gains or losses (less all fees and
expenses or charges relating thereto) attributable to business dispositions or
asset dispositions other than in the ordinary course of business (as determined
in good faith by senior management or the board of directors of Holdings) will
be excluded;

 

(vi)          any net after-tax gains or losses (less all fees and
expenses or charges relating thereto) attributable to the early extinguishment
of indebtedness will be excluded;

 

14

 

(vii)         non-cash gains, losses, income and expenses resulting from
fair value accounting required by Statement of Financial Accounting Standards
No. 133 and related interpretations will be excluded;

 

(viii)        the effects of purchase accounting as a
result of the Transactions will be excluded;

 

(ix)           any fees, expenses and charges relating to the
Transactions (whenever paid) will be excluded; and

 

(x)            accruals and reserves that are established within 12
months of the Closing Date and that are required to be established in
accordance with GAAP will be excluded.

 

“Consolidated
Net Tangible Assets” means, as of any date of determination, the sum
of the assets of LNT and its Subsidiaries after eliminating intercompany items,
determined on a consolidated basis in accordance with GAAP, less (without
duplication) (i) the net book value of all of LNT’s and its Subsidiaries’
licenses, patents, patent applications, copyrights, trademarks, trade names,
goodwill, non-compete agreements or organizational expenses and other like
intangibles shown on the balance sheet of LNT and its Subsidiaries as of the
most recent date for which such a balance sheet is available, (ii) unamortized
Indebtedness discount and expenses, (iii) all reserves for depreciation,
obsolescence, depletion and amortization of its properties and all other proper
reserves related to assets which in accordance with GAAP have been provided by
LNT and its Subsidiaries and (iv) all current liabilities.

 

“Contested Collateral Lien Conditions” shall mean, with respect to any Permitted
Lien of the type described in clauses (a), (b), (e) and (f) of Section 6.02,
the following conditions:

 

(a)           US Borrowers shall cause any
proceeding instituted contesting such Lien to stay the sale or forfeiture of
any portion of the Collateral on account of such Lien;

 

(b)           at the option and at the request of
the US Administrative Agent, to the extent such Lien is in an amount in excess
of $100,000, the applicable Collateral Agent shall maintain a Reserve against
the Borrowing Base or Canadian Borrowing Base, as applicable, in an amount
sufficient to pay and discharge such Lien and the US Administrative Agent’s
reasonable estimate of all interest and penalties related thereto; and

 

(c)           such Lien shall in all respects be
subject and subordinate in priority to the Lien and security interest created
and evidenced by the Security Documents, except if and to the extent that the
Requirement of Law creating, permitting or authorizing such Lien provides that
such Lien is or must be superior to the Lien and security interest created and
evidenced by the Security Documents.

 

“Contingent Obligation” shall mean, as to any person, any
obligation, agreement, understanding or arrangement of such person guaranteeing
or intended to guarantee any Indebtedness, leases, dividends or other
obligations (“primary obligations”)
of any other person (the “primary obligor”)
in any manner, whether directly or indirectly, including any obligation of such
person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect security therefor; (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor; (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation; (d) with
respect to bankers’ acceptances, letters of credit and similar credit
arrangements, until a reimbursement obligation arises 

 

15

 

(which reimbursement obligation shall constitute Indebtedness); or (e)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided,
however, that the term “Contingent Obligation” shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business or any product warranties. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
(or, if less, the maximum amount of such primary obligation for which such
person may be liable, whether singly or jointly, pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such person is required to perform thereunder) as determined by such
person in good faith.

 

“Contribution,
Intercompany Contracting and Offset Agreement” shall mean that
certain Contribution, Intercompany Contracting and Offset Agreement dated as of
the Closing Date by and among the Loan Parties (other than Foreign
Subsidiaries), Collateral Agents and Administrative Agents, as the same may be
amended, amended and restated, reaffirmed, supplemented, revised or modified
from time to time.

 

“Control” shall mean 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 ownership of voting securities, by contract or
otherwise, and the terms “Controlling”
and “Controlled” shall have
meanings correlative thereto.

 

“Control Agreement” shall have the meaning assigned to such
term in the Security Agreement.

 

“Controlled Investment Affiliate” means, as to any person, any
other person which directly or indirectly is in Control of, is Controlled by,
or is under common Control with, such person and is organized by such person
(or any person Controlling such person) primarily for making equity or debt
investments in Holdings or other portfolio companies.

 

“Cost” shall mean, as determined by the applicable Collateral
Agents, in good faith, with respect to Inventory or Canadian Inventory, as
applicable, the lower of (a) landed cost computed on first-in a first-out basis
in accordance with GAAP or (b) market value; provided, that for purposes
of the calculation of the Borrowing Base or the Canadian Borrowing Base, (i)
the Cost of the Inventory or the Cost of the Canadian Inventory shall not
include: (A) the portion of the cost of Inventory or Canadian Inventory equal
to the profit earned by any Affiliate on the sale thereof to Borrowers or the
Borrowing Base Guarantors or (B) write-ups or write-downs in cost with respect
to currency exchange rates, and (ii) notwithstanding anything to the contrary
contained herein, the cost of the Inventory and Canadian Inventory shall be
computed in the same manner and consistent with the most recent Inventory Appraisal
which has been received and approved by Collateral Agents in their reasonable
discretion.

 

“Credit Card
Agreements” shall mean all agreements now or hereafter entered into
by Borrowers or Borrowing Base Guarantors with any credit card issuer or any
credit card processor, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, including,
without limitation, any agreements entered into in connection with any Private
Label Credit Cards.

 

“Credit Card
Receivables” shall mean, collectively, all present and future rights
of Borrowers or Borrowing Base Guarantors to payment from (a) any major credit
card issuer or major credit card processor arising from sales of goods or
rendition of services to customers who have purchased such goods or services
using a credit or debit card, (b) any major credit card issuer or major 

 

16

 

credit card processor in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or a
debit card, including, but not limited to, all amounts at any time due or to
become due from any major credit card issuer or major credit card processor
under the Credit Card Agreements or otherwise and (c) the issuers of Private
Label Credit Cards.

 

“Credit Extension” shall mean, as the context may require, (i)
the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit,
or the amendment, extension or renewal of any existing Letter of Credit, by the
Issuing Bank.

 

“Current Derivative Exposure”  shall mean, as of
any date of determination, 100% of the aggregate mark-to-market exposure then
owing by any Borrower under Lender Hedging Agreements, determined by all
Lenders that are counterparties to each Lender Hedging Agreement, in good faith
and in a commercially reasonable manner, based on net termination values and
calculated as if such Lender Hedging Agreements were terminated as of such
determination date and a payment were due thereunder to the Lender or its
Affiliates and furnished to the applicable Agent on a bi-monthly basis (or more
frequently, in the commercially reasonable discretion of the applicable Agent).

 

“Debt Issuance” shall mean the incurrence by Holdings or any of
its Subsidiaries of any Indebtedness after the Closing Date (other than as
permitted by Section 6.01).

 

“Default” shall mean any event, occurrence or condition which
is, or upon notice, lapse of time or both would constitute, an Event of
Default.

 

“Default Rate” shall have the meaning assigned to such term in Section
2.06(e).

 

“Disbursement
Account” shall have the meaning assigned to such term in Section
9.02(i).

 

“Discount
Note” shall mean a non-interest bearing promissory note denominated
in Canadian Dollars, substantially in the form of Exhibit K-5, issued by
the Canadian Borrower to evidence a BA Equivalent Loan.

 

“Discount
Proceeds” shall mean on any day, for any Bankers’ Acceptance issued
hereunder, an amount calculated on such day by multiplying:

 

(a)           the face amount of such Bankers’
Acceptance by

 

(b)           the quotient obtained by dividing:

 

(i)            one by

 

(ii)           the sum of one plus the product of:

 

A)           the Discount Rate applicable to such Bankers’ Acceptance
and

 

B)            a fraction, the numerator of which is the number of days
in the applicable Interest Period and the denominator of which is 365,

 

with the quotient being rounded up or down to the fifth decimal place
and 0.00005 being rounded up.

 

17

 

“Discount
Rate” means, on any day, with respect to an issue of Bankers’
Acceptances, or in respect of a BA Equivalent Loan, with the same maturity
date, (a) for a Lender which is a Schedule I Lender, (i) the average bankers’
acceptance discount rate of the appropriate term as quoted on Reuters Screen
CDOR Page determined at or about 10:00 a.m. (Toronto time) on that day or, (ii)
if the discount rate for a particular term is not quoted on Reuters Screen CDOR
Page, the arithmetic average of the actual discount rates for bankers’
acceptances for such term accepted by any two of the Schedule I banks, chosen
by the Canadian Administrative Agent, as of 10:00 a.m. (Toronto time) on such
day, or if such day is not a Business Day, then on the immediately preceding Business
Day, and (b) for a Lender which is not a Schedule I Lender, the rate determined
by the Canadian Administrative Agent in accordance with (a) above, plus 10
basis points per annum.

 

“Disqualified Capital Stock” shall mean any Equity Interest
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, (a) matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the first anniversary of
the Final Maturity Date, (b) is convertible into or exchangeable (unless at the
sole option of the issuer thereof) for (i) debt securities or (ii) any Equity
Interests referred to in (a) above, in each case at any time on or prior to the
first anniversary of the Final Maturity Date, or (c) contains any repurchase
obligation which may come into effect prior to payment in full of all
Obligations; provided, however,
that any Equity Interests that would not constitute Disqualified Capital Stock
but for provisions thereof giving holders thereof (or the holders of any
security into or for which such Equity Interests is convertible, exchangeable
or exercisable) the right to require the issuer thereof to redeem such Equity
Interests upon the occurrence of a change in control or an asset sale occurring
prior to the first anniversary of the Final Maturity Date shall not constitute
Disqualified Capital Stock if such Equity Interests provide that the issuer
thereof will not redeem any such Equity Interests pursuant to such provisions
prior to the repayment in full of the Obligations.

 

“Dividend” with respect to any person shall mean that such
person has declared or paid a dividend or returned any equity capital to the
holders of its Equity Interests or authorized or made any other distribution,
payment or delivery of property (other than Qualified Capital Stock of such
person) or cash to the holders of its Equity Interests as such, or redeemed,
retired, purchased or otherwise acquired, directly or indirectly, for
consideration any of its Equity Interests outstanding (or any options or warrants
issued by such person with respect to its Equity Interests), or set aside any
funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for consideration any of the
Equity Interests of such person outstanding (or any options or warrants issued
by such person with respect to its Equity Interests).  Without limiting the foregoing, “Dividends”
with respect to any person shall also include all payments made or required to
be made by such person with respect to any stock appreciation rights, plans,
equity incentive or achievement plans or any similar plans or setting aside of
any funds for the foregoing purposes.

 

“Documentation Agent” shall have the meaning assigned to such
term in the preamble hereto.

 

“Dollar
Equivalent” shall mean, as to any amount denominated in Canadian
dollars on any date of determination, the amount of dollars that would be
required to purchase the amount of Canadian dollars based upon the Spot Selling
Rate.

 

“dollars” or “$” shall mean lawful money of the United
States.

 

“Eligible
Accounts” shall have the meaning assigned to such term in Section
2.20(a).

 

18

 

“Eligible Assignee” shall mean (a) if the assignment does not
include assignment of a Revolving Commitment, (i) any Lender, (ii) an Affiliate
of any Lender, (iii) an Approved Fund and (iv) any other person approved by the
applicable Administrative Agent (such approval not to be unreasonably withheld
or delayed) and (b) if the assignment includes assignment of a Revolving
Commitment, (i) any Revolving Lender, (ii) an Affiliate of any Revolving
Lender, (iii) an Approved Fund of a Revolving Lender and (iv) any other person
approved by the applicable Administrative Agent, the Issuing Bank, the
Swingline Lenders and Borrowers (each such approval not to be unreasonably
withheld or delayed); provided
that (x) no approval of Borrowers shall be required during the continuance of a
Default, (y) “Eligible Assignee” shall not include US Borrowers or any of their
Affiliates or Subsidiaries or any natural person and (z) each Revolving Lender
becoming a party hereto pursuant to an Assignment and Assumption must also
arrange to designate an Affiliate as a Canadian Revolving Lender and such
Canadian Revolving Lender must also become a party hereto pursuant to such
Assignment and Assumption.

 

“Eligible
Canadian Accounts” shall have the meaning assigned to such term in Section
2.21(a).

 

“Eligible
Canadian Inventory” shall mean, subject to adjustment as set forth
in Section 2.21(b), items of Canadian Inventory of the Canadian Borrower
and any Canadian Borrowing Base Guarantors.

 

“Eligible
Canadian In-Transit Inventory” means, as of any date of
determination, without duplication of other Eligible Canadian Inventory,
Inventory (a) which has been shipped by or on behalf of a supplier from any
location for receipt by Canadian Borrower or any Canadian Borrowing Base
Guarantor within sixty (60) days of the date of determination, but which has
not yet been received by Canadian Borrower or such Canadian Borrowing Base
Guarantor, (b) for which the purchase order is in the name of Canadian Borrower
or any Canadian Borrowing Base Guarantor, and title has passed to Canadian
Borrower or any Canadian Borrowing Base Guarantor, (c) for which the document
of title, to the extent applicable, reflects Canadian Borrower or any Canadian
Borrowing Base Guarantor as consignee (along with delivery to Canadian Borrower
or such Canadian Borrowing Base Guarantor of the documents of title, to the
extent applicable, with respect thereto), (d) as to which the applicable
Collateral Agent has control over the documents of title, to the extent
applicable, which evidence ownership of the subject Inventory (such as by the
delivery of a Freight Forwarding Agreement), (e) is covered by insurance
reasonably acceptable to the Collateral Agents, and (f) which otherwise is not
excluded from the definition of Eligible Inventory.

 

“Eligible Canadian Lender”  means a financial institution or commercial
finance company that is (i) not a non-resident of Canada for the purpose of the
ITA, or (ii) an “authorized foreign bank” as defined in section 2, of the Bank Act (Canada) and in subsection 248(1)
of the ITA, that is not subject to the restrictions and requirements referred
to in subsection 524(2) of the Bank Act
(Canada) and which will receive all amounts paid or credited to it under its
Canadian Revolving Loans and under the Loan Documents in respect of its “Canadian
banking business” (as defined in subsection 248(1) of the ITA) for the purposes
of paragraph 212(13.3)(a) of the ITA.

 

“Eligible
In-Transit Inventory” means, as of any date of determination,
without duplication of other Eligible Inventory, Inventory (a) which has been
shipped by or on behalf of a supplier from any location for receipt by either a
US Borrower or any US Borrowing Base Guarantor within sixty (60) days of the
date of determination, but which has not yet been received by such US Borrower
or US Borrowing Base Guarantor, (b) for which the purchase order is in the name
of either a US Borrower or any US Borrowing Base Guarantor, and title has
passed to either a US Borrower or any US Borrowing Base Guarantor, (c) for
which the document of title, to the extent applicable, reflects either a US 

 

19

 

Borrower or any US Borrowing Base Guarantor as consignee (along with
delivery to such a US Borrower or US Borrowing Base Guarantor of the documents
of title, to the extent applicable, with respect thereto), (d) as to which
either the applicable Collateral Agent has control over the documents of title,
to the extent applicable, which evidence ownership of the subject Inventory
(such as by the delivery of a Freight Forwarding Agreement) or the goods
covered by such document of title are expected to be delivered to a
distribution center operated by US Borrowers or any of their Subsidiaries
within 20 days of the date such goods become the subject of such document of
title, (e) is covered by insurance reasonably acceptable to the Collateral
Agents, and (f) which otherwise is not excluded from the definition of Eligible
Inventory.

 

“Eligible
Inventory” shall mean, subject to adjustment as set forth in Section
2.20(b), items of Inventory of the US Borrowers and any US Borrowing Base
Guarantors.

 

“Eligible
Letter of Credit” means, as of any date of determination a
Commercial Letter of Credit issued by the Issuing Bank which meet the following
criteria:

 

(a)           the Inventory being purchased
thereunder has not yet been delivered to a US Borrower or any of the US
Borrowing Base Guarantors;

 

(b)           The purchase order for such Inventory
is in the name of US Borrowers or any of its US Borrowing Base Guarantors (or
Canadian Borrower or any Canadian Borrowing Base Guarantor, for Letters of
Credit issued pursuant to Section 2.18(m)) and the purchase of which is
supported by a Commercial Letter of Credit issued under this Agreement having
an initial expiry, subject to the proviso hereto, within 120 days after the
date of initial issuance of such Commercial Letter of Credit, provided that
fifty percent (50%) of the maximum Stated Amount all such Commercial Letters of
Credit shall not, at any time, have an initial expiry greater than ninety (90)
days after the original date of issuance of such Commercial Letters of Credit;

 

(c)           Drawing under such Commercial Letters
of Credit requires delivery of a bill of lading or other document of title,
which names the US Collateral Agent, a US Borrower or any of the US Borrowing
Base Guarantors or any of their agents as consignee, which evidences ownership
of the subject inventory and which complies with the requirements of the
applicable Freight Forwarding Agreement;

 

(d)           the Inventory is not otherwise
included in another category of Eligible Inventory or Eligible In-Transit
Inventory;

 

(e)           the Inventory being purchased
thereunder is covered by insurance reasonably acceptable to the Collateral
Agents; and

 

(f)            the Inventory being purchased
thereunder is not expected to be excluded from the definition of Eligible
Inventory once it has been purchased and delivered.

 

“Embargoed Person” shall have the meaning assigned to such term
in Section 6.20.

 

“Environment” shall mean ambient air, indoor air, surface water
and groundwater (including potable water, navigable water and wetlands), the
land surface or subsurface strata, natural resources, the workplace or as
otherwise defined in any Environmental Law.

 

“Environmental Claim” shall mean any claim, notice, demand,
order, action, suit, proceeding or other communication alleging liability for
or obligation with respect to any investigation, remediation, removal, cleanup,
response, corrective action, damages to natural resources, personal injury,
property damage, fines, penalties or other costs resulting from, related to or
arising out of (i) the presence, 

 

20

 

Release or threatened Release in or into the Environment of Hazardous
Material at any location or (ii) any violation or alleged violation of any
Environmental Law, and shall include any claim seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from, related to or arising out of the presence, Release or threatened Release
of Hazardous Material or alleged injury or threat of injury to health, safety
or the Environment.

 

“Environmental Law” shall mean any and all present and future,
foreign or domestic, federal, provincial, territorial or state (or any
Subdivision of any of them) treaties, laws, statutes, ordinances, regulations,
rules, decrees, orders, judgments, consent orders, consent decrees, code or
other binding requirements, and the common law, relating to protection of
public health or the Environment, the Release or threatened Release of Hazardous
Material, natural resources or natural resource damages, or occupational safety
or health, and any and all Environmental Permits.

 

“Environmental Permit” shall mean any permit, license,
approval, registration, notification, exemption, consent or other authorization
required by or from a Governmental Authority under Environmental Law.

 

“Equipment” shall have the meaning assigned to such term in the
applicable Security Agreement.

 

“Equity Financing” shall mean the cash equity investment in
Holdings by the Equity Investors as the same was further invested in cash
equity in the US Borrowers on or prior to February 14, 2006, in an amount not
less than $600 million on terms and conditions satisfactory to the
Administrative Agents; of which at least 50% was, directly or indirectly,
invested by Sponsor and its Controlled Investment Affiliates.

 

“Equity Interest” shall mean, with respect to any person, any
and all shares, interests, participations or other equivalents, including
membership interests (however designated, whether voting or nonvoting), of
equity of such person, including, if such person is a partnership, partnership
interests (whether general or limited) and any other interest or participation
that confers on a person the right to receive a share of the profits and losses
of, or distributions of property of, such partnership, whether outstanding on
the date hereof or issued after the Closing Date, but excluding debt securities
convertible or exchangeable into such equity.

 

“Equity Investors” shall mean Sponsor, its Controlled
Investment Affiliates and one or more investors reasonably satisfactory to the
Administrative Agents and the Arranger.

 

“Equity Issuance” shall mean, without duplication, (i) any
issuance or sale by Holdings after the Closing Date of any Equity Interests in
Holdings (including any Equity Interests issued upon exercise of any warrant or
option) or any warrants or options to purchase Equity Interests or (ii) any
contribution to the capital of Holdings; provided,
however, that an Equity Issuance shall not include (x) any Preferred
Stock Issuance or Debt Issuance, (y) any such sale or issuance by Holdings of
not more than an aggregate amount of 5.0% of its Equity Interests (including
its Equity Interests issued upon exercise of any warrant or option or warrants
or options to purchase its Equity Interests but excluding Disqualified Capital
Stock), in each case, to directors, officers or employees of any Company and
(z) any Excluded Issuance.

 

“ERISA” shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.

 

21

 

“ERISA Affiliate” shall mean, with respect to any person, any
trade or business (whether or not incorporated) that, together with such
person, is treated as a single employer under Section 414 (b), (c) or (m) of
the Code.

 

“ERISA Event” shall mean (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 by
regulation); (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 failure to make by its due date a
required installment under Section 412(m) of the Code with respect to any Plan
or the failure to make any required contribution to a Multiemployer Plan; (d)
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; (e) the incurrence by any Company of any liability under Title IV of
ERISA with respect to the termination of any Plan; (f) the incurrence by the
Company of material liability, under Title IV of ERISA with respect to a
defined benefit pension plan maintained by an ERISA Affiliate or a
multi-employer plan (as defined in ERISA Section 3 (37)) contributed to by an
ERISA Affiliate (g) the receipt by any Company from the PBGC or a plan
administrator of any notice relating to the intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan, or the occurrence of any
event or condition which could reasonably be expected to constitute grounds under
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan; (h) the incurrence by any Company of any liability with respect to
the withdrawal from any Plan or Multiemployer Plan; (i) the receipt by any
Company 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; (j) the “substantial
cessation of operations” within the meaning of Section 4062(e) of ERISA with
respect to a Plan; (k) the making of any amendment to any Plan which could
result in the imposition of a Lien or the posting of a bond or other security;
and (l) the occurrence of a nonexempt prohibited transaction (within the
meaning of Section 4975 of the Code or Section 406 of ERISA) which could
reasonably be expected to result in liability to any Company.

 

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

 

“Eurodollar Loan” shall mean any Loan bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Article II..

 

“Eurodollar Revolving Borrowing” shall mean a Borrowing
comprised of Eurodollar Revolving Loans.

 

“Eurodollar Revolving Loan” shall mean any Revolving Loan
bearing interest at a rate determined by reference to the Adjusted LIBOR Rate
in accordance with the provisions of Article II.

 

“Event of Default” shall have the meaning assigned to such term
in Section 8.01.

 

“Excess Amount” shall have the meaning assigned to such term in
Section 2.10(f)(iii).

 

“Excess Availability” shall mean, at any time, (a) the sum of (x)
the Borrowing Base plus (y) the Canadian Borrowing Base (exclusive of
amounts added pursuant to clause (iv) thereof) plus (z) the Tranche B
Borrowing Base on the date of determination less (b) all outstanding Loans and Tranche B Loans and LC
Exposure less (c) in the
applicable Collateral Agents’ reasonable discretion, the aggregate amount of
all the outstanding and unpaid trade payables and other obligations of
Borrowers and/or the Borrowing Base Guarantors which are not paid within 90
days past the due date according to their original terms of sale, in each case
as of such date of determination less
(d) in the applicable 

 

22

 

Collateral Agents’ reasonable discretion, and without duplication, the
amount of checks issued by Borrowers and/or the Borrowing Base Guarantors to
pay trade payables and other obligations but which are not paid within 90 days
past the due date according to their original terms of sale, in each case as of
such date of determination, but which either have not yet been sent or are
subject to other arrangements which are expected to delay the prompt presentation
of such checks for payment less (e) the Total Minimum Availability Requirement.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended.

 

“Excluded
Issuance” shall mean an issuance and sale of Qualified Capital Stock
of Holdings, to the extent such Qualified Capital Stock is used, or the Net
Cash Proceeds thereof shall be, within ninety (90) days of the consummation of
such issuance and sale, used, without duplication, to finance Capital
Expenditures or one or more Permitted Acquisitions.

 

“Excluded Taxes” shall mean, with respect to the Administrative
Agents, any Lender, the Issuing Bank or any other recipient of any payment to
be made by or on account of any obligation of Borrowers hereunder, (a) taxes
imposed on or measured by its overall net income (however denominated),
franchise taxes imposed on it (in lieu of net income taxes) and branch profits
taxes imposed on it, by a jurisdiction (or any political subdivision thereof)
as a result of the recipient being organized or having its principal office or,
in the case of any Lender, its applicable lending office in such jurisdiction;
(b) in the case of a Foreign Lender, any U.S. federal withholding tax that (i)
is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office), except (x)
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 Borrowers with respect to such withholding tax pursuant
to Section 2.15(a), (y) if such Foreign Lender is an assignee pursuant
to a request by Borrowers under Section 2.16 or (z) if the applicable
Borrower has re-domiciled to the United States; provided that
this subclause (b)(i) shall not apply to any Tax imposed on a Lender following
an Event of Default or in connection with an interest or participation in any
Loan or other obligation that such Lender was required to acquire pursuant to Section
2.14(d), or (ii) is attributable to such Lender’s failure to comply with Section
2.15(e); and (c) those Canadian federal withholding taxes under Part XIII
of the ITA, if any, in excess of the amount of such taxes that would have been
imposed had the recipient of the particular payment been, at the time of the
payment, a resident of the United States for the purposes of the Canada-United
States Income Tax Convention (1980), as amended from time to time, and entitled
to the reduced withholding tax rate provided under paragraph 2 of Article XI
thereof (such rate, for greater certainty, being 10% (ten percent) as at the
date of this Agreement).

 

“Executive Order” shall have the meaning assigned to such term
in Section 3.22.

 

“Existing
Issuing Bank Letters of Credit” shall mean the outstanding letters
of credit issued before the Closing Date by an Issuing Bank for the account of
a Borrower or a Subsidiary of a Borrower set forth on Schedule 1.01(c) hereto.

 

“Existing Lien” shall have the meaning assigned to such term in
Section 6.02(c).

 

“Federal Funds Effective Rate” shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System of the United States 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 of the quotations for the day for such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.

 

23

 

“Fee Letter”
shall mean that certain Fee Letter dated as of August 13, 2007 by and among GE
Capital, GECM, and Borrowers, as the same may be amended, amended and restated,
supplemented, revised or modified from time to time.

 

“Fees” shall mean the Commitment Fees, the Administrative Agent
Fees, the Collateral Monitoring Fees, the LC Participation Fees and the
Fronting Fees.

 

“Final Maturity Date” shall mean the Revolving Maturity Date.

 

“Financial Officer” of any person shall mean the chief
financial officer, principal accounting officer, treasurer or controller of
such person.

 

“FIRREA” shall mean the Federal Institutions Reform, Recovery
and Enforcement Act of 1989, as amended.

 

“First
Priority” means, with respect to any Lien purported to be created in
any Collateral pursuant to any Security Document, that such Lien is the most
senior Lien to which such Collateral is subject (subject to Permitted Liens).

 

“Foreign Lender” shall mean any Lender that is not, for United
States federal income tax purposes, (i) an individual who is a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
treated as a corporation or partnership created or organized in or under the
laws of the United States, or any political subdivision thereof, (iii) an
estate whose income is subject to U.S. federal income taxation regardless of
its source or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust and one or
more United States persons have the authority to control all substantial
decisions of such trust.

 

“Foreign Plan” shall mean any defined benefit pension plan,
program, policy, arrangement or agreement maintained or contributed to by any
Company with respect to employees employed outside the United States.

 

“Foreign Subsidiary” shall mean a Subsidiary that is organized
under the laws of a jurisdiction other than the United States or any state
thereof or the District of Columbia.

 

“Freight
Forwarding Agreement” means a multi-party agreement in a form and
substance satisfactory to Collateral Agents among a Borrower, a customs broker,
freight forwarder, or other carrier, and the applicable Collateral Agents in
which the customs broker, freight forwarder, or other carrier acknowledges that
it has control over (in the case of persons other than carriers which are
issuing non-negotiable bills of lading) and holds the documents evidencing
ownership of the subject Inventory or other property for the benefit of such
Collateral Agents and agrees, upon notice from such Collateral Agent to hold
and dispose of the subject Inventory and other property solely as directed by
the such Collateral Agent.

 

“Fronting Fee” shall have the meaning assigned to such term in Section
2.05(d).

 

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

 

“GAAP” shall mean generally accepted accounting principles in
the United States applied on a consistent basis.

 

24

 

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

 

“Governmental Real Property Disclosure Requirements” shall mean
any Requirement of Law of any Governmental Authority requiring notification of
the buyer, lessee, mortgagee, assignee or other transferee of any Real
Property, facility, establishment or business, or notification, registration or
filing to or with any Governmental Authority, in connection with the sale,
lease, mortgage, assignment or other transfer (including any transfer of
control) of any Real Property, facility, establishment or business, of the
actual or threatened presence or Release in or into the Environment, or the
use, disposal or handling of Hazardous Material on, at, under or near the Real
Property, facility, establishment or business to be sold, leased, mortgaged,
assigned or transferred.

 

“Guaranteed Obligations” shall have the meaning assigned to
such term in Section 7.01.

 

“Guarantees” shall mean the guarantees issued pursuant to Article
VII by Holdings and the Subsidiary Guarantors.

 

“Guarantors” shall mean Holdings, each Borrowing Base Guarantor
and the Subsidiary Guarantors.

 

“Hazardous Materials” shall mean the following:  hazardous substances; hazardous wastes;
polychlorinated biphenyls (“PCBs”)
or any substance or compound containing PCBs; asbestos or any asbestos-containing
materials in any form or condition; radon or any other radioactive materials
including any source, special nuclear or by-product material; petroleum, crude
oil or any fraction thereof; and any other pollutant or contaminant or
chemicals, wastes, materials, compounds, constituents or substances, subject to
regulation or which can give rise to liability under any Environmental Laws.

 

“Hedging Agreement” shall mean any swap, cap, collar, forward
purchase or similar agreements or arrangements dealing with interest rates,
currency exchange rates or commodity prices, either generally or under specific
contingencies entered into for the purpose of hedging any Borrower’s exposure
to interest or exchange rates, loan credit exchange, security or currency valuations
or commodity prices not for speculative purposes.

 

“Hedging Obligations” shall mean obligations under or with
respect to Hedging Agreements.

 

“Holdings” shall have the meaning assigned to such term in the
preamble hereto.

 

“Incorporated  Borrowing Base”
shall mean at any time, for each US Borrowing Base Guarantor, subject to
adjustment as provided in Section 2.20, an amount equal to the lesser
of:

 

(a)           the sum of, without duplication:

 

(i)            the book value of Eligible Accounts of such US Borrowing
Base Guarantor multiplied by the advance rate of 100%, plus

 

25

 

(ii)           (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the Cost of Eligible Inventory of such US Borrowing Base Guarantor and (B)
during a Seasonal Advance Period, the advance rate of 92.5% of the Net Recovery
Cost Percentage multiplied by the Cost of Eligible Inventory of such US
Borrowing Base Guarantor, plus

 

(iii)          (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the Cost of Eligible In-Transit Inventory of such US Borrowing Base
Guarantor, and (B) during a Seasonal Advance Period, the advance rate of 92.5%
of the Net Recovery Cost Percentage multiplied by the Cost of Eligible
In-Transit Inventory of such US Borrowing Base Guarantor, plus 

 

(iv)          (A) at any time other than during a Seasonal Advance
Period, the advance rate of 90% of the Net Recovery Cost Percentage multiplied
by the aggregate undrawn face amount of Eligible Letters of Credit of such US
Borrowing Base Guarantor and (B) at any time during a Seasonal Advance Period,
the advance rate of 92.5% of the Net Recovery Cost Percentage multiplied by the
aggregate undrawn face amount of Eligible Letters of Credit of such US
Borrowing Base Guarantor, or

 

(b)           with respect to the US Borrowing Base
Guarantors, the applicable Borrowing Base Guarantor Intercompany Loan Amount.

 

“Indebtedness” of any person shall mean, without duplication,
(a) all obligations of such person for borrowed money or advances; (b) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments; (c) all obligations of such person under conditional sale or other
title retention agreements relating to property purchased by such person; (d)
all obligations of such person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business on normal trade terms
and not overdue by more than 90 days); (e) all Indebtedness of others secured
by any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, but limited to the fair market
value of such property; (f) all Capital Lease Obligations, Purchase Money
Obligations and synthetic lease obligations of such person; (g) all Hedging
Obligations to the extent required to be reflected on a balance sheet of such
person; (h) all obligations of such person for the reimbursement of any obligor
in respect of Standby Letters of Credit, letters of guaranty, bankers’
acceptances and similar credit transactions; and (i) all Contingent Obligations
of such person in respect of Indebtedness or obligations of others of the kinds
referred to in clauses (a) through (h) above. 
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
(other than in the case of general partner liability) to the extent that terms
of such Indebtedness expressly provide that such person is not liable therefor.

 

“Indemnified Taxes” shall mean all Taxes other than Excluded
Taxes.

 

“Indemnitee” shall have the meaning assigned to such term in Section
11.03(b).

 

“Information” shall have the meaning assigned to such term in Section
11.12.

 

“Insolvency
Laws” shall mean any of the BIA, the Companies’
Creditors Arrangement Act (Canada), and the Winding-Up
and Restructuring Act (Canada), each as now exists or may from time
to time hereafter be amended, modified, recodified, supplemented or replaced,
together with all rules, regulations and interpretations thereunder or related
thereto, and any other applicable insolvency or other 

 

26

 

similar law of any jurisdiction, including any law of any jurisdiction
permitting a debtor to obtain a stay or a compromise of the claims of its
creditors against it.

 

“Instruments” shall mean all “instruments,” as such term is
defined in the UCC as in effect on the date hereof in the State of New York or
as defined in the PPSA, as applicable, in which any Person now or hereafter has
rights.

 

“Insurance Policies” shall mean the insurance policies and
coverages required to be maintained by each Loan Party which is an owner of
Mortgaged Property with respect to the applicable Mortgaged Property pursuant
to Section 5.04 and all renewals and extensions thereof.

 

“Insurance Requirements” shall mean, collectively, all
provisions of the Insurance Policies, all requirements of the issuer of any of
the Insurance Policies and all orders, rules, regulations and any other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) binding upon each Loan Party which is an owner of
Mortgaged Property and applicable to the Mortgaged Property or any use or
condition thereof.

 

“Intellectual Property” shall have the meaning assigned to such
term in Section 3.06(a).

 

“Intercompany Note” shall mean a promissory note substantially
in the form of Exhibit P.

 

“Intercreditor
Agreement” shall mean that certain Intercreditor Agreement dated as
of February 14, 2006 by and among Holdings, US Borrowers, Canadian Borrower,
the Subsidiary Guarantors party thereto, UBS AG, Stamford Branch, as
administrative agent, UBS AG, Stamford Branch and Wachovia Bank, National
Association, as US co-collateral agents, UBS AG Canada Branch and Wachovia
Capital Finance Corporation (Canada), as Canadian co-collateral agents and
Senior Note Collateral Agent, as supplemented by that certain Joinder and
Acknowledgement Agreement dated as of the Closing Date by and among Holdings,
US Borrowers, Canadian Borrower, the Subsidiary Guarantors party thereto, the
US Administrative Agent, the Collateral Agents and Senior Note Collateral Agent
and as may be further amended, restated, supplemented or otherwise modified
from time to time.

 

“Interest Election Request” shall mean a request by a Borrower
to convert or continue a Revolving Borrowing in accordance with Section
2.08(b), substantially in the form of Exhibit E.

 

“Interest Payment Date” shall mean (a) with respect to any ABR
Loan or Canadian Prime Rate Loan, the last Business Day of each March, June,
September and December to occur during any period in which such Loan is
outstanding, (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and,
in the case of a Eurodollar Loan with an Interest Period of more than three
months’ duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months’ duration after the first day of such
Interest Period, (c) with respect to any Swingline Loan, the last Business Day
of each month to occur during any period in which such Swingline Loan is
outstanding and (d) with respect to any Revolving Loan or Swingline Loan, the
Revolving Maturity Date or such earlier date on which the Revolving Commitments
are terminated.

 

“Interest Period” shall mean, with respect to any Eurodollar
Borrowing, Tranche B Borrowing or Bankers’ Acceptance, 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 (or, if each affected
Lender so agrees, nine or twelve months) thereafter as the applicable Borrower
may elect; provided that with
respect to any Eurodollar Borrowing (a) if any Interest Period would end on a
day 

 

27

 

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 Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period.  For purposes hereof,
the date of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent conversion,
rollover or continuation of such Borrowing.

 

“Inventory” shall mean all “inventory,” as such term is defined
in the UCC as in effect on the date hereof in the State of New York, or as
defined in the PPSA, as applicable, wherever located, in which any Person now
or hereafter has rights.

 

“Inventory Appraisal” shall mean (a) on the Closing Date, the
inventory appraisal prepared by the Great American Appraisal & Valuation
Services, L.L.C. dated May, 2007 and the audit prepared by the Great American
Appraisal & Valuation Services, L.L.C. dated January, 2007 and (b)
thereafter, the most recent inventory appraisal conducted by an independent
appraisal firm and delivered pursuant to Section 9 hereof.  For the avoidance of doubt, the
Administrative Borrower may, at any time when an Event of Default has not
occurred and is not continuing, request that a new Inventory Appraisal be
conducted at its expense and the Borrowers and Agents shall thereafter promptly
arrange for such appraisal to be completed at Borrower’s expense.

 

“Investments” shall have the meaning assigned to such term in Section
6.04.

 

“Issuing Bank” shall mean, as the context may require, (a)
Wachovia Bank, National Association in its capacity as issuer of Letters of
Credit issued by it; (b) Wells Fargo Retail Finance, LLC and Affiliates in its
capacity as issuer of Letters of Credit issued by it; (c) Bank of America, N.A.
in its capacity as issuer of Letters of Credit issued by it; (d) any other
Lender that may become an Issuing Bank pursuant to Sections 2.18(j) and (k)
in its capacity as issuer of Letters of Credit issued by such Lender; or (e)
collectively, all of the foregoing.

 

“ITA”
means the Income Tax Act, RSC 1985, c.1 (5th supp), as amended from
time to time.

 

“Joinder Agreement” shall mean a joinder agreement
substantially in the form of Exhibit F.

 

“Landlord Access Agreement” shall mean a Landlord Access
Agreement, substantially in the form of Exhibit G, or such other form as
may reasonably be acceptable to the applicable Administrative Agent.

 

“LC
Acceptance(s)” shall mean acceptances that are created by an Issuing
Bank pursuant to Commercial Letters of Credit.

 

“LC Collateral Account” shall mean a collateral account in the form
of a deposit account established and maintained by the applicable Collateral
Agents for the benefit of the Secured Parties, in accordance with the provisions
of Section 9.01.

 

“LC Commitment” shall mean the commitment of the Issuing Bank
to issue Letters of Credit pursuant to Section 2.18.  The total amount of the LC Commitment shall
initially be $400  million, but in no event exceed
the Revolving Commitment.

 

28

 

“LC Disbursement” shall mean a payment or disbursement made by
the Issuing Bank pursuant to a Letter of Credit or a LC Acceptance.

 

“LC Exposure” shall mean at any time the sum of (a) the Dollar
Equivalent of the aggregate undrawn amount of all outstanding Letters of Credit
at such time plus (b) the Dollar
Equivalent of the aggregate principal amount of all Reimbursement Obligations
outstanding at such time, plus, (c) the
Dollar Equivalent of the aggregate amount owing on all outstanding LC
Acceptances.  The LC Exposure of any
Revolving Lender at any time shall mean its Pro Rata Percentage of the
aggregate LC Exposure at such time.

 

“LC
Obligations” shall mean each payment required to be made by US Borrowers
and the other Loan Parties under this Agreement in respect of any Letter of
Credit or LC Acceptance, when and as due, including payments in respect of
Reimbursement Obligations, interest thereon and obligations to provide cash
collateral.

 

“LC Participation Fee” shall have the meaning assigned to such
term in Section 2.05(d).

 

“LC Request” shall mean a request by a Borrower in accordance
with the terms of Section 2.18(b) and substantially in the form of Exhibit
H, or such other form as shall be approved by the Administrative Agents.

 

“Leases” shall mean any and all leases, subleases, tenancies,
options, concession agreements, rental agreements, occupancy agreements,
franchise agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any material portion of
any Real Property.

 

“Lender Addendum” shall mean with respect to any Lender on the
Closing Date, a lender addendum in the form of Exhibit I, to be executed
and delivered by such Lender on the Closing Date as provided in Section
11.15, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Lender
Hedging Agreement” shall mean any Hedging Agreement between a
Borrower and any Person (or affiliate of such Person) that was a Lender or an
Affiliate of such lender at the time it entered into such Hedging Agreement
whether or not such Person has ceased to be a Lender under this Agreement.

 

“Lenders” shall mean (a) the financial institutions and
commercial finance companies that have become a party hereto pursuant to a
Lender Addendum and (b) any financial institution or commercial finance company
that has become a party hereto pursuant to an Assignment and Assumption, other
than, in each case, any such financial institution that has ceased to be a
party hereto pursuant to an Assignment and Assumption.  Unless the context clearly indicates
otherwise, the term “Lenders” shall include the Swingline Lenders and the
Canadian Revolving Lenders.

 

“Letter of Credit” shall mean any (i) Standby Letter of Credit,
(ii) Commercial Letter of Credit, in each case, issued or to be issued by an
Issuing Bank for the account of the US Borrowers or the Canadian Borrower
pursuant to Section 2.18 and (iii) the Existing Issuing Bank Letters of
Credit.

 

“Letter of Credit Expiration Date” shall mean the date which is
five (5) days prior to the Revolving Maturity Date.

 

29

 

“LIBOR Rate” shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate per annum determined by the
applicable Administrative Agent to be the arithmetic mean (rounded upward, if
necessary, to the nearest 1/100th of 1%) of the offered rates for deposits in
dollars with a term comparable to such Interest Period that appears on the
Reuters Interest Settlement Rates Page (as defined below) at approximately
11:00 a.m., London, England time, on the second full Business Day preceding the
first day of such Interest Period; provided,
however, that (i) if no comparable term for an Interest Period is
available, the LIBOR Rate shall be determined using the weighted average of the
offered rates for the two terms most nearly corresponding to such Interest
Period and (ii) if there shall at any time no longer exist a Reuters Interest
Settlement Rates Page, “LIBOR Rate” shall mean, with respect to each day during
each Interest Period pertaining to Eurodollar Borrowings comprising part of the
same Borrowing, the rate per annum equal to the rate at which the applicable
Administrative Agent is offered deposits in dollars at approximately 11:00
a.m., London, England time, two Business Days prior to the first day of such
Interest Period in the London interbank market for delivery on the first day of
such Interest Period for the number of days comprised therein and in an amount
comparable to its portion of the amount of such Eurodollar Borrowing to be
outstanding during such Interest Period. 
“Reuters Interest Settlement Rates
Page” shall mean the display designated as Reuters Screen LIBOR01
Page (or any successor page provided by Reuters or any successor service for
the purpose of displaying the rates at which dollar deposits are offered by
leading banks in the London interbank deposit market).

 

“Lien” shall mean, with respect to any property, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, claim, charge, assignment,
hypothecation, security interest or encumbrance of any kind or any arrangement
to provide priority or preference or any filing of any financing statement or
financing change statement under the UCC or the PPSA or any other similar
notice of lien under any similar notice or recording statute of any
Governmental Authority, including any easement, right-of-way or other
encumbrance on title to Real Property, in each of the foregoing cases whether
voluntary or imposed by law, and any agreement to give any of the foregoing;
(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 property; and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

 

“Line Reserve” shall have the meaning assigned to such term in Section
2.10(f)(ii).

 

“LNT”
shall have the meaning assigned to such term in the preamble.

 

“LNT Center”
shall have the meaning assigned to such term in the preamble.

 

“LNT
Partnership” means Linens ‘n Things Canada Limited Partnership, an
Alberta limited partnership.

 

“LNT I”
means Linens ‘n Things Investment Canada I Company, a Nova Scotia unlimited
company.

 

“LNT II”
means Linens ‘n Things Investment Canada II Company, a Nova Scotia unlimited
company.

 

“Loan Documents” shall mean this Agreement, the Fee Letter, any
Borrowing Base Certificate, the Letters of Credit, the Notes (if any), the
Intercreditor Agreement, and the Security Documents.

 

“Loan Parties” shall mean Holdings, Borrowers and the
Subsidiary Guarantors.

 

30

 

“Loans” shall mean, as the context may require, a US Revolving
Loan, a Canadian Revolving Loan, a Tranche B Loan or a Swingline Loan.

 

“Management
Services Agreement” means that certain Management Services Agreement
dated as of February 14, 2006 among LNT, Holdings, Apollo Management V, L.P.,
NRDC Linens B LLC and Silver Point Capital Fund Investments LLC.

 

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

 

“Material Adverse Effect” shall mean (a) a material adverse
effect on the business, property, results of operations, prospects or
condition, financial or otherwise, or material agreements of US Borrowers and
their Subsidiaries, taken as a whole; (b) material impairment of the ability of
the Loan Parties to fully and timely perform their obligations under the Loan
Documents; (c) material impairment of the rights of or benefits or remedies
available to the Lenders or the Collateral Agents under any Loan Document; or
(d) a material adverse effect on the Collateral or the Liens in favor of the
Collateral Agents (for their benefit and for the benefit of the other Secured
Parties) on the Collateral or the priority of such Liens.

 

“Material Indebtedness” shall mean (a) the Senior Note
Documents and (b) any other Indebtedness (other than the Loans and Letters of
Credit) or Hedging Obligations of Holdings or any of its Subsidiaries in an
aggregate outstanding principal amount exceeding $30 million.  For purposes of determining Material
Indebtedness, the “principal amount” in respect of any Hedging Obligations of
any Loan Party at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that such Loan Party would be required to pay if the
related Hedging Agreement were terminated at such time.

 

“Maximum Rate” shall have the meaning assigned to such term in Section
11.14.

 

“Merger” shall have the meaning assigned to such term in the
second recital hereto.

 

“Mortgage” shall mean an agreement, including, but not limited
to, a mortgage, deed of trust or any other document, creating and evidencing a Lien
on a Mortgaged Property, which shall be substantially in a form reasonably
satisfactory to the applicable Collateral Agents, in each case, with such
schedules and including such provisions as shall be reasonably necessary to
conform such document to applicable local or foreign law or as shall be
customary under applicable local or foreign law.

 

“Mortgaged Property” shall mean (a) each Real Property
identified as a Mortgaged Property on Schedule 8(a) to the Perfection
Certificate dated the Closing Date and (b) each Real Property, if any, which
shall be subject to a Mortgage delivered after the Closing Date pursuant to Section
5.11(c).

 

“Multiemployer Plan” shall mean a multiemployer plan within the
meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any
Company is then making or accruing an obligation to make contributions; (b) to
which any Company has within the preceding five plan years made contributions;
or (c) with respect to which any Company could incur liability.

 

“Net Cash Proceeds” shall mean:

 

(a)           with respect to any Asset Sale (other than any issuance or
sale of Equity Interests), the cash proceeds received by Holdings or any of its
Subsidiaries (including cash proceeds subsequently received (as and when
received by Holdings or any of its Subsidiaries) in respect of non-cash
consideration initially received) net of (i) selling expenses (including 

 

31

 

reasonable brokers’ fees or
commissions, legal, accounting and other professional and transactional fees,
transfer and similar taxes and Borrowers’ good faith estimate of income taxes
paid or payable in connection with such sale); (ii) amounts reasonably
estimated by Holdings or any of its Subsidiaries as a reserve, in accordance
with GAAP, against (x) any liabilities under any indemnification obligations
associated with such Asset Sale or (y) any other liabilities retained by
Holdings or any of its Subsidiaries associated with the properties sold in such
Asset Sale (provided that, to the extent and at the
time any such amounts are released from such reserve, such amounts shall
constitute Net Cash Proceeds); (iii) Borrowers’ good faith estimate of payments
required to be made with respect to unassumed liabilities relating to the
properties sold within 90 days of such Asset Sale (provided
that, to the extent such cash proceeds are not used to make payments in respect
of such unassumed liabilities within 90 days of such Asset Sale, such cash
proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness for
borrowed money (other than Obligations) which is secured by a Lien on the
properties sold in such Asset Sale (so long as such Lien was permitted to encumber
such properties under the Loan Documents at the time of such sale) and which is
repaid with such proceeds (other than any such Indebtedness assumed by the
purchaser of such properties);

 

(b)           with respect to any Debt Issuance, any Equity Issuance or
any other issuance or sale of Equity Interests by Holdings or any of its
Subsidiaries, the cash proceeds thereof, net of customary fees, commissions,
costs and other expenses incurred in connection therewith; and

 

(c)           with respect to any Casualty Event, the cash insurance
proceeds, condemnation awards and other compensation received in respect
thereof, net of all reasonable costs and expenses incurred in connection with
the collection of such proceeds, awards or other compensation in respect of
such Casualty Event.

 

“Net Income” means, with respect to any specified person,
the net income (loss) of such person, determined in accordance with GAAP and
before any reduction in respect of preferred stock dividends

 

“Net Recovery Cost Percentage” shall mean the fraction,
expressed as a percentage, (a) the numerator of which is the amount equal to
the recovery on the aggregate amount of the Inventory or Canadian Inventory, as
applicable, at such time on a “net orderly liquidation value” basis as set
forth in the most recent Inventory Appraisal received by Collateral Agents in
accordance with Section 4.01 or Section 9, net of operating
expenses, liquidation expenses and commissions reasonably anticipated in the
disposition of such assets, and (b) the denominator of which is the original
Cost of the aggregate amount of the Inventory or the Canadian Inventory, as
applicable, subject to appraisal.

 

“Non-BA
Lender” shall mean a Canadian Revolving Lender that cannot or does
not, as a matter of policy, accept Bankers’ Acceptances.

 

“Non-Guarantor Subsidiary” shall mean each Subsidiary that is
not a Subsidiary Guarantor.

 

“Notes” shall mean any notes evidencing the Revolving Loans,
Tranche B Loans or Swingline Loans, in each case, issued pursuant to this
Agreement, if any, substantially in the form of Exhibit K-1, K-2,
K-3, K-4 or K-6, including any notes issued to the Lenders
on the Closing Date.

 

“Obligations” shall mean (a) obligations of Borrowers and the
other Loan Parties from time to time arising under or in respect of the due and
punctual payment of (i) the principal of and 

 

32

 

premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such 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
Borrowers and the other Loan Parties under this Agreement in respect of any
Letter of Credit or LC Acceptance, when and as due, including payments in
respect of Reimbursement Obligations, 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 (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of Borrowers
and the other Loan Parties under this Agreement and the other Loan Documents,
(b) the due and punctual performance of all covenants, agreements, obligations
and liabilities of Borrowers and the other Loan Parties under or pursuant to
this Agreement and the other Loan Documents, (c) the due and punctual payment
and performance of all obligations of the Borrowers and any and all of the
other Loan Parties under each Lender Hedging Agreement and (d) the due and
punctual payment and performance of all obligations in respect of overdrafts
and related liabilities owed to any Lender, any Affiliate of a Lender, the
Administrative Agents or the Collateral Agents arising from treasury,
depositary and cash management services or in connection with any automated
clearinghouse transfer of funds.

 

“OFAC” shall have the meaning assigned to such term in Section
3.22.

 

“Officers’ Certificate” shall mean a certificate executed by
the chairman of the Board of Directors (if an officer), the chief executive
officer, the president or one of the Financial Officers, each in his or her
official (and not individual) capacity.

 

“Organizational Documents” shall mean, with respect to any
person, (i) in the case of any corporation, the certificate of incorporation
and by-laws (or similar documents) of such person, (ii) in the case of any
limited liability company, the certificate of formation and operating agreement
(or similar documents) of such person, (iii) in the case of any limited
partnership, the certificate of formation and limited partnership agreement (or
similar documents) of such person, (iv) in the case of any general partnership,
the partnership agreement (or similar document) of such person, (v) with
respect to any Foreign Subsidiary, the equivalent of the foregoing in its
jurisdiction of incorporation or organization, and (vi) in any other case, the
functional equivalent of the foregoing.

 

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

 

“Participant” shall have the meaning assigned to such term in Section
11.04(d).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.

 

“Perfection Certificate” shall mean a certificate in the form
of Exhibit L-1 or any other form approved by the Collateral Agents, as
the same shall be supplemented from time to time by a Perfection Certificate
Supplement or otherwise.

 

“Perfection Certificate Supplement” shall mean a certificate
supplement in the form of Exhibit L-2 or any other form approved by the
Collateral Agents.

 

33

 

“Permitted Acquisition” shall mean any transaction or series of
related transactions for the direct or indirect (a) acquisition of all or
substantially all of the property of any person, or of any line of business or
division of any person; (b) acquisition of in excess of 50% of the Equity
Interests of any person, and otherwise causing such person to become a
Subsidiary of such person; or (c) merger, amalgamation or consolidation or any
other combination with any person, if each of the following conditions is met:

 

(i)            no Default then exists or would result therefrom;

 

(ii)           after giving effect to such transaction on a Pro Forma Basis,
(A) Average Excess Availability determined as of the date five (5) Business
Days prior to the Closing Date of such acquisition would have exceeded $150
million (after giving effect to such acquisition and the Revolving Loans to be
funded in connection therewith as if made on the first day of such period), and
(B) the projections in connection with the proposed acquisition for the 2 years
after the consummation of such acquisition shall be reasonably acceptable to
the Collateral Agents and Administrative Agents;

 

(iii)          no Company shall, in connection with any such transaction,
assume or remain liable with respect to any Indebtedness or other liability
(including any material tax or ERISA liability) of the related seller or the
business, person or properties acquired, except (A) to the extent permitted
under Section 6.01 and (B) obligations not constituting Indebtedness
incurred in the ordinary course of business and necessary or desirable to the
continued operation of the underlying properties, and any other such
liabilities or obligations not permitted to be assumed or otherwise supported
by any Company hereunder shall be paid in full or released as to the business,
persons or properties being so acquired on or before the consummation of such
acquisition;

 

(iv)          the person or business to be acquired shall be, or shall be
engaged in, a business of the type that US Borrowers and their Subsidiaries are
permitted to be engaged in under Section 6.15 and the property acquired
in connection with any such transaction shall be made subject to the Lien of
the Security Documents and shall be free and clear of any Liens, other than
Permitted Liens;

 

(v)           the Board of Directors of the person to be acquired shall
not have indicated publicly its opposition to the consummation of such
acquisition (which opposition has not been publicly withdrawn);

 

(vi)          all transactions in connection therewith shall be
consummated in accordance with all applicable Requirements of Law;

 

(vii)         with respect to any transaction involving Acquisition
Consideration of more than $100 million, unless the Administrative Agent shall
otherwise agree, Borrowers shall have provided the Administrative Agents and
the Lenders with (A) historical financial statements for the last three fiscal
years (or, if less, the number of years since formation) of the person or
business to be acquired (audited if available without undue cost or delay) and
unaudited financial statements thereof for the most recent interim period which
are available, (B) reasonably detailed projections for the succeeding five
years pertaining to the person or business to be acquired and updated
projections for Borrower after giving effect to such transaction, (C) a
reasonably detailed description of all material information relating thereto and
copies of all material documentation pertaining to such transaction, and (D)
all such other information and data relating to such 

 

34

 

transaction or the person or
business to be acquired as may be reasonably requested by the Administrative
Agents or the Required Lenders;

 

(ix)           the Property acquired in connection with any such
acquisition shall be made subject to the Lien of the Security Documents on
terms reasonably satisfactory to the Agents, and shall be free and clear of any
Liens, other than Permitted Liens, and the Agents shall have received all
opinions, certificates, lien search results and other documents reasonably
requested by the Agents;

 

(x)            at least 10 Business Days prior to the proposed date of
consummation of the transaction, Borrowers shall have delivered to the Agents
and the Lenders an Officers’ Certificate certifying that (A) such transaction
complies with this definition (which shall have attached thereto reasonably
detailed backup data and calculations showing such compliance), and (B) such
transaction could not reasonably be expected to result in a Material Adverse
Effect; and

 

(xi)           the Acquisition Consideration (exclusive of any amounts
financed by Excluded Issuances) for such acquisition shall not exceed $300
million, and the aggregate amount of the Acquisition Consideration (exclusive
of any amounts financed by Excluded Issuances) for all Permitted Acquisitions
since the Closing Date shall not exceed $500 million; provided
that any Equity Interests constituting all or a portion of such Acquisition
Consideration shall not have a cash dividend requirement on or prior to the
Final Maturity Date.

 

“Permitted Discretion” shall mean a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset based lender) business judgment.

 

“Permitted Holders” shall mean (a) Sponsor, (b) its Controlled
Investment Affiliates, (c) Silver Point Capital, L.P. and National Realty &
Development Corp. and (d) each such person’s Related Parties.

 

“Permitted Liens” shall have the meaning assigned to such term
in Section 6.02.

 

“Permitted Tax Distributions” shall mean payments, dividends or
distributions by US Borrowers and any US Subsidiaries to Holdings in order to
pay consolidated or combined federal, state or local taxes, including estimated
taxes, not payable directly by US Borrowers or any of their Subsidiaries which
payments by US Borrowers and their US Subsidiaries are not in excess of the tax
liabilities that would have been payable by US Borrowers and their Subsidiaries
on a stand-alone basis.

 

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

 

“Plan” shall mean 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 which is maintained or contributed to
by any Company or with respect to which any Company could incur liability
(including under Section 4069 of ERISA) other than plans of ERISA Affiliates.

 

“PPSA”
shall mean the Personal Property Security Act
(Ontario) and the Regulations and Minister’s Orders thereunder, as from time to
time in effect, provided, however, if attachment, perfection or priority of any
Agent’s security interest in any Collateral is governed by the personal
property security laws of any jurisdiction other than Ontario, PPSA shall mean
those personal property security laws in such other jurisdiction of Canada for
the purposes of the provisions hereof relating to such attachment, perfection
or priority and for the definitions related to such provisions.

 

35

 

“Preferred Stock” shall mean, with respect to any person, any
and all preferred or preference Equity Interests (however designated) of such
person whether now outstanding or issued after the Closing Date.

 

“Preferred Stock Issuance” shall mean the issuance or sale by
Holdings or any of its Subsidiaries of any Preferred Stock after the Closing
Date (other than any Excluded Issuance).

 

“Premises” shall have the meaning assigned thereto in the
applicable Mortgage.

 

“Prior Credit
Agreement” shall mean that certain Amended and Restated Credit
Agreement, dated as of May 24, 2007, by and between the Borrowers, Holdings and
the other guarantors party thereto, UBS Securities LLC, as Arranger and
Bookmanager, UBS AG, Stamford Branch as an Issuing Bank, US Administrative Agent,
and US Co-Collateral Agent, UBS AG Canada Branch, as Canadian Co-Administrative
Agent and Canadian and Canadian Collateral Agent, Wachovia Bank, National
Association, as US Co-Collateral Agent, Co-Documentation Agent and an Issuing
Bank, Wachovia Capital Finance Corporation (Canada), as Canadian
Co-Administrative Agent, Canadian Co-Collateral Agent and Canadian Swingline
Lender, UBS Loan Finance LLC, as US Swingline Lender, UBS Securities LLC and
Bear, Stearns & Co. Inc., as Joint Book Runners, and Bear, Stearns &
Co. Inc., as Co-Syndication Agent.

 

“Prior
Lenders” shall mean the lenders from time to time party to the Prior
Credit Agreement.

 

“Prior Lender
Obligations” shall mean the obligations of the Borrowers owed under
the Prior Credit Agreement.

 

“Priority
Payables” shall mean, at any time, the full amount of the
liabilities at such time which have a trust imposed to provide for payment or
security interest, lien or charge ranking or capable of ranking senior to or
pari passu with security interests, hypothecs, liens or charges securing the
Obligations on any of the Collateral under federal, provincial, state, county,
municipal, or local law including, but not limited, to claims for unremitted
and accelerated rents, taxes, wages, workers’ compensation obligations,
vacation pay, government royalties or pension fund obligations, together with
the aggregate value, determined in accordance with GAAP, of all Eligible
Canadian Inventory which applicable Collateral Agents consider may be or may
become subject to a right of a supplier to recover possession thereof under any
federal or provincial or territorial law, where such supplier’s right may have
priority over the security interests, liens or charges securing the Obligations
including, without limitation, Eligible Canadian Inventory subject to a right
of a supplier to repossess goods pursuant to Section 81.1 of the BIA.

 

“Private
Label Credit Card” shall mean a credit card that bears either
Borrower’s trademark and/or logo and is issued by a third party which takes the
credit risk as to customers and makes payments to the Borrowers or Guarantors
in a manner similar to other major credit card issuers.

 

“Pro Forma Basis” shall mean on a basis in accordance with GAAP
and Regulation S-X and otherwise reasonably satisfactory to the Administrative
Agent.

 

“Pro Rata Percentage” of any Revolving Lender at any time shall
mean the percentage of the total Revolving Commitments of all Revolving Lenders
represented by such Lender’s Revolving Commitment, and with respect to any
Canadian Revolving Lender at any time, the percentage of the total Canadian
Revolving Commitments of all Canadian Revolving Lenders represented by such
Canadian Revolving Lender’s Canadian Revolving Commitment, and with respect to
any Tranche B Lender at any 

 

36

 

time, the percentage of the total Tranche B Exposure of all Tranche B
Lenders represented by such Tranche B Lender’s Tranche B Exposure.

 

“property” shall mean any right, title or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible and including Equity Interests or other
ownership interests of any person and whether now in existence or owned or
hereafter entered into or acquired, including all Real Property.

 

“Property Material Adverse Effect” shall have the meaning
assigned thereto in the Mortgage.

 

“Purchase Money Obligation” shall mean, for any person, the
obligations of such person in respect of Indebtedness (including Capital Lease
Obligations) incurred for the purpose of financing all or any part of the
purchase price of any property (including Equity Interests of any person) or
the cost of installation, construction or improvement of any property and any
refinancing thereof; provided, however,
that (i) such Indebtedness is incurred within one year after such acquisition
of such property by such person and (ii) the amount of such Indebtedness does
not exceed 100% of the cost of such acquisition, installation, construction or
improvement, as the case may be.

 

“Qualified Capital Stock” of any person shall mean any Equity
Interests of such person that are not Disqualified Capital Stock.

 

“Real Property” shall mean, collectively, all right, title and
interest (including any leasehold, mineral or other estate) in and to any and
all parcels of or interests in real property owned, leased or operated by any
person, whether by lease, license or other means, together with, in each case,
all easements, hereditaments and appurtenances relating thereto, all
improvements and appurtenant fixtures.

 

“Refinancing” shall mean the repayment in full and the
termination of any commitment to make extensions of credit under all of the
outstanding indebtedness of Holdings or any of its Subsidiaries listed on Schedule
1.01(a).

 

“Register” shall have the meaning assigned to such term in Section
11.04(c).

 

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

 

“Regulation S-X” shall mean Regulation S-X promulgated under
the Securities Act.

 

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

 

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

 

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

 

“Reimbursement Obligations” shall mean Borrowers’ obligations
under Section 2.18(e) to reimburse LC Disbursements.

 

37

 

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

 

“Release” shall mean any spilling, leaking, seepage, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing, depositing, dispersing, emanating or migrating of any
Hazardous Material in, into, onto or through the Environment.

 

“Required Lenders” shall mean Lenders having more than 66 2/3%
of the sum of all Loans outstanding, LC Exposure and unused Revolving
Commitments; provided that if GE Capital and GE Canada collectively have
more than 66 2/3% of the sum of all Loans outstanding, LC Exposure and unused
Revolving Commitments, Required Lenders shall mean (i) GE Capital and GE Canada
and one (1) additional Lender if there are two Lenders and (ii) GE Capital and
GE Canada and two (2) additional Lenders if there are three or more Lenders; provided
further that the preceding proviso shall not apply to changes to the
definitions of “Required Lenders” or “Supermajority Lenders” that increase the
percentages set forth in such definitions.

 

“Requirements of Law” shall mean, collectively, any and all
requirements of any Governmental Authority including any and all laws, judgments,
orders, decrees, ordinances, rules, regulations, statutes or case law.

 

“Reserves” shall mean reserves established against the
Borrowing Base or Canadian Borrowing Base that the Collateral Agents may, in
their Permitted Discretion, establish from time to time.

 

“Response” shall mean (a) “response” as such term is defined in
CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to (i) clean up, remove,
treat, abate or in any other way address any Hazardous Material in the
Environment; (ii) prevent the Release or threat of Release, or minimize the
further Release, of any Hazardous Material; or (iii) perform studies and
investigations in connection with, or as a precondition to, or to determine the
necessity of the activities described in, clause (i) or (ii) above.

 

“Responsible Officer” of any person shall mean any executive
officer or Financial Officer of such person and any other officer or similar
official thereof with responsibility for the administration of the obligations
of such person in respect of this Agreement.

 

“Reuters Screen CDOR Page” shall mean the display designated as
page CDOR on the Reuters Monitor Money Rates Service or such other page as may,
from time to time, replace that page on that service for the purpose of
displaying bid quotations for bankers’ acceptances accepted by leading Canadian
banks.

 

“Revolving Availability Period” shall mean the period from and
including the Closing Date to but excluding the earlier of (i) the Business Day
preceding the Revolving Maturity Date and (ii) the date of termination of the
Revolving Commitments.

 

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

 

“Revolving Commitment” shall mean, with respect to each Lender,
the commitment, if any, of such Lender to make Revolving Loans hereunder up to
the amount set forth on Schedule I to the Lender Addendum executed and
delivered by such Lender, or in the Assignment and Assumption pursuant to which
such Lender assumed its Revolving Commitment, as applicable, as the same may be
(a) reduced from time to time pursuant to Section 2.07 and (b) reduced
or increased from time to time 

 

38

 

pursuant to assignments by or to such Lender pursuant to Section
11.04.  The portion of the Revolving
Commitments, if any, which may be utilized for Canadian Revolving Loans shall
constitute the Canadian Revolving Commitment, which shall be treated as a
sub-facility of the Revolving Commitment and the total Revolving Loans and LC
Exposure shall not exceed the total Revolving Commitments.  The aggregate amount of the Lenders’
Revolving Commitments on the Closing Date is $625 million.

 

“Revolving Exposure” shall mean, with respect to any Lender at
any time, the Dollar Equivalent of the aggregate principal amount at such time
of all outstanding Revolving Loans of such Lender, plus the Dollar Equivalent of the aggregate amount at such
time of such Lender’s LC Exposure, plus
the Dollar Equivalent of the aggregate amount at such time of such Lender’s
Swingline Exposure.

 

“Revolving Lender” shall mean a Lender with a Revolving
Commitment and, with respect to any Canadian Revolving Commitment, shall
include the respective Canadian Revolving Lender; it being understood that each
Revolving Lender that is not a Canadian Revolving Lender shall have an
affiliated Canadian Revolving Lender that will provide the Canadian Revolving
Loans and become a signatory hereto.

 

“Revolving Loan” shall mean a Loan made by any of the Lenders
to any Borrower pursuant to Section 2.01(a) or (c).  Each Revolving Loan shall either be an ABR
Revolving Loan, Eurodollar Revolving Loan, Canadian Prime Rate Loan or Bankers’
Acceptance.

 

“Revolving Maturity Date” shall mean October 24, 2012.

 

“Sale and Leaseback Transaction” means any arrangement,
directly or indirectly, with any person whereby any person shall sell or
transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.

 

“Sarbanes-Oxley Act” shall mean the United States
Sarbanes-Oxley Act of 2002, as amended, and all rules and regulations
promulgated thereunder.

 

“Schedule I
Lender” means any Lender named on Schedule I to the Bank Act (Canada).

 

“Seasonal
Advance Period” shall mean the period from and including the first
day of the fiscal month of August of each year to and including the last day of
the fiscal month of December of the same year.

 

“Secured Obligations” shall mean (a) the Obligations, (b) the
due and punctual payment and performance of all obligations of Borrowers and
the other Loan Parties under each Hedging Agreement entered into with any
counterparty that is a Secured Party and (c) the due and punctual payment and
performance of all obligations in respect of overdrafts and related liabilities
owed to any Lender, any Affiliate of a Lender, the Administrative Agents or the
Collateral Agents arising from treasury, depositary and cash management
services or in connection with any automated clearinghouse transfer of funds.

 

“Secured Parties” shall mean, collectively, the Administrative
Agents, the Collateral Agents, the Lenders, the Issuing Banks and each party to
a Lender Hedging Agreement if at the date of entering into such Lender Hedging
Agreement such person executes and delivers to the Administrative Agents a
letter agreement in form and substance acceptable to the Administrative Agents
pursuant to which such person (i) appoints the applicable Collateral Agents as
its agent under the applicable Loan 

 

39

 

Documents and (ii) agrees to be bound by the provisions of Section
10.03, Section 10.09 and the Security Agreements.

 

“Securities Act” shall mean the Securities Act of 1933.

 

“Securities Collateral” shall have the meaning assigned to such
term in the Security Agreements.

 

“Security Agreement Collateral” shall mean all property pledged
or granted as collateral pursuant to the Security Agreements or pursuant to Section
5.11.

 

“Security Agreements” shall mean, collectively, (a) the US
Security Agreement and (b) the Canadian Security Agreements, in each case, as
the same may from time to time be modified, amended, extended or reaffirmed in
accordance with the terms thereof.

 

“Security Documents” shall mean the Security Agreements, the
Mortgages, the Canadian Pledge Agreements, the US Pledge Agreements, each
Canadian Guaranty and each other security document or pledge agreement
delivered in accordance with applicable local or foreign law to grant a valid,
perfected security interest in any property as collateral for the Secured
Obligations, and all UCC or PPSA or other financing statements or financing
change statements or instruments of perfection required by this Agreement, the
Security Agreements, any Mortgage or any other such security document or pledge
agreement to be filed with respect to the security interests in property and
fixtures created pursuant to the Security Agreements or any Mortgage and any
other document or instrument utilized to pledge or grant or purport to pledge
or grant a security interest or lien on any property as collateral for the
Secured Obligations.

 

“Seller” shall have the meaning assigned to such term in the
first recital hereto.

 

“Senior Note Agreement” shall mean that certain Indenture dated
as of February 14, 2006 by US Borrowers in favor of Senior Note Collateral
Agent pursuant to which the Senior Notes are issued as in effect on the
February 14, 2006 and thereafter amended from time to time subject to the
requirements of this Agreement.

 

“Senior
Note  Collateral”
shall have the meaning assigned to such term in the Intercreditor Agreement.

 

“Senior
Note  Collateral
Agent” means the Bank of New York, in its capacity as the collateral
agent under the Senior Note Documents, together with any successors and
assigns.

 

“Senior Note Documents” shall mean the Senior Notes, the Senior
Note Agreement, the Senior Note Guarantees and all other documents executed and
delivered with respect to the Senior Notes or the Senior Note Agreement.

 

“Senior Note
Guarantees” shall mean the guarantees of Holdings and the Subsidiary
Guarantors pursuant to the Senior Note Agreement.

 

“Senior
Note Secured Parties” shall have the
meaning assigned to such term in the Intercreditor Agreement.

 

40

 

“Senior Notes” shall mean US Borrowers’ Senior Secured Floating
Rate Notes due 2014 issued on February 14, 2006 and any registered notes issued
by US Borrowers in exchange for, and as contemplated by, such notes with
substantially identical terms as such notes.

 

“Specified
Obligations” shall mean any obligation of any Loan Parties under the
Loan Documents consisting of (i) the payment of principal of and interest on
Loans, (ii) Reimbursement Obligations in respect of Letters of Credit and (iii)
excluding the payment of principal and interest on Tranche B Loans.

 

“Sponsor” shall mean Apollo Management, L.P. and its
Affiliates.

 

“Spot Selling Rate” shall mean the spot selling rate at which
the US Administrative Agent offers to sell Canadian Dollars for dollars in the
Toronto foreign exchange market at approximately 11:00 a.m. Toronto time on
such date for delivery two (2) Business Days later.

 

“Standby Letter of Credit” shall mean any Letters of Credit
other than Letters of Credit which are Commercial Letters of Credit.

 

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

 

“Statutory Reserves” shall mean (a) for any Interest Period for
any Eurodollar Borrowing in dollars, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of
the United States Federal Reserve System in New York City with deposits
exceeding one billion dollars against “Eurocurrency liabilities” (as such term
is used in Regulation D).

 

“Stores”
shall mean any of the retail stores operated by LNT Center and its
Subsidiaries.

 

“Subsidiary” shall mean, with respect to any person (the “parent”) at any date, (i) any person 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, (ii) any other corporation, limited
liability company, association or other business entity of which securities or
other ownership interests representing more than 50% of the voting power of all
Equity Interests entitled (without regard to the occurrence of any contingency)
to vote in the election of the Board of Directors thereof are, as of such date,
owned, controlled or held by the parent and/or one or more subsidiaries of the
parent, (iii) any partnership (a) the sole general partner or the managing
general partner of which is the parent and/or one or more subsidiaries of the
parent or (b) the only general partners of which are the parent and/or one or
more subsidiaries of the parent and (iv) any other person that is otherwise
Controlled by the parent and/or one or more subsidiaries of the parent.  Unless the context requires otherwise, “Subsidiary”
refers to a Subsidiary of Borrower.

 

“Subsidiary
Guarantor” shall mean each Subsidiary listed on Schedule 1.01(b),
and each other Subsidiary that is or becomes a party to this Agreement pursuant
to Section 5.11.

 

“Supermajority
Lenders” shall mean at any time, Lenders having at least 80% of the
Revolving Commitment and Tranche B Exposures or, if the Revolving Commitments
have been terminated, at least 80% of the sum of Revolving Exposures and
Tranche B Exposures.

 

“Survey” shall mean a survey of any Mortgaged Property (and all
improvements thereon) which is (i) prepared by a surveyor or engineer licensed
to perform surveys in the jurisdiction where such 

 

41

 

Mortgaged Property is located, (ii) dated (or redated) not earlier than
six months prior to the date of delivery thereof unless there shall have
occurred within six months prior to such date of delivery any exterior
construction of structures on the site of such Mortgaged Property or any
easement or right of way on the Mortgaged Property has been granted or become
effective through operation of law or otherwise with respect to such Mortgaged
Property which, in either case, can reasonably be depicted on a survey, in
which events, as applicable, such survey shall be dated (or redated) after the
completion of such construction or if such construction shall not have been
completed as of such date of delivery, not earlier than 20 days prior to such
date of delivery, or after the grant or effectiveness of any such easement or right
of way on the applicable Mortgaged Property, (iii) certified by the surveyor
(in a manner reasonably acceptable to the Administrative Agents) to such
Administrative Agents, the applicable Collateral Agents and the Title Company,
and (iv) complying in all respects with the minimum detail requirements of the
American Land Title Association as such requirements are in effect on the date
of preparation of such survey.

 

“Swingline Exposure” shall mean at any time the aggregate
principal amount at such time of all outstanding Swingline Loans.  The Swingline Exposure of any Revolving
Lender at any time shall equal its Pro Rata Percentage of the aggregate
Swingline Exposure at such time.

 

“Swingline
Lenders” shall have the meaning assigned to such term in the preamble
hereto.

 

“Swingline Loans” shall mean the US Swingline Loans and the
Canadian Swingline Loans.

 

“Syndication Agent” shall have the meaning assigned to such
term in the preamble hereto.

 

“Tax Return” shall mean all returns, statements, filings, attachments
and other documents or certifications required to be filed in respect of Taxes.

 

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

 

“Test Period” shall mean, at any time, the four consecutive
fiscal quarters of US Borrowers then last ended (in each case taken as one accounting
period) for which financial statements have been or are required to be
delivered pursuant to Section 5.01(a) or (b).

 

“Title Company” shall mean any title insurance company as shall
be retained by Borrowers and reasonably acceptable to the Administrative Agent.

 

“Title Policy” shall have the meaning assigned to such term in Section
4.01(o)(iii).

 

“Total
Minimum Availability Requirement” shall
mean, at all times, an amount equal to the sum of (x) the U.S. Minimum
Availability Requirement and (y) the Canadian Minimum Availability Requirement.

 

“Tranche B
Borrowing” shall mean a Borrowing comprised of Tranche B Loans.

 

“Tranche B
Borrowing Base” shall mean at any time, subject to adjustment as
provided in Section 2.20, an amount equal to the sum of (i) the advance
rate of 10% of the Net Recovery Cost 

 

42

 

Percentage multiplied by the Cost of Eligible Inventory of the US
Borrowers and US Borrowing Base Guarantors plus (ii) the advance rate of
10% of the Net Recovery Cost Percentage multiplied by the Cost of Eligible
In-Transit Inventory of US Borrowers and US Borrowing Base Guarantors plus
(iii) the advance rate of 10% of the Net Recovery Cost Percentage multiplied by
the aggregate undrawn face amount of Eligible Letters of Credit of the US
Borrowers and US Borrowing Base Guarantors.

 

“Tranche B Commitment” shall mean, with respect to each Lender,
the commitment, if any, of such Lender to make Tranche B Loans hereunder up to
the amount set forth on Schedule I to the Lender Addendum executed and
delivered by such Lender, or in the Assignment and Assumption pursuant to which
such Lender assumed its Tranche B Commitment, as applicable, as the same may be
(a) reduced from time to time pursuant to Section 2.07 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 11.04.  The
aggregate amount of the Lenders’ Tranche B Commitments on the Closing Date is
$75 million.

 

“Tranche B
Deficiency Amount” shall mean, at any time, the excess of (a) the
aggregate amount of Tranche B Loans then outstanding over (b) the Tranche B
Borrowing Base at such time.

 

“Tranche B
Exposure” shall mean, with respect to any Lender at any time, the
Dollar Equivalent of the aggregate principal amount at such time of all
outstanding Tranche B Loans of such Lender.

 

“Tranche B
Lender” shall mean a Lender with a Tranche B Commitment or Tranche B
Exposure.

 

“Tranche B
Loan” shall mean a Loan made by any of the Lenders to any US
Borrower pursuant to Section 2.01(b).

 

“Tranche B
Maturity Date” shall mean October 24, 2012.

 

“Transactions” shall mean, collectively, (a) the transactions
which occurred pursuant to the Acquisition Documents or the Senior Note
Documents, including (i) the consummation of the Acquisition; (ii) the
Refinancing; (iii) the Equity Financing; (iv) the issuance of the Senior Notes;
and (v) the payment of all fees and expenses to be paid on or prior to the
Closing Date and owing in connection with the foregoing subclauses (i) through
(v) and (b) the transactions which occurred on or prior to the Closing Date
pursuant to the Loan Documents, including the execution, delivery and
performance of the Loan Documents and the payment of all fees and expenses to
be paid on or prior to the Closing Date and owing in connection therewith.

 

“Transferred Guarantor” shall have the meaning assigned to such
term in Section 7.09.

 

“Trigger
Event” shall mean at any time (a) a Default shall have occurred and
be continuing and/or (b) Average Excess Availability (without taking into
account the deduction of the Total Minimum Availability Requirement from the
computation of Excess Availability as set forth in clause (e) of the definition
thereof) for the preceding fiscal quarter shall be less than $90 million.

 

“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 LIBOR Rate, the Alternate
Base Rate, Canadian Prime Rate or Bankers’ Acceptances.

 

“UCC” shall mean the Uniform Commercial Code as in effect from
time to time (except as otherwise specified) in any applicable state or
jurisdiction.

 

43

 

“United States” shall mean the United States of America.

 

“US
Administrative Agent” shall have the meaning assigned to such term
in the preamble hereto and includes each other person appointed as the
successor pursuant to Article X.

 

“US Borrower”
shall have the meaning assigned to such term in the preamble hereto.

 

“US
Borrowing Base Guarantor” shall
mean LNT Inc., a New Jersey corporation, LNT West, a Delaware corporation, and
LNT Merchandising Company, LLC, a Delaware limited liability company and any Wholly
Owned Subsidiary of US Borrowers which may hereafter be approved by the
Administrative Agents and the Collateral Agents which (a) is organized in a
State within the United States, (b) is currently able to prepare all collateral
reports in a comparable manner to the Borrowers’ reporting procedures and (c)
has executed and delivered to the applicable Collateral Agents such joinder
agreements to guarantees, contribution and set-off agreements and other
Security Documents as such Collateral Agents have reasonably requested so long
as such Collateral Agents have received and approved, in their reasonable
discretion, (i) a collateral audit and Inventory Appraisal conducted by an
independent appraisal firm reasonably acceptable to such Collateral Agents and
(ii) all UCC and similar search results necessary to confirm such Collateral
Agents’ first priority Lien on all of such Borrowing Base Guarantor’s personal
property, subject to Permitted Liens.

 

“U.S. Minimum
Availability Requirement” shall mean, at all times, an amount equal
to 10% of the sum of (x) the sum of clauses (i) through (v) of the Borrowing
Base and (y) the Tranche B Borrowing Base.

 

“US
Obligations” shall mean (a) obligations of US Borrowers and the
other Loan Parties from time to time arising under or in respect of the due and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the US Revolving Loans and the US Swingline
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
US Borrowers and the other Loan Parties under this Agreement in respect of any
Letter of Credit or LC Acceptance, when and as due, including payments in
respect of Reimbursement Obligations, 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 (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
US Borrowers and the other Loan Parties under this Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of US Borrowers and the other Loan Parties under or
pursuant to this Agreement and the other Loan Documents, (c) the due and
punctual payment and performance of all obligations of the US Borrowers and any
and all of the other Loan Parties under each Lender Hedging Agreement and (d)
the due and punctual payment and performance of all obligations in respect of
overdrafts and related liabilities owed to any Lender, any Affiliate of a
Lender, the Administrative Agents or the Collateral Agents arising from
treasury, depositary and cash management services or in connection with any
automated clearinghouse transfer of funds.

 

“US Pledge
Agreements” shall mean that certain Pledge Agreement dated as of the
Closing Date by Holdings pledging all of its Equity Interests in LNT and that
certain Pledge Agreement dated as of the Closing Date by LNT and certain US
Subsidiaries pledging all of their Equity Interests in LNT Center and the
Subsidiary Guarantors, as applicable (except the Canadian Loan Parties), in
each 

 

44

 

case, addressed to the Collateral Agents for the benefit of the Secured
Parties, as the same may from time to time be modified, amended, extended or
reaffirmed in accordance with the terms thereof.

 

“US Revolving
Commitment” shall mean, with respect to each Revolving Lender, the
commitment, if any, of such Revolving Lender to make US Revolving Loans
hereunder up to its Pro Rata Percentage of the Revolving Commitment.

 

“US Revolving
Exposure” shall mean, with respect to any Lender at any time, the
Dollar Equivalent of the aggregate principal amount at such time of all
outstanding Revolving Loans made to US Borrowers of such Lender, plus the aggregate amount at such time of such Lender’s LC
Exposure, plus the aggregate amount at such time
of such Lender’s Swingline Exposure to US Borrower.

 

“US Revolving
Lender” shall mean a Lender with a US Revolving Commitment.

 

“US Revolving
Loans” shall mean each Revolving Loan borrowed by a US Borrower.

 

“US Security
Agreement” shall mean that Security Agreement dated as of the
Closing Date by and among certain of the Loan Parties and US Collateral Agents
for the benefit of the Secured Parties, as the same may from time to time be
modified, amended, extended or reaffirmed in accordance with the terms thereof.

 

“US
Subsidiary” shall mean a Subsidiary organized in a State of the
United States.

 

“US
Swingline Commitment” shall mean
the commitment of the Swingline Lender to make loans pursuant to Section
2.17, as the same may be reduced from time to time pursuant to Section
2.07 or Section 2.17.  The
amount of the US Swingline Commitment shall initially be $50 million, but in no
event shall exceed the Revolving Commitment.

 

“US
Swingline Lender” shall have the
meaning assigned to such term in the preamble hereto.

 

“US Swingline
Loans” shall mean any loan made by the US Swingline Lender pursuant
to Section 2.17(a).

 

“Voting Stock” shall mean, with respect to any person, any
class or classes of Equity Interests pursuant to which the holders thereof have
the general voting power under ordinary circumstances to elect at least a
majority of the Board of Directors of such person.

 

“Wholly Owned Subsidiary” shall mean, as to any person, (a) any
corporation 100% of whose capital stock (other than directors’ qualifying
shares) is at the time owned by such person and/or one or more Wholly Owned
Subsidiaries of such person and (b) any partnership, association, joint
venture, limited liability company or other entity in which such person and/or
one or more Wholly Owned Subsidiaries of such person have a 100% equity
interest at such time.

 

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

 

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

 

45

 

be classified and referred to
by Class (e.g., a “Revolving
Borrowing,” “Borrowing of Tranche B Loans”) or by Type (e.g., a “Eurodollar Borrowing”) or by
Class and Type (e.g., a “Eurodollar
Revolving Borrowing”).

 

SECTION 1.03.            Terms Generally.  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall be construed
to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any
definition of or reference to any Loan Document, agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any person shall
be construed to include such person’s successors and assigns, (c) the words “herein,”
“hereof” and “hereunder,” and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, this Agreement, (e) any reference to any law or regulation herein
shall refer to such law or regulation as amended, modified or supplemented from
time to time, (f) 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
and (g) “on,” when used with respect to the Mortgaged Property or any property
adjacent to the Mortgaged Property, means “on, in, under, above or about.”

 

SECTION 1.04.            Accounting Terms; GAAP. 
Except as otherwise expressly provided herein, all financial statements
to be delivered pursuant to this Agreement shall be prepared in accordance with
GAAP as in effect from time to time and all terms of an accounting or financial
nature shall be construed and interpreted in accordance with GAAP, as in effect
on the date hereof unless otherwise agreed to by Borrowers and the Required
Lenders.  

 

SECTION 1.05.            Resolution of Drafting Ambiguities.  Each
Loan Party acknowledges and agrees that it was represented by counsel in
connection with the execution and delivery of the Loan Documents to which it is
a party, that it and its counsel reviewed and participated in the preparation
and negotiation hereof and thereof and that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be employed in the interpretation hereof or thereof.

 

ARTICLE II.

THE CREDITS

 

SECTION 2.01.            Commitments.  Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly as follows:

 

(a)         each US Revolving Lender agrees,
severally and not jointly, to make US Revolving Loans to US Borrowers, at any
time and from time to time on or after the Closing Date until the earlier of
the Business Day prior to the Revolving Maturity Date and the termination of
the Revolving Commitment of such Lender in accordance with the terms hereof, in
an aggregate principal amount at any time outstanding that will not (subject to
the provisions of Section 10.10 and Section 10.11) result in such
Lender’s US Revolving Exposure exceeding the lesser of (i) such Lender’s
Revolving Commitment less such Lender’s Pro Rata Percentage of any Line Reserve
and (ii) such Lender’s Pro Rata Percentage multiplied by the result of (A) the
Borrowing Base then in effect minus (B) the U.S. Minimum Availability
Requirement;

 

46

 

(b)        each Tranche B Lender agrees, severally
and not jointly, to make Tranche B Loans on the Closing Date to US Borrowers in
accordance with the terms hereof, in an aggregate principal amount that will
not (subject to the provisions of Section 10.10 and Section 10.11)
result in such Lender’s Tranche B Exposure exceeding such Lender’s Tranche B
Commitment on the Closing Date; provided that the aggregate Revolving
Exposure plus the aggregate Tranche B Exposure shall not exceed the
amount equal to the Borrowing Base minus the U.S. Minimum Availability
Requirement minus the Line Reserve plus the Tranche B Borrowing
Base; and 

 

(c)         each Canadian Revolving Lender agrees,
severally and not jointly, to make Canadian Revolving Loans to Canadian
Borrower, at any time and from time to time on or after the Closing Date until
the earlier of the Business Day prior to the Revolving Maturity Date and the
termination of the Canadian Revolving Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
that will not (subject to Section 10.10 and Section 10.11) result
in such Lender’s Canadian Exposure exceeding the lesser of (i) such Lender’s
Canadian Revolving Commitment less such Lender’s Pro Rata Percentage of any
Line Reserve allocated to Canadian Revolving Commitments and (ii) such Lender’s
Pro Rata Percentage multiplied by the result of (A) the Canadian Borrowing Base
then in effect minus (B) the Canadian Minimum Availability Requirement.

 

Within the limits set forth
in clause (a), clause (b) and clause (c) above and subject
to the terms, conditions and limitations set forth herein, the relevant
Borrower may borrow, pay or prepay and reborrow Revolving Loans, and borrow on
the Closing Date and repay Tranche B Loans; provided that (i) no Tranche B
Loans may be repaid at any time that any US Revolving Loans are outstanding,
(ii) US Borrowers shall borrow the Tranche B Loans up to the full amount of the
Tranche B Commitment on the Closing Date and prior to requesting any US
Revolving Loans and (iii) in no event shall the US Borrowers request, and the
US Revolving Lenders shall not have any obligation to honor a request for, a US
Revolving Loan if (I) the aggregate unpaid balance of all US Revolving Exposure
and all Tranche B Exposure outstanding at such time (including the requested US
Revolving Loan) would exceed the lesser of (A) the amount of the sum of (x)
Commitments less the Line Reserve plus (y) the Tranche B Commitments, (B) the
amount of the sum of (x) the Borrowing Base then in effect minus the U.S.
Minimum Availability Requirement plus (y) Tranche B Borrowing Base or (II) the
aggregate unpaid balance of all US Revolving Exposure  outstanding
at such time (including the requested US Revolving Loans) would exceed the
lesser of (A) the Revolving Commitments less the Line Reserve and (B) the Borrowing Base then in effect minus the U.S. Minimum
Availability Requirement or (C) the sum of all Lenders’ Revolving Exposures
exceeds the Revolving Commitments less the Line Reserve then in effect.  

 

Each request for a U.S.
Revolving Loan, a Tranche B Loan or a Canadian Revolving Loan by the relevant
Borrower shall be deemed to be a representation by such Borrower that such Loan
so requested complies with the applicable conditions set forth in this Section
2.01.

 

SECTION 2.02.            Loans.

 

(a)         Each Loan (other than Swingline Loans)
shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their applicable Commitments; provided, that the failure of any Lender to make its Loan shall not in
itself relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender).  Except for Loans deemed made pursuant to Section
2.18(e)(ii), (A) ABR Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1.0 million and
not less than $3.0 million or (ii) equal to the remaining available balance of
the applicable Commitments, (B) the Eurodollar Loans comprising any Borrowing shall
be in an aggregate principal amount that is (i) an integral multiple of $1.0
million and not less than $3.0 million or (ii) equal to the remaining available

 

47

 

balance
of the applicable Commitments, (C) Canadian Prime Rate Loans in Canadian
dollars comprising any Borrowing shall be in an aggregate principal amount that
is (i) an integral multiple of Can$100,000 and not less than Can$1.0 million or
(ii) equal to the remaining available balance of the applicable Commitments and
(D) Bankers’ Acceptances in Canadian dollars comprising any Borrowing shall be
in an aggregate principal amount that is (i) an integral multiple of
Can$100,000 and not less than Can$3.0 million or (ii) equal to the remaining
available balance of the applicable Commitments.

 

(b)        Reserved.  

 

(c)         Subject to Section 2.11 and Section
2.12, each Borrowing shall be comprised entirely of ABR Loans, Eurodollar
Loans, Canadian Prime Rate Loans or Bankers’ Acceptances as the applicable
Borrower may request pursuant to Section 2.03.  Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of such
Borrower to repay such Loan in accordance with the terms of this
Agreement.  Borrowings of more than one
Type may be outstanding at the same time; provided that such Borrower shall not be entitled to request
any Borrowing that, if made, would result in more than fifteen Eurodollar
Borrowings outstanding hereunder at any one time.  For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.

 

(d)        Except with respect to Loans deemed made
pursuant to Section 2.18(e)(ii), each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to such account in New York City or Toronto, as the
case may be, as the applicable Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the applicable Administrative Agent
shall promptly credit the amounts so received to an account as directed by the
Administrative Borrower in the applicable Borrowing Request maintained with the
applicable Administrative Agent or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met,
return the amounts so received to the respective Lenders.

 

(e)         Unless the applicable Administrative
Agent shall have received notice from a Lender prior to the date of any
Borrowing that such Lender will not make available to the applicable
Administrative Agent such Lender’s portion of such Borrowing, such
Administrative Agent may assume that such Lender has made such portion
available to such Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above, and such Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on
such date a corresponding amount.  If the
applicable Administrative Agent shall have so made funds available, then, to
the extent that such Lender shall not have made such portion available to such
Administrative Agent, each of such Lender and the Borrowers severally agrees to
repay to such Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the applicable Borrower until the date such amount is
repaid to such Administrative Agent at (i) in the case of such Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, the greater of the Federal Funds Effective
Rate and a rate determined by such Administrative Agent in accordance with
banking industry rules on interbank compensation.  If such Lender shall repay to such
Administrative Agent such corresponding amount, such amount shall constitute
such Lender’s Loan as part of such Borrowing for purposes of this Agreement,
and Borrowers’ obligation to repay such Administrative Agent such corresponding
amount pursuant to this Section 2.02(e) shall cease.

 

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

 

48

 

SECTION 2.03.            Borrowing Procedure.

 

(a)         Borrowings.  To request a Revolving Borrowing, the
Administrative Borrower shall deliver, by hand delivery or telecopier, a duly
completed and executed Borrowing Request to the applicable Administrative Agent
(i) in the case of a Eurodollar Borrowing in dollars or a Bankers’ Acceptance,
not later than 11:00 a.m., New York City time, three Business Days before the
date of the proposed Borrowing, (ii) in the case of an ABR Borrowing, not later
than 1:00 p.m., New York City time, on the date of the proposed Borrowing or
(iii) in the case of a Borrowing of Canadian Prime Rate Loans, not later than
1:00 p.m., New York time, one Business Day before the date of the proposed
Borrowing.  Each Borrowing Request shall
be irrevocable and shall specify the following information in compliance with Section
2.02:

 

(i)            the aggregate amount and Approved
Currency of such Borrowing;

 

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

 

(iii)          for US Revolving Loans or Tranche B
Loans, whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing or, for Canadian Revolving Loans, whether such Borrowing is to be by
way of Bankers’ Acceptance or Canadian Prime Rate Loan;

 

(iv)          in the case of a Eurodollar Borrowing
or a Bankers’ Acceptance, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”;

 

(v)           the name of the applicable Borrower
and the location and number of the applicable Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.02(d); and

 

(vi)          that the conditions set forth in Section
4.02(b) – (e) have been satisfied as of the date of the notice.

 

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

 

(b)        Bankers’ Acceptances.

 

(i)            Canadian Administrative Agent.  On each date that a Bankers’ Acceptance is to
be accepted hereunder, the Canadian Administrative Agent shall advise the
Canadian Borrower as to the Canadian Administrative Agent’s determination of
the applicable Discount Rate for the Bankers’ Acceptance which any of the
Canadian Revolving Lenders have agreed to accept and purchase.

 

(ii)           Purchase.  Each Canadian Revolving Lender shall purchase
a Bankers’ Acceptance accepted by it, and the Canadian Borrower shall sell such
Bankers’ Acceptance to such Canadian Revolving Lender at the applicable
Discount Rate.  The relevant Canadian
Revolving Lender shall provide to the Canadian Administrative Agent on the date
of the related 

 

49

 

Borrowing
the Discount Proceeds less the Acceptance Fee payable by the Canadian Borrower
with respect to such Bankers’ Acceptance.

 

(iii)          Sale.  Each Canadian Revolving Lender may from time
to time hold, sell, rediscount or otherwise dispose of any or all Bankers’
Acceptances accepted and purchased by it.

 

(iv)          Power of Attorney for the Execution
of Bankers’ Acceptances.  To
facilitate the issuance of Bankers’ Acceptances, the Canadian Borrower hereby
appoints each Canadian Revolving Lender as its attorney to sign and endorse on
its behalf, in handwriting or facsimile or mechanical signature as and when
deemed necessary by such Canadian Revolving Lender, blank forms of Bankers’
Acceptances.  In this respect, it is each
Canadian Revolving Lender’s responsibility to maintain an adequate supply of
blank forms of Bankers’ Acceptances for acceptance under this Agreement.  The Canadian Borrower recognizes and agrees
that all Bankers’ Acceptances signed and/or endorsed on its behalf by a Canadian
Revolving Lender shall bind the Canadian Borrower as fully and effectually as
if signed in the handwriting of and duly issued by the proper signing officers
of the Canadian Borrower.  Each Canadian
Revolving Lender is hereby authorized to issue such Bankers’ Acceptances
endorsed in blank in such face amounts as may be determined by such Canadian
Revolving Lender; provided that the aggregate
amount thereof is equal to the aggregate amount of Bankers’ Acceptances
required to be accepted and purchased by such Canadian Revolving Lender.  No Canadian Revolving Lender shall be liable
for any damage, loss or other claim arising by reason of any loss or improper
use of any such instrument except for the gross negligence or willful misconduct
of such Canadian Revolving Lender.  Each
Canadian Revolving Lender shall maintain a record with respect to Bankers’
Acceptances held by it in blank hereunder, voided by it for any reason,
accepted and purchased by it hereunder, and canceled at their respective
maturities.

 

(v)           Execution.  Drafts drawn by the Canadian Borrower to be
accepted as Bankers’ Acceptances shall be signed by a duly authorized officer
or officers of the Canadian Borrower or by its attorneys-in-fact, including
attorneys-in-fact appointed pursuant to this Section.  Notwithstanding that any person whose
signature appears on any Bankers’ Acceptance may no longer be an authorized
signatory for the Canadian Borrower at the time of issuance of a Bankers’
Acceptance, that signature shall nevertheless be valid and sufficient for all
purposes as if the authority had remained in force at the time of issuance and
any Bankers’ Acceptance so signed shall be binding on the Canadian
Borrower.  Any executed drafts or orders
to be used as Bankers’ Acceptances shall be held in safekeeping with the same
degree of care as if they were Lender’s own property.

 

(vi)          Issuance.  The Canadian Administrative Agent, promptly
following receipt of a Borrowing Request or Interest Election Request for
Bankers’ Acceptances, shall advise the Canadian Revolving Lenders of the notice
and the face amount of Bankers’ Acceptances to be accepted by it and the
applicable Interest Period (which shall be identical for all Canadian Revolving
Lenders).  The aggregate face amount of
Bankers’ Acceptances to be accepted by a Canadian Revolving Lender shall be
determined by reference to such Canadian Revolving Lender’s Canadian Pro Rata
Percentage of the issue of Bankers’ Acceptances, except that, if the face
amount of a Bankers’ Acceptance which would otherwise be accepted by a Canadian
Revolving Lender would not be Can$500,000 or a whole multiple thereof, the face
amount shall be increased or reduced by the Canadian Administrative Agent in
its sole discretion to Can$100,000, or the nearest whole multiple of that
amount, as appropriate; provided that
after such issuance, no Canadian Revolving Lender shall have aggregate
outstanding Canadian Exposure in excess of its Canadian Revolving Commitment.

 

50

 

(vii)         Waiver of Presentment and Other
Conditions.  The Canadian Borrower
waives presentment for payment and any other defense to payment of any amounts
due to any Canadian Revolving Lender in respect of a Bankers’ Acceptance
accepted and purchased by it pursuant to this Agreement which might exist
solely by reason of the Bankers’ Acceptance being held, at the maturity
thereof, by such Canadian Revolving Lender in its own right and the Canadian
Borrower agrees not to claim any days of grace if the Canadian Revolving Lender
as holder sues or otherwise commences legal proceedings against the Canadian Borrower
on the Bankers’ Acceptance for payment of the amount payable by the Canadian
Borrower thereunder.

 

(viii)        BA Equivalent Loans by Non-BA Lenders.  Whenever the Canadian Borrower requests a
Canadian Revolving Loan under this Agreement by way of Bankers’ Acceptances,
each Non-BA Lender (or, at its option, any other Canadian Revolving Lender),
shall, in lieu of accepting a Bankers’ Acceptance, make a BA Equivalent Loan in
an amount equal to such Non-BA Lender’s Canadian Pro Rata Percentage of such
Canadian Revolving Loan.

 

(ix)           Terms Applicable to Discount Notes.  As set out in the definition of “Bankers’
Acceptances”, that term includes Discount Notes and BA Equivalent Loans not
evidenced by Discount Notes and all terms of this Agreement applicable to Bankers’
Acceptances shall apply equally to BA Equivalent Loans and Discount Notes
evidencing BA Equivalent Loans with such changes as may in the context be
necessary.  For greater certainty:

 

(1)           the term of a Discount Note shall be the same as the
Interest Period for Bankers’ Acceptances accepted and purchased on the same
date in respect of the same Canadian Revolving Loan;

 

(2)           an acceptance fee will be payable in respect of a Discount
Note and shall be calculated at the same rate and in the same manner as the
Acceptance Fee in respect of a Bankers’ Acceptance; and

 

(3)           the Discount Rate applicable to a Discount Note shall be
the Discount Rate applicable to BA Equivalent Loans made on the same date in
respect of the same Canadian Revolving Loan.

 

Notwithstanding the
foregoing, it is understood and agreed that any Non-BA Lender may agree, in
lieu of receiving any Discount Notes, that such Discount Notes may be
uncertificated and the applicable BA Equivalent Loan shall be evidenced by a
loan account, which such Non-BA Lender shall maintain in its name, and in such
event such loan account shall be entitled to all the benefits of Discount Notes
in respect of BA Equivalent Loans.

 

(x)            Depository Bills and Notes Act.  At the option of the Canadian Borrower and
any Canadian Revolving Lender, Bankers’ Acceptances under this Agreement to be
accepted by such Canadian Revolving Lender may be issued in the form of
depository bills for deposit with The Canadian Depository for Securities
Limited pursuant to the Depository Bills and Notes
Act  (Canada).  All depository bills so issued shall be
governed by the provisions of this Section.

 

(xi)           Prepayments and Mandatory Payments.  If at any time any Bankers’ Acceptances are
to be paid prior to their maturity, the Canadian Borrower shall be required to
deposit the face amount of such Bankers’ Acceptances being prepaid in an
interest-bearing cash collateral account with the Canadian Administrative Agent
until the date of maturity of such Bankers’ Acceptances.  The cash collateral account shall be under
the sole control of the Canadian Administrative Agent and shall be subject to
no Liens, except for Liens in favor of the Canadian Administrative Agent 

 

51

 

in
its capacity as such.  Except as
contemplated by this Section, neither the Canadian Borrower nor any person
claiming on its behalf shall have any right to any of the cash in the cash
collateral account.  The Canadian
Administrative Agent shall apply the cash held in the cash collateral account
and interest earned thereon to the face amount of such Bankers’ Acceptances at
maturity, whereupon any cash remaining in the cash collateral account shall be
released by the Canadian Administrative Agent to the Canadian Borrower.

 

(c)         Appointment of Administrative
Borrower.  Each Borrower hereby
irrevocably appoints and constitutes Administrative Borrower as its agent to
request and receive Loans and Letters of Credit pursuant to this Agreement in
the name or on behalf of such Borrower. 
The Administrative Agents and Lenders may disburse the Loans to such
bank account of Administrative Borrower or a Borrower or otherwise make such
Loans to a Borrower and provide such Letters of Credit to a Borrower as
Administrative Borrower may designate or direct, without notice to any other
Borrower or Guarantor.  Administrative
Borrower hereby accepts the appointment by Borrowers to act as the agent of
Borrowers and agrees to ensure that the disbursement of any Loans to a Borrower
requested by or paid to or for the account of such Borrower, or the issuance of
any Letter of Credit for a Borrower hereunder, shall be paid to or for the
account of such Borrower.  Each Borrower
hereby irrevocably appoints and constitutes Administrative Borrower as its
agent to receive statements on account and all other notices from the Agents
and Lenders with respect to the Obligations or otherwise under or in connection
with this Agreement and the other Loan Documents.  Any notice, election, representation,
warranty, agreement or undertaking by or on behalf of any other Borrower by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower, as the case may be, and shall be binding upon and enforceable
against such Borrower to the same extent as if made directly by such
Borrower.  No purported termination of
the appointment of Administrative Borrower as agent as aforesaid shall be
effective, except after ten (10) days’ prior written notice to Administrative
Agents.

 

(d)        Additional Functions of Administrative
Borrower.  The Administrative
Borrower operates a centralized cash management system for the Borrowers and
their Subsidiaries, including the Borrowing Base Guarantor Intercompany Loan
Amounts and all other intercompany accounts owing among the Loan Parties.  All Loans or Letters of Credit requested by
the Administrative Borrower for ultimate use by Loan Parties other than LNT or
Canadian Borrower shall be drawn or obtained in the name of the Administrative
Borrower.  Upon request, Administrative
Borrower shall promptly confirm for the Administrative Agents that each Loan or
Letter of Credit has been issued in the name of the appropriate Borrower and,
in the event of any error, the respective records shall be adjusted without
prejudice to the rights of the Agents and Lenders.

 

SECTION 2.04.            Evidence of Debt; Repayment of Loans.

 

(a)         Promise to Repay.  The US Borrowers hereby unconditionally
promise to pay (i) to the US Administrative Agent for the account of each
Revolving Lender, the then unpaid principal amount of each US Revolving Loan of
such Revolving Lender on the Revolving Maturity Date, (ii) to the US
Administrative Agent for the account of each Tranche B Lender, the then unpaid
principal amount of each Tranche B Loan of such Tranche B Lender on the Tranche
B Maturity Date and (iii) to the US Swingline Lender, the then unpaid principal
amount of each US Swingline Loan on the earlier of the Revolving Maturity Date
and the first date after such Swingline Loan is made that is the 15th or last
day of a calendar month and is at least two (2) Business Days after such
Swingline Loan is made; provided
that on each date that a US Revolving Loan is made, the US Borrowers shall
repay all US Swingline Loans that were outstanding on the date such Borrowing
was requested.  Canadian Borrower hereby
unconditionally promises to pay (i) to Canadian Administrative Agent for the
account of each Canadian Revolving Lender, the then unpaid principal amount of
each Canadian Revolving Loan of such Canadian Revolving Lender on the Revolving
Maturity Date and (ii) to the Canadian Swingline Lender, 

 

52

 

the
then unpaid principal amount of each Canadian Swingline Loan on the earlier of
the Revolving Maturity Date and the first date after such Swingline Loan is
made that is the 15th or last day of a calendar month and is at
least two (2) Business Days after such Swingline Loan is made; provided that on
each date that a Canadian Revolving Loan is made, the Canadian Borrower shall repay
all Canadian Swingline Loans that were outstanding on the date such Borrowing
was requested.  All payments or
repayments of Loans made pursuant to this Section 2.04(a) shall be made
in the Approved Currency in which such Loan is denominated.

 

(b)        Lender and Administrative Agent
Records.  Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the
indebtedness of the applicable Borrower to such Lender resulting from each Loan
made by such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this
Agreement.  The applicable Administrative
Agent shall maintain accounts in which it will record (i) the amount and
Approved Currency of each Loan made hereunder, the Type and Class thereof, the
name of the applicable Borrower and the Interest Period applicable thereto;
(ii) the amount of any principal or interest due and payable or to become due
and payable from the applicable Borrower to each applicable Lender hereunder;
and (iii) the amount of any sum received by such Administrative Agent hereunder
for the account of the applicable Lenders and each such Lender’s share
thereof.  The entries made in the
accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and
amounts of the obligations therein recorded as well as the Borrower which
received such Loans or Letters of Credit; provided
that the failure of any Lender or such Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligations of the
Borrowers to repay the Loans in accordance with their terms.

 

(c)         Promissory Notes.  Any Lender by written notice to
Administrative Borrower (with a copy to the Administrative Agents) may request
that Loans of any Class made by it be evidenced by a promissory note (unless
already evidenced by a Bankers’ Acceptance). 
In such event, the applicable Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) in
the form of Exhibit K-1, K-2, K-3, K-4, or K-6
as the case may be.  Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 11.04) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).

 

SECTION 2.05.            Fees.  In addition to the fees
payable as set forth in the Fee Letter, the following fees will be payable to
the Administrative Agent:

 

(a)         Commitment Fee.  The Borrowers agree to pay to the applicable
Administrative Agent for the account of each Lender with a Revolving Commitment
a commitment fee (a “Commitment Fee”)
equal to the Applicable Fee per annum on the average daily unused amount of
each Revolving Commitment of such Lender during the period from and including the
date hereof to but excluding the date on which such Revolving Commitment
terminates.  Accrued Commitment Fees
shall be payable in arrears (A) on the last Business Day of March, June,
September and December of each year, commencing on the first such date to occur
after the date hereof, and (B) on the date on which such Revolving Commitment
terminates.  Commitment Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last
day).  For purposes of computing
Commitment Fees with respect to Revolving Commitments a Revolving Commitment of
a Lender shall be deemed to be used to the extent of the outstanding Revolving
Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender
shall be disregarded for such purpose).  

 

53

 

(b)        LC and Fronting Fees.  The US Borrowers agree to pay (i) to the US
Administrative Agent for the account of each Revolving Lender (other than a
Canadian Revolving Lender) a participation fee (“Standby
LC Participation Fee”) with
respect to its participations in Standby Letters of Credit, which shall accrue
at a rate equal to the Applicable Margin from time to time used to determine
the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06
on the average daily amount of such Lender’s LC Exposure (excluding any portion
thereof attributable to Reimbursement Obligations), as appropriate, during the
period from and including the Closing Date to but excluding the later of the
date on which such Lender’s Revolving Commitment terminates and the date on
which such Lender ceases to have any LC Exposure, (ii) to the US Administrative
Agent for the account of each Revolving Lender a participation fee (“Commercial LC Participation Fee” and together with the
Standby LC Participation Fee, the “LC Participation Fee”)
with respect to its participation in Commercial Letters of Credit, which shall
accrue at a rate equal to the greater of (A) the Applicable Margin from time to
time used to determine the interest rate on Eurodollar Revolving Loans pursuant
to Section 2.06 on the average daily amount of such Lender’s LC Exposure
(excluding any portion thereof attributable to Reimbursement Obligations), as
appropriate, during the period from and including the Closing Date to but
excluding the later of the date on which such Lender’s Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure minus
0.50% and (B) 0.50%, and (iii) to the Issuing Bank a fronting fee (“Fronting Fee”), which shall accrue at the
rate of 0.125% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to Reimbursement Obligations) during
the period from and including the Closing Date to but excluding the later of
the date of termination of the Revolving Commitments and the date on which
there ceases to be any LC Exposure, as well as the Issuing Bank’s customary
fees with respect to the issuance, amendment, renewal or extension of any
Letter of Credit or processing of drawings thereunder.  Accrued LC Participation Fees and Fronting
Fees shall be payable in arrears (i) on the last Business Day of March, June,
September and December of each year, commencing on the first such date to occur
after the Closing Date, and (ii) on the date on which the Revolving Commitments
terminate.  Any such fees accruing after
the date on which the Revolving Commitments terminate shall be payable on
demand.  Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand therefor.  All LC Participation
Fees and Fronting Fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).  During the
continuance of a Default, the LC Participation Fee shall be increased to a per
annum rate equal to 2% plus the otherwise applicable rate with respect thereto.

 

(c)         All Fees shall be paid on the dates
due, in immediately available funds in dollars, to the applicable
Administrative Agent for distribution, if and as appropriate, among the
applicable Lenders, except that the US Borrowers shall pay the Fronting Fees
directly to the Issuing Bank.  Once paid,
none of the Fees shall be refundable under any circumstances.

 

SECTION 2.06.            Interest on Loans.

 

(a)         ABR Loans.  Subject to the provisions of Section
2.06(e), the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin in effect from time to time.

 

(b)        Canadian Prime Rate Loans.  Subject to Section 2.06(e), the Loans
comprising each Canadian Prime Rate Borrowing shall bear interest at a rate per
annum equal to the Canadian Prime Rate plus the Applicable Margin in effect
from time to time.

 

54

 

(c)         Eurodollar Loans.  Subject to the provisions of Section
2.06(e), the Loans comprising each Eurodollar Borrowing shall bear interest
at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in
effect for such Borrowing plus the Applicable Margin in effect from time to
time.

 

(d)        Bankers’ Acceptances.  Subject to Section 2.06(e), upon
acceptance of a Bankers’ Acceptance by a Lender, Canadian Borrower shall pay to
Canadian Administrative Agent on behalf of such Lender a fee (the “Acceptance Fee”) calculated on the face amount of such
Bankers’ Acceptance at a rate per annum equal to the Applicable Margin on the
basis of the number of days in the Interest Period applicable to such Bankers’
Acceptance and a year of 365 or 366 days, as applicable.

 

(e)         Default Rate.  Notwithstanding the foregoing, during an Event
of Default, all Obligations shall, to the extent permitted by applicable law,
bear interest, after as well as before judgment, at a per annum rate equal to
(i) in the case of principal and premium, if any, of or interest on any Loan,
2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section
2.06 or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans in the case
of Borrowings in dollars, or Canadian Prime Rate Loans, in the case of
Borrowings in Canadian dollars, as provided in Section 2.06(a) or (b),
respectively (in either case, the “Default
Rate”).

 

(f)         Interest Payment Dates.  Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to Section 2.06(e) shall be payable on demand, (ii) in the
event of any repayment or prepayment of any Loan (other than a prepayment of an
ABR Revolving Loan, Canadian Prime Rate Loan or a Swingline Loan without a
permanent reduction in Revolving Commitments), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

 

(g)        Interest Calculation.  All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate, the Canadian Prime Rate or Bankers’ Acceptances shall
be computed on the basis of a year of 365 days (or 366 days in a leap year),
and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted
LIBOR Rate, Canadian Prime Rate or Acceptance Fee shall be determined by the
applicable Administrative Agent in accordance with the provisions of this Agreement
and such determination shall be conclusive absent manifest error.

 

(h)        Currency for Payment of Interest.  All interest paid or payable pursuant to this
Section 2.06 shall be paid in the Approved Currency in which the Loan
giving rise to such interest is denominated.

 

(i)          Interest Act (Canada).  For the purposes of the Interest Act
(Canada), in any case in which an interest or fee rate is stated in
this Agreement to be calculated on the basis of a number of days that is other
than the number in a calendar year, the yearly rate, to which such interest or
fee rate is equivalent, is equal to such interest or fee rate multiplied by the
actual number of days in the year in which the relevant interest or fee payment
accrues and divided by the number of days used as the basis for such
calculation.

 

SECTION 2.07.            Termination and Reduction of Commitments.

 

(a)         Termination of Commitments.  The Revolving Commitments, the Tranche B
Commitments, the US Swingline Commitment, the Canadian Swingline Commitment and
the LC 

 

55

 

Commitment
shall automatically terminate on the Revolving Maturity Date and the Tranche B
Maturity Date.  

 

(b)        Optional Terminations and Reductions.  At their option, Borrowers may at any time
terminate, or from time to time permanently reduce, the Commitments of any
Class; provided that (i) each
reduction of the Commitments of any Class shall be in an amount that is an
integral multiple of $1.0 million and not less than $5.0 million, (ii) the
Revolving Commitments shall not be terminated or reduced if, after giving
effect to any concurrent prepayment of the Revolving Loans in accordance with Section
2.10, the aggregate amount of Revolving Exposures would exceed the
aggregate amount of Revolving Commitments, (iii) the Tranche B Commitment shall
not be terminated or reduced if there are any Revolving Loans outstanding and
(iv) the Tranche B Commitments shall not be terminated or reduced if, after
giving effect to any concurrent prepayment of the Tranche B Loans in accordance
with Section 2.10, the aggregate amount of Tranche B Exposures would
exceed the aggregate amount of Tranche B Commitments.  Any permanent reduction of the Revolving
Commitment shall result in a pro rata permanent reduction in the Canadian
Revolving Commitments.

 

(c)         Notice by the Borrowers.  The applicable Borrower shall notify the
applicable Administrative Agent in writing of any election to terminate or
reduce the Commitments under Section 2.07(b) at least three Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. 
Promptly following receipt of any notice, such Administrative Agent
shall advise the Lenders of the contents thereof.  Each notice delivered by such Borrower
pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitments delivered by any Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by such Borrower (by
notice to such Administrative Agent on or prior to the specified effective
date) if such condition is not satisfied. 
Any termination or reduction of the Commitments of any Class shall be
permanent.  Each reduction of the
Commitments of any Class shall be made ratably among the Lenders in accordance
with their respective Commitments of such Class.

 

SECTION 2.08.            Interest Elections.

 

(a)         Generally.  Each Revolving Borrowing, including each
Canadian Revolving Borrowing, and each Tranche B Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing and a Bankers’ Acceptance, shall have an initial Interest
Period as specified in such Borrowing Request. 
Thereafter, the applicable Borrower may elect to convert such Borrowing
to a different Type or to rollover or continue such Borrowing and, in the case
of a Eurodollar Borrowing or a Bankers’ Acceptance, may elect Interest Periods
therefor, all as provided in this Section (except that only the Canadian
Borrower may elect Canadian Prime Rate Borrowings or Bankers’
Acceptances).  Borrowings consisting of
Canadian Revolving Loans may only be converted to a different Type of Canadian
Revolving Loan.  The applicable Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising each
such portion shall be considered a separate Borrowing.  Notwithstanding anything to the contrary, the
applicable Borrower shall not be entitled to request any conversion, rollover
or continuation that, if made, would result in more than fifteen Eurodollar
Borrowings or Bankers’ Acceptances having more than fifteen different Interest
Periods being outstanding hereunder at any one time.  This Section shall not apply to Borrowings of
Swingline Loans, which may not be converted or continued.

 

(b)        Interest Election Notice.  To make an election pursuant to this Section,
the applicable Borrower shall deliver, by hand delivery or telecopier, a duly
completed and executed Interest Election 

 

56

 

Request
to the applicable Administrative Agent not later than the time that a Borrowing
Request would be required under Section 2.03 if such Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. 
Each Interest Election Request shall be irrevocable.  Each Interest Election Request shall specify
the following information in compliance with Section 2.02:

 

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

 

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

 

(iii)          the Approved Currency of the resulting
Borrowing;

 

(iv)          whether the resulting Borrowing is to
be an ABR Borrowing, Canadian Prime Rate Borrowing, a Eurodollar Borrowing or
an advance by way of Bankers’ Acceptance; and

 

(v)           if the resulting Borrowing is a
Eurodollar Borrowing or an advance by way of Bankers’ Acceptance, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.

 

If any such Interest
Election Request requests a Eurodollar Borrowing or an advance by way of
Bankers’ Acceptance but does not specify an Interest Period, then such Borrower
shall be deemed to have selected an Interest Period of one month’s duration.

 

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

 

(c)         Automatic Conversion to ABR
Borrowing or Canadian Prime Rate Borrowings.  If an Interest Election Request with respect
to a Eurodollar Borrowing or a Bankers’ Acceptance is not timely delivered
prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing or Bankers’ Acceptance is repaid as provided herein, at the end of
such Interest Period such Eurodollar Borrowing or Bankers’ Acceptance shall be
converted to (i) in the case of a Eurodollar Borrowing, an ABR Borrowing and
(ii) in the case of a Bankers’ Acceptance, a Canadian Prime Rate
Borrowing.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing, the applicable
Administrative Agent or the Required Lenders may require, by notice to the
applicable Borrower, that (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing or a Bankers’ Acceptance and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing and
each Banker’s Acceptance shall be converted into a Canadian Prime Rate Loan, in
each case, at the end of the Interest Period applicable thereto.

 

SECTION 2.09.            [Intentionally Deleted].

 

SECTION 2.10.            Optional and Mandatory Prepayments of Loans.

 

(a)         Optional Prepayments.  Each Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part,
subject to the requirements of this Section 2.10 and subject to the
provisions of Section 9.02(g); provided
that each partial prepayment shall be in an amount 

 

57

 

that
is an integral multiple of $1.0 million (or, if applicable, Can$100,000) and
not less than $3.0 million (or, if applicable, Can$1.0 million) or, if less,
the outstanding principal amount of such Borrowing; provided
further that there shall be no prepayment of any Tranche B
Borrowings, in whole or in part, if there are any Revolving Borrowings
outstanding, and if any prepayments are made in respect of Tranche B Borrowings
as provided herein, the Tranche B Commitments shall be permanently reduced
ratably among the Tranche B Lenders in accordance with their applicable Tranche
B Commitments in an aggregate amount equal to such prepayment and Borrower
shall comply with Section 2.10(b).

 

(b)        Certain Revolving Loan and Tranche B
Loan Prepayments.

 

(i)            In the event of the termination of
all the Revolving Commitments, each Borrower shall, on the date of such termination,
repay or prepay all its outstanding Revolving Borrowings and all outstanding
Swingline Loans and replace all outstanding Letters of Credit or cash
collateralize all outstanding Letters of Credit in accordance with the
procedures set forth in Section 2.18(i). 

 

(ii)           In the event of any partial reduction
of the Revolving Commitments, then (x) at or prior to the effective date of
such reduction, the Administrative Agents shall notify Borrowers and the
Revolving Lenders of the sum of the Revolving Exposures after giving effect
thereto and (y) if the sum of the Revolving Exposures would exceed the
aggregate amount of Revolving Commitments after giving effect to such
reduction, then Borrowers shall, on the date of such reduction, first, repay or prepay Swingline Loans, second, repay or prepay Revolving
Borrowings and third, replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance with the procedures set forth in Section 2.18(i),
in an aggregate amount sufficient to eliminate such excess.

 

(iii)          In the event that (x) the sum of all
Lenders’ Revolving Exposures exceeds the Revolving Commitments less the Line
Reserve then in effect (including on any date on which Dollar Equivalents are
determined pursuant to Section 11.17) or (y) the sum of all Lenders’
Canadian Exposures exceeds the Canadian Revolving Commitments less the Line
Reserve allocated to the Canadian Commitments Revolving then in effect
(including on any date on which Dollar Equivalents are determined pursuant to Section
11.17), then in each case, Borrowers shall, without notice or demand,
immediately first, repay or
prepay Revolving Borrowings, and second,
replace outstanding Letters of Credit or cash collateralize outstanding Letters
of Credit in accordance with the procedures set forth in Section 2.18(i),
in an aggregate amount sufficient to eliminate such excess.

 

(iv)          In the event that the aggregate LC
Exposure exceeds the LC Commitment then in effect (including on any date on
which Dollar Equivalents are determined pursuant to Section 11.17), US
Borrowers shall, without notice or demand, immediately replace outstanding
Letters of Credit or cash collateralize outstanding Letters of Credit in
accordance with the procedures set forth in Section 2.18(i), in an
aggregate amount sufficient to eliminate such excess.

 

(v)           In the event that (x) the sum of all
Lenders’ US Revolving Exposures exceeds the result of (I) the Borrowing Base
then in effect minus (II) the U.S. Minimum Availability Requirement or (y) the
sum of all Lenders’ Canadian Exposures exceeds the result of (I) the Canadian
Borrowing Base then in effect minus (II) the Canadian Minimum Availability
Requirement, the Borrowers shall, without notice or demand, immediately apply
an amount equal to such excess to prepay the Loans and any interest accrued
thereon, in accordance with Section 2.10(f) in an amount sufficient to
eliminate such excess.  

 

58

 

(vi)          In the event an Activation Notice has
been given (as contemplated by Section 9.02), the Borrowers shall pay
all proceeds of Collateral (other than proceeds of a Casualty Event or an Asset
Sale that do not require a permanent repayment) into the Collection Account,
for application in accordance with Section 9.02(g).

 

(vii)         Borrowings by way of Bankers’
Acceptance may only be prepaid by cash collateralizing the same in accordance
with Section 2.03(b)(xi).

 

(viii)        Subject to Section 2.07(b), in the event
of the termination of all the Tranche B Commitments, each Borrower shall, on
the date of such termination, repay or prepay all its outstanding Tranche B
Borrowings.

 

(ix)           Subject to Section 2.07(b), in the
event of any partial reduction of the Tranche B Commitments, then (x) at or
prior to the effective date of such reduction, the Administrative Agents shall
notify Borrowers and the Tranche B Lenders of the sum of the Tranche B
Exposures after giving effect thereto and (y) if the sum of the Tranche B
Exposures would exceed the aggregate amount of Tranche B Commitments after
giving effect to such reduction, then Borrowers shall, on the date of such
reduction, repay or prepay Tranche B Borrowings in an aggregate amount
sufficient to eliminate such excess.

 

(x)            Subject to Section 2.07(b), in the
event that the sum of all Lenders’ Tranche B Exposures exceeds the Tranche B
Commitments then in effect (including on any date on which Dollar Equivalents
are determined pursuant to Section 11.17), then Borrowers shall, without
notice or demand, immediately repay or prepay the Tranche B Borrowings in an
aggregate amount sufficient to eliminate such excess.

 

(xi)           In the event that the sum of (x) the
sum of all Lenders’ aggregate US Revolving Exposure plus the aggregate
Tranche B Exposure exceeds the sum of the Borrowing Base then in effect minus
the U.S. Minimum Availability Requirement minus the Line Reserve plus
the Tranche B Borrowing Base, the Borrowers shall, without notice or demand,
immediately apply an amount equal to such excess to prepay the Revolving Loans
and any interest accrued thereon in accordance with Section 2.10(f) in
an amount sufficient to eliminate such excess.

 

(c)         Asset Sales.  Not later than one Business Day following the
receipt of any Net Cash Proceeds of any Asset Sale by Holdings or any of its
Subsidiaries, Borrowers shall make any prepayments required by Section
2.10(b) as well as prepayments in accordance with Section 2.10(f)
and (g) in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:

 

(i)            no such prepayment shall be required
under this Section 2.10(c) with respect to (A) any Asset Sale permitted
by Section 6.06(a), (B) the disposition of property which constitutes a
Casualty Event, or (C) Asset Sales for fair market value resulting in no more
than the Dollar Equivalent of $100,000 in Net Cash Proceeds per Asset Sale (or
series of related Asset Sales) and less than the Dollar Equivalent of $1.0
million in Net Cash Proceeds in any fiscal year; provided that clause (C) shall not apply in the case of any
Asset Sale described in clause (b) of the definition thereof; and

 

(ii)           subject to Section 2.10(g) and
any requirement for a prepayment made under Section 2.10(b) and so long
as no Default shall then exist or would arise therefrom, such proceeds shall
not be required to be so applied on such date to the extent that Borrowers
shall have delivered an Officers’ Certificate to the applicable Administrative
Agent on or prior to such date stating that such Net Cash Proceeds are expected
to be reinvested in fixed or capital assets within 

 

59

 

365
days following the date of such Asset Sale (which Officers’ Certificate shall
set forth the estimates of the proceeds to be so expended); provided that if all or any portion of
such Net Cash Proceeds is not so reinvested within such 365-day period, such
unused portion shall be applied on the last day of such period as a mandatory
prepayment as provided in this Section 2.10(c); provided, further, that if the property
subject to such Asset Sale constituted Collateral, then all property purchased
with the Net Cash Proceeds thereof pursuant to this subsection shall be made
subject to the Lien of the applicable Security Documents in favor of the
applicable Collateral Agents for their benefit and for the benefit of the other
Secured Parties in accordance with Section 5.11 and Section 5.12.

 

(d)        Casualty Events.  Not later than one Business Day following the
receipt of any Net Cash Proceeds from a Casualty Event by Holdings or any of
its Subsidiaries, the applicable Borrower shall make any prepayments required
by Section 2.10(b) as well as any prepayments in accordance with Sections
2.10(f) and (g) in an aggregate amount equal to 100% of such Net
Cash Proceeds; provided that:

 

(i)            so long as no Default shall then
exist or arise therefrom, such proceeds (other than amounts required under Section
2.10(b) to be prepaid) shall not be required to be so applied on such date
to the extent that Borrowers shall have delivered an Officers’ Certificate to
the Administrative Agents on or prior to such date stating that such proceeds
are expected to be used to repair, replace or restore any property in respect
of which such Net Cash Proceeds were paid or to reinvest in other fixed or
capital assets, no later than 180 days following the date of receipt of such
proceeds; provided that if the
property subject to such Casualty Event constituted Collateral under the
Security Documents, then all property purchased with the Net Cash Proceeds
thereof pursuant to this subsection shall be made subject to the Lien of the
applicable Security Documents in favor of the applicable Collateral Agents for
their benefit and for the benefit of the other Secured Parties in accordance
with Section 5.11 and Section 5.12; and

 

(ii)           if any portion of such Net Cash
Proceeds shall not be so applied within such 180-day period, such unused
portion shall be applied on the last day of such period as a mandatory
prepayment as provided in this Section 2.10(d).

 

(e)         [Intentionally
Deleted].

 

(f)         Application of Prepayments.  

 

(i)            Prior to any optional or mandatory
prepayment hereunder, Borrowers shall select the Borrowing or Borrowings to be
prepaid and shall specify such selection in the notice of such prepayment
pursuant to Section 2.10(g), subject to the provisions of this Section
2.10(f).  Any mandatory prepayments
(other than those required by Section 2.10(b)) shall (i) first, be applied to the Revolving Loans and the Revolving
Commitments shall be permanently reduced ratably among the Revolving Lenders in
accordance with their applicable Revolving Commitments in an aggregate amount
equal to such prepayment and Borrower shall comply with Section 2.10(b)
and (ii) second, be applied to the Tranche B
Loans and the Tranche B Commitments shall be permanently reduced ratably among
the Tranche B Lenders in accordance with their applicable Tranche B Commitments
in an aggregate amount equal to such prepayment and Borrower shall comply with Section
2.10(b).

 

(ii)           Notwithstanding the foregoing, in the event
that Borrowers have delivered an Officers’ Certificate in accordance with
Section 2.10(c) or in accordance with Section 2.10(d), (A) the applicable Net
Cash Proceeds shall be applied against the outstanding Revolving Loans, 

 

60

 

without
a permanent reduction in the Commitments, (B) both a Reserve and a reserve
against the Commitments (“Line Reserve”)
shall be established (in the amount of the Net Cash Proceeds less any amounts
used for prepayments that were required by Sections 2.10(b) because of
the sale or disposition of Inventory outside of the ordinary course of
business) which Reserve and Line Reserve shall each be released simultaneously
with and to the extent of any Loans advanced to the Borrowers for the purpose of
purchasing assets in accordance with Section 2.10(c) or Section 2.10(d), as
applicable; provided Borrowers submit (with the applicable Borrowing Request)
an Officer’s Certificate setting forth the use of proceeds of the requested
Loan and confirming that such use is in compliance with Section 2.10(c) or
Section 2.10(d), as applicable, and (C) in the event that any part or all of
the Reserve remains in place at the end of the time period set forth in Section
2.10(c) or Section 2.10(d), as applicable, the Commitments shall be permanently
reduced by an amount equal to such remaining Reserve and, simultaneously with
the such reduction, the remaining Line Reserve shall be released.

 

(iii)          Amounts to be applied pursuant to this Section
2.10 to the prepayment of Revolving Loans shall, in the absence of
direction from the Borrowers pursuant to Section 2.10(g)(i), be applied to the
prepayment of the ABR Loans and Canadian Prime Rate Loans in the discretion of
the Administrative Agents.  Any amounts
remaining after each such application shall be applied to prepay Eurodollar
Revolving Loans or Bankers’ Acceptances, as applicable.  Notwithstanding the foregoing, if the amount
of any prepayment of Loans required under this Section 2.10 shall be in
excess of the amount of the ABR Loans and Canadian Prime Rate Loans at the time
outstanding (an “Excess Amount”),
only the portion of the amount of such prepayment as is equal to the amount of
such outstanding ABR Loans and Canadian Prime Rate Loans shall be immediately
prepaid and, at the election of the applicable Borrower, the Excess Amount
shall be either (A) deposited in an escrow account on terms satisfactory to the
applicable Collateral Agents and applied to the prepayment of Eurodollar Loans
or Bankers’ Acceptances on the last day of the then next-expiring Interest
Period for the applicable Eurodollar Loans or Bankers’ Acceptances, as the case
may be; provided that (i) interest in respect of
such Excess Amount shall continue to accrue thereon at the rate provided
hereunder for the Loans which such Excess Amount is intended to repay until
such Excess Amount shall have been used in full to repay such Loans and (ii) at
any time while a Default has occurred and is continuing, the Administrative
Agent may, and upon written direction from the Required Lenders shall, apply
any or all proceeds then on deposit to the payment of such Loans in an amount
equal to such Excess Amount or (B) prepaid immediately, together with any
amounts owing to the Lenders under Section 2.13.

 

(g)        Notice of Prepayment.  The applicable Borrower shall notify the
applicable Administrative Agent (and, in the case of prepayment of a Swingline
Loan, the applicable Swingline Lender) by written notice of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing or Bankers’
Acceptances, not later than 11:00 a.m., New York City time, three Business Days
before the date of prepayment, (ii) in the case of prepayment of an ABR
Borrowing or a Canadian Prime Rate Loan, not later than 1:00 p.m., New York
City time, one Business Day before the date of prepayment and (iii) in the case
of prepayment of a Swingline Loan, not later than 2:00 p.m., New York City
time, on the date of prepayment.  Each
such notice shall be irrevocable; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.07,
then such notice of prepayment may be revoked if such termination is revoked in
accordance with Section 2.07. 
Each such notice shall specify the prepayment date, the principal amount
of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment.  Promptly following receipt of
any such notice (other than a notice relating solely to Swingline Loans), such
Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing
shall be in an amount that would be permitted in the case of a Credit Extension
of the same Type as provided 

 

61

 

in
Section 2.02, except as necessary to apply fully the required amount of
a mandatory prepayment.  Each prepayment
of a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing and otherwise in accordance with this Section 2.09.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.06.

 

SECTION 2.11.            Alternate Rate of Interest.

 

(a)         If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

 

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

 

(ii)           the applicable Administrative Agent
is advised in writing by the Required Lenders that the Adjusted LIBOR 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 such Administrative Agent shall give written notice thereof to the
applicable Borrower and the Lenders as promptly as practicable thereafter and,
until such Administrative Agent notifies such Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

 

(b)        If prior to the commencement of any
Interest Period relating to a Bankers’ Acceptance, the Canadian Administrative
Agent determines (which determination shall be final and conclusive absent
manifest error) that, by reason of circumstances affecting the money markets,
there is no active market for Bankers’ Acceptances or the demand for Bankers’
Acceptances is insufficient to allow the sale or trading of the Bankers’
Acceptances to be created hereunder, then:

 

(i)            the right of the Canadian Borrower
to request a Canadian Revolving Loan by means of a Bankers’ Acceptance shall be
suspended until such time as the Canadian Administrative Agent determines that
the circumstances causing such suspension no longer exist and the Canadian
Administrative Agent so notifies the Canadian Borrower;

 

(ii)           any Borrowing Request which calls for
the issuance of a Bankers’ Acceptance which is outstanding shall be cancelled
and such Borrowing Request shall be deemed to be a request for a Canadian Prime
Rate Loan in the face amount of the requested Bankers’ Acceptance;

 

(iii)          any outstanding Interest Election
Request requesting a conversion of a Canadian Prime Rate Loan into Bankers’
Acceptances or BA Equivalent Loan shall be deemed to be revoked; and

 

(iv)          any outstanding Interest Election
Request requesting a rollover of Bankers’ Acceptances or BA Equivalent Loans
shall (unless revoked by the Canadian Borrower before the Borrowing) be deemed
to be an Interest Election Request requesting a conversion of such Loans into
Canadian Prime Rate Loans.

 

62

 

SECTION 2.12.            Yield Protection.

 

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

 

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

 

(ii)           subject any Lender or the Issuing
Bank to any tax of any kind whatsoever with respect to this Agreement, any
Letter of Credit, any participation in a Letter of Credit or any Eurodollar
Loan made by it or any Bankers’ Acceptance purchased or accepted by it, or
change the basis of taxation of payments to such Lender or the Issuing Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
2.15 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender or the Issuing Bank); or

 

(iii)          impose on any Lender or the Issuing
Bank or the London interbank market any other condition, cost or expense (other
than any Taxes) affecting this Agreement or Eurodollar Loans made by such
Lender or any Bankers’ Acceptance purchased or accepted by such Lender or any
Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan or purchasing or accepting any Bankers’
Acceptance), or to increase the cost to such Lender, the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company, if any, of participating in,
issuing or maintaining any Letter of Credit (or of maintaining its obligation
to participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by such Lender or the Issuing Bank hereunder
(whether of principal, interest or any other amount), then, upon request of
such Lender or the Issuing Bank, the applicable Borrower 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)        Capital Requirements.  If any Lender or the Issuing Bank determines
(in good faith, but in its sole absolute discretion) that any Change in Law
affecting such Lender or the Issuing Bank or any lending office of such Lender
or such Lender’s or the Issuing Bank’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender’s or the 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, the Commitments of such Lender or the Loans made by, the
Bankers’ Acceptances purchased or accepted 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
applicable Borrower 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)         Certificates for Reimbursement.  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 2.12 and delivered to the
applicable Borrower shall be conclusive absent manifest error.  The applicable Borrower shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

63

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the Issuing Bank to demand compensation pursuant to this Section 2.12
shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to
demand such compensation; provided
that Borrowers shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the applicable Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s or the Issuing Bank’s intention to claim compensation therefor (except
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to
include the period of retroactive effect thereof).

 

SECTION 2.13.            Breakage Payments.  In
the event of (a) the payment or prepayment, whether optional or mandatory, of
any principal of any Eurodollar Loan earlier than the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan earlier than the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Revolving Loan or Tranche B Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such prepayment notice is
later revoked in accordance with Section 2.10(g)) or (d) the assignment
of any Eurodollar Loan earlier than the last day of the Interest Period
applicable thereto as a result of a request by Borrowers pursuant to Section
2.16(b), then, in any such event, the applicable Borrower shall compensate
each applicable Lender for the loss, cost and expense attributable to such
event.  In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBOR Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the Eurodollar market.  A certificate of any Lender setting forth in
reasonable detail any amount or amounts that such Lender is entitled to receive
pursuant to this Section 2.13 shall be delivered to the applicable
Borrower (with a copy to the Administrative Agents) and shall be conclusive and
binding absent manifest error.  The
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 5 days after receipt thereof.

 

SECTION 2.14.            Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.

 

(a)         Payments Generally.  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 Obligations, or of amounts payable under Section
2.12, Section 2.13, Section 2.15 or Section 11.03, or
otherwise) on or before the time expressly required hereunder or under such
other Loan Document for such payment (or, if no such time is expressly
required, prior to 4:00 p.m., New York City time), on the date when due, in
immediately available funds, without setoff, deduction or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the applicable 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 applicable Administrative Agent at the office
designated by it from time to time, except payments to be made directly to the
Issuing Bank or a Swingline Lender as expressly provided herein and except that
payments pursuant to Section 2.12, Section 2.13, Section 2.15
and Section 11.03 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 applicable
Administrative Agent shall distribute any such payments received by it for the
account of any 

 

64

 

other
person to the appropriate recipient promptly following receipt thereof.  If any payment under any Loan Document shall
be due on a day that is not a Business Day, unless specified otherwise, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension.  All
payments under each Loan Document shall be made in dollars, except as expressly
specified otherwise.

 

(b)        Pro Rata Treatment.

 

(i)            Each payment by Borrowers of
interest in respect of its Loans shall be applied to the amounts of such
Borrower’s obligations owing to the applicable Lenders pro rata according to the respective
amounts then due and owing to such Lenders.

 

(ii)           Each payment by Borrowers on account
of principal of the Revolving Borrowings or Tranche B Borrowings, as
applicable, shall be made to the applicable Lenders pro rata based on the principal amounts of the Revolving
Loans or Tranche B Loans, as applicable then held by the Lenders.

 

(c)         Insufficient Funds.  If at any time insufficient funds are
received by and available to the applicable Administrative Agent to pay fully
all amounts of principal, Reimbursement Obligations, interest and fees then due
hereunder, such funds shall be applied (i) first,
toward payment of interest and fees (other than in respect of the Tranche B
Loans) then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, (ii)
second, toward payment of
principal (other than in respect of the Tranche B Loans) and Reimbursement
Obligations then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and Reimbursement Obligations then due
to such parties, (iii) third, toward
payment of interest and fees then due hereunder in respect of the outstanding Tranche
B Loans, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and  (iv) fourth, toward
payment of principal in respect of outstanding Tranche Loans then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal in respect of outstanding Tranche B Loans then due to such
parties.

 

(d)        Sharing of Set-Off.  Subject to the terms of the Intercreditor
Agreement, if any Lender (and/or the Issuing Bank, which shall be deemed a “Lender”
for purposes of this Section 2.14(d)) 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 other Obligations resulting in such
Lender’s receiving payment of a proportion of the aggregate amount of its Loans
and accrued interest thereon or other Obligations greater than its pro  rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the applicable Administrative Agent of such fact,
and (b) purchase (for cash at face value) participations in the Loans and such
other obligations of the other applicable Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the applicable Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and other amounts owing them, 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 apply to (x) any application of proceeds and any payment made by Borrowers
pursuant to and in accordance with the express terms of this Agreement or (y)
any payment obtained by a Lender as consideration for the assignment of or sale
of a participation in any of its Loans or participations in LC Disbursements to
any assignee 

 

65

 

or
participant, other than to Borrowers or any Subsidiary thereof (as to which the
provisions of this paragraph shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it
may effectively do so under applicable Requirements of Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan
Party in the amount of such participation. 
If under applicable bankruptcy, insolvency or any similar law any
Secured Party receives a secured claim in lieu of a setoff or counterclaim to
which this Section 2.14(d) applies, such Secured Party shall to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights to which the Secured Party is entitled under
this Section 2.14(d) to share in the benefits of the recovery of such
secured claim.

 

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

 

(f)         Lender Default.  If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.02(c), Section
2.14(e), Section 2.17(d), Section 2.18(d), Section 2.18(e)
or Section 11.03(c), then the applicable Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by such Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.

 

SECTION 2.15.            Taxes.

 

(a)         Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Loan Parties hereunder or under any other Loan Document shall
be made free and clear of and without deduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if the Loan Parties
shall be required by applicable Requirements of Law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the applicable Administrative Agent, the applicable Collateral Agent, Lender or
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 applicable Loan Party
shall make such deductions and (iii) the applicable Loan Party shall timely pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable Requirements of Law.

 

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

 

66

 

(c)         Indemnification by Borrowers.  Borrowers shall indemnify the Agents, each
Lender and the Issuing Bank, within 10 days after demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) paid by the Agents, such Lender or the Issuing Bank, as the case
may be, and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to Borrowers by a Lender or the
Issuing Bank (with a copy to the Administrative Agents), or by the Agents on
their own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error.

 

(d)        Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by Borrowers to a Governmental Authority,
Borrowers shall deliver to the Administrative Agents 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 Agents.

 

(e)         Status of Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which US Borrowers are resident for tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or
under any other Loan Document shall, to the extent it may lawfully do so,
deliver to US Borrowers (with a copy to the Administrative Agents), at the time
or times prescribed by applicable Requirements of Law or as reasonably
requested by US Borrowers or the Administrative Agents, such properly completed
and executed documentation prescribed by applicable Requirements of Law as will
permit such payments to be made without withholding or at a reduced rate of
withholding.  In addition, any Lender, if
requested by US Borrowers or either Administrative Agent, shall deliver such
other documentation prescribed by applicable Requirements of Law or reasonably
requested by US Borrowers or the Administrative Agents as will enable US
Borrowers or the Administrative Agents to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in
the above two sentences, in the case of non-U.S. withholding taxes the
completion, execution and submission of non-U.S. forms shall not be required if
in the Lender’s judgment such completion, execution or submission would subject
such Lender to any material unreimbursed cost or expense or would be otherwise
disadvantageous to such Lender in any material respect.

 

Each initial Canadian Lender
of the Canadian Borrower represents and warrants to the Canadian Borrower that
on the Closing Date (a) (i)  it is not a “non-resident”
within the meaning of the ITA; or (ii) it is an “authorized foreign bank”
within the meaning of the Bank Act (Canada) for
purposes of the ITA, and is entering into this Agreement in the ordinary course
of its trade and business that is its “Canadian banking business” for purposes
of the ITA, and each amount paid or credited by or to it in respect of the
transactions contemplated hereunder is, and will be brought into account and
recorded and reported in computing its income for Canadian tax purposes as
having been made or received as the case may be, in respect of its “Canadian
banking business” as so defined; and (b) has no present intention to withdraw
from this Agreement.  Upon the written
request of the Canadian Administrative Agent or the Canadian Borrower acting
reasonably, each such Canadian Lender shall use its best efforts to deliver to
the Canadian Administrative Agent and Canadian Borrower such certificates,
documents or other evidence as may be required from time to time, properly
completed and duly executed by such Canadian Lender, to confirm the continuing
accuracy of the foregoing representation or alternatively, shall deliver a notice
to the Canadian Borrower indicating the facts and circumstances (other than
facts and circumstances brought about unilaterally by such Canadian Lender)
which have resulted in the above representation and warranty no longer
continuing to be true and accurate.  If
such Canadian Lender fails to deliver such requested certificates, documents,
other evidence on the one hand, or such notice on the 

 

67

 

other or, for greater certainty, the facts and circumstances relating
to the change of the status of the Canadian Lender have been brought about
unilaterally by such Canadian Lender, then the Canadian Borrower or the
Canadian Administrative Agent, as the case may be, shall withhold from any
interest payment to such Canadian Lender an amount equivalent to the applicable
Canadian withholding tax imposed by applicable Canadian laws (including any
applicable tax treaty) and the Canadian Borrower shall not be required to pay
any additional or other amounts to such Canadian Lender under Section
2.15(a).  From time to time, each such
Canadian Lender shall (i) promptly submit to the Canadian Administrative Agent
and the Canadian Borrower such certificates, documents, other evidence or
notice as aforesaid, (ii) promptly notify the Canadian Administrative Agent and
the Canadian Borrower of any change in circumstances which would result in the
above representation and warranty no longer continuing to be true and accurate,
and (iii) take such steps as shall not be materially disadvantageous to it, in
the reasonable judgment of such Canadian Lender, and as may be reasonably
necessary (including the re-designation of its Lending Office) to avoid any
requirement of applicable laws that the Canadian Borrower make any deduction or
withholding for Taxes from amounts payable to such Canadian Lender.  Notwithstanding the foregoing, but subject to
Section 11.04(b)(v), the Borrowers acknowledge that the rights and
obligations of a Canadian Lender hereunder may be assigned to an Eligible Assignee
that does not qualify as an Eligible Canadian Lender and further agree that any
Borrower approval required in respect of such an assignment shall not be
withheld on such basis.

 

Without limiting the
generality of any of the foregoing, any Foreign Lender shall, to the extent it
may lawfully do so, deliver to US Borrowers and the Administrative Agents (in
such number of copies as shall be requested by the recipient) on or prior to
the date on which such Foreign Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the request of Administrative Borrower
or either Administrative Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:

 

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

 

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

 

(iii)          in the case of a Foreign Lender
claiming the benefits of the exemption for portfolio interest under Section
881(c) of the Code, (x) a certificate, in substantially the form of Exhibit
Q, or any other form approved by the applicable Administrative Agent, to
the effect that such Foreign Lender is not (A) a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any
Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly
completed copies of  Internal Revenue
Service Form W-8BEN, or

 

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

 

(v)           any Lender that is not a Foreign
Lender and has not otherwise established to the reasonable satisfaction of the
Administrative Borrower and the Administrative Agent that it is an exempt
recipient (as defined in Section 6049(b)(4) of the Code and the regulations
thereunder) shall deliver to the Administrative Borrower (with a copy to the US
Administrative Agent) on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter as prescribed by
Applicable Law or upon the request of the Administrative 

 

68

 

Borrower
or the US Administrative Agent) two duly executed and properly completed copies
of Internal Revenue Service Form W-9 (or applicable successor form).  Each Lender (other than a Foreign Lender)
shall promptly notify the Administrative Borrower and the US Administrative
Agent at any time that it determines any previously delivered form or
certification is no longer accurate.

 

Each Foreign Lender shall
promptly notify the Administrative Borrower and each Administrative Agent at
any time that a previously delivered form of certificate is no longer accurate.

 

(f)         Treatment of Certain Refunds.  If either Administrative Agent, a Lender or
the Issuing Bank determines, in its sole discretion, that it has received a
refund of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by Borrowers or with respect to which Borrowers have paid
additional amounts pursuant to this Section, it shall pay to Borrowers an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by Borrowers under this Section with respect to the
Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Administrative Agent, such Lender or the Issuing
Bank, as the case may be, and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund); provided that Borrowers, upon the request of
either Administrative Agent, such Lender or the Issuing Bank, agrees to repay
the amount paid over to Borrowers (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to such Administrative
Agent, such Lender or the Issuing Bank in the event such Administrative Agent,
such Lender or the Issuing Bank is required to repay such refund to such
Governmental Authority.  If and to the
extent that any Lender is able, in its sole opinion, to apply or otherwise take
advantage of any offsetting tax credit or other similar tax benefit arising out
of or in conjunction with any deduction or withholding which gives rise to an
obligation of a Borrower to pay any additional amount pursuant to this Section
2.15, then such Lender shall, to the extent that in its sole opinion it can do
so without prejudice to the retention of the amount of such credit or benefit
and without any other adverse tax consequences for such Lender, reimburse such
Borrower at such time as such tax credit or benefit shall have actually been
received by such Lender such amount as such Lender shall, in its sole opinion,
have determined to be attributable to the relevant deduction or withholding and
as will leave such Lender in no better or worse position than it would have
been in if the payment of such additional amount had not been required (net of
all out-of-pocket expenses of such Administrative Agent, such Lender or the
Issuing Bank, as the case may be); provided that the Borrowers upon the request
of either Administrative Agent, such Lender or the Issuing Bank agrees to repay
the amount paid over to the Borrowers (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) in the event
Governmental Authority successfully challenges such tax credits or other tax
benefits.

 

This section shall not be construed to require either Administrative
Agent, any Lender or the Issuing Bank to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to
Borrowers or any other person. 
Notwithstanding anything to the contrary, in no event will any
Administrative Agent, any Lender or the Issuing Bank be required to pay any
amount to Borrowers the payment of which would place such Lender, such
Administrative Agent or the Issuing Bank in a less favorable net after-tax
position than such Lender, such Administrative Agent or the Issuing Bank would
have been in if the additional amounts giving rise to such refund of any
Indemnified Taxes or Other Taxes had never been paid.

 

(g)        Upon the reasonable request of the Canadian
Borrower, and at the Canadian Borrower’s expense, a Canadian Lender shall use
its reasonable efforts to co-operate with the Canadian Borrower with a view to
obtaining a refund of any Tax which is not, in the Canadian Borrower’s
reasonable opinion, correctly or legally imposed and for which the Canadian
Borrower has indemnified the Canadian Lender under this Agreement, if obtaining
such refund would not, in the sole judgment of the 

 

69

 

Canadian
Lender, be disadvantageous to the Canadian Lender; provided that nothing in
this clause shall be construed to require the Canadian Lender to institute any
administrative proceeding (other than the filing of a claim for any such
refund) or judicial proceeding to obtain any such refund.  If such Canadian Lender shall receive a
refund from a taxing authority (as a result of any error in the imposition of
Taxes by such taxing authority) or any Taxes paid by the Canadian Borrower pursuant
to this Agreement, the Canadian Lender shall promptly pay to the Canadian
Borrower the amount so received, less any Taxes imposed on the Canadian Lender
as a result of such amount and net out-of-pocket expenses provided that the
Canadian Lender shall only be required to pay the Canadian Borrower such
amounts as the Canadian Lender determines are attributable to Taxes paid by the
Canadian Borrower.  In the event that the
Canadian Lender is required to repay the amount of such refund (including interest,
if any), the Canadian Borrower, upon the request of the Canadian Lender, agrees
to promptly return to the Canadian Lender the amount of such refund and
interest, if any (plus penalties, interest and other charges imposed in
connection with the repayment of such amounts by the Canadian Lender).

 

SECTION 2.16.            Mitigation Obligations; Replacement of
Lenders.

 

(a)         Designation of a Different Lending
Office.  If any Lender requests
compensation under Section 2.12, or requires Borrowers to pay any
additional amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.15, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.12 or Section 2.15, 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.  Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.  A certificate
setting forth such costs and expenses submitted by such Lender to Borrower
shall be conclusive absent manifest error.

 

(b)        Replacement of Lenders.  If any Lender requests compensation under Section
2.12, or if Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to Section
2.15, or if any Lender defaults in its obligation to fund Loans hereunder,
or if Borrowers exercises their replacement rights under Section 11.02(d),
then Borrowers may, at their sole expense and effort, upon notice to such
Lender and the Administrative Agents, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 11.04), all of its
interests, rights and obligations under this Agreement and the other Loan
Documents to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that:

 

(i)            Borrowers shall have paid to the
applicable Administrative Agent the processing and recordation fee specified in
Section 11.04(b);

 

(ii)           such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any amounts under Section 2.13),
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or Borrowers(in the case of all other amounts);

 

70

 

(iii)          in the case of any such assignment
resulting from a claim for compensation under Section 2.12 or payments
required to be made pursuant to Section 2.15, such assignment will
result in a reduction in such compensation or payments thereafter; and

 

(iv)          such assignment does not conflict with
applicable Requirements of Law.

 

A Lender shall not be required to make any such assignment or
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling Borrowers to require such assignment and
delegation cease to apply.

 

SECTION
2.17.            Swingline Loans.

 

(a)         US Swingline Commitment.  Subject to the terms and conditions set forth
herein, the US Swingline Lender agrees to make US Swingline Loans to US
Borrowers from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in the
aggregate principal amount of outstanding US Swingline Loans exceeding $50
million and provided that after making a US Swingline Loan, the sum of the
total US Revolving Exposures shall not exceed the lesser of (A) the total
Revolving Commitments minus any Line Reserve and (B) the Borrowing Base minus
the U.S. Minimum Availability Requirement then in effect; provided
that the aggregate US Revolving Exposure plus the aggregate Tranche B
Exposure shall not exceed the amount equal to the Borrowing Base minus
the U.S. Minimum Availability Requirement minus the Line Reserve plus
the Tranche B Borrowing Base; provided
further that the US Swingline Lender shall not be required to make a
US Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to
the terms and conditions set forth herein, US Borrowers may borrow, repay and
reborrow US Swingline Loans.  

 

(b)        US Swingline Loans.  To request a US Swingline Loan, Administrative
Borrower shall deliver, by hand delivery or telecopier, a duly completed and
executed Borrowing Request to the US Administrative Agent and the US Swingline
Lender, not later than 2:00 p.m., New York City time, on the day of a proposed
Swingline Loan.  Each such notice shall
be irrevocable and shall specify the requested date (which shall be a Business
Day) and the amount of the requested US Swingline Loan.  Each US Swingline Loan shall be an ABR Loan.  The US Swingline Lender shall make each US
Swingline Loan available to the applicable US Borrower by means of a credit to
the general deposit account of such US Borrower with the US Swingline Lender
(or, in the case of a US Swingline Loan made to finance the reimbursement of an
LC Disbursement as provided in Section 2.18(e), by remittance to the
Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such
US Swingline Loan.  US Borrowers shall
not request a US Swingline Loan if at the time of or immediately after giving
effect to the extension of credit contemplated by such request a Default has
occurred and is continuing or would result therefrom.  US Swingline Loans shall be made in minimum
amounts of $1.0 million and integral multiples of $500,000 above such amount.

 

(c)         Prepayment.  US Borrowers shall have the right at any time
and from time to time to repay any US Swingline Loan, in whole or in part, upon
giving written notice to the US Swingline Lender and the US Administrative
Agent before 2:00 p.m., New York City time, on the proposed date of repayment.

 

(d)        Canadian Swingline Commitment.  Subject to the terms and conditions set forth
herein, the Canadian Swingline Lender agrees to make Canadian Swingline Loans
to Canadian Borrower from time to time during the Revolving Availability Period,
in an aggregate principal amount at any time outstanding that will not result
in the aggregate principal amount of outstanding Canadian Swingline Loans
exceeding $5.0 million and provided that after making a Canadian Swingline
Loan, the sum of the 

 

71

 

total
Canadian Exposures shall not exceed the lesser of (A) the total Canadian
Revolving Commitments minus any Line Reserve allocated to the Canadian
Revolving Commitments and (B) the Canadian Borrowing Base minus the Canadian
Minimum Availability Requirement then in effect; provided that the Canadian Swingline Lender shall not be
required to make a Canadian Swingline Loan to refinance an outstanding
Swingline Loan.  Within the foregoing
limits and subject to the terms and conditions set forth herein, Canadian
Borrower may borrow, repay and reborrow Canadian Swingline Loans.

 

(e)         Canadian Swingline Loans.  To request a Swingline Loan, Administrative
Borrower shall deliver, by hand delivery or telecopier, a duly completed and
executed Borrowing Request to the Canadian Administrative Agent and the
Canadian Swingline Lender, not later than 1:00 p.m., New York City time, on the
day of a proposed Canadian Swingline Loan. 
Each such notice shall be irrevocable and shall specify the requested
date (which shall be a Business Day) and the amount of the requested Canadian
Swingline Loan.  Each Canadian Swingline
Loan shall be a Canadian Prime Rate Loan. 
The Canadian Swingline Lender shall make each Canadian Swingline Loan
available to Canadian Borrower by means of a credit to the general deposit
account of Canadian Borrower with the Canadian Swingline Lender by 3:00 p.m.,
New York City time, on the requested date of such Canadian Swingline Loan.  Canadian Borrower shall not request a
Canadian Swingline Loan if at the time of or immediately after giving effect to
the extension of credit contemplated by such request a Default has occurred and
is continuing or would result therefrom. 
Canadian Swingline Loans shall be made in minimum amounts of Can$1.0
million and integral multiples of Can$500,000 above such amount.

 

(f)         Prepayment.  Canadian Borrower shall have the right at any
time and from time to time to repay any Canadian Swingline Loan, in whole or in
part, upon giving written notice to the Canadian Swingline Lender and the
Canadian Administrative Agent before 12:00 (noon), New York City time, on the
proposed date of repayment.

 

(g)        Participations.  Either Swingline Lender at any time in its
discretion may (and, in any event, not later than the fifth (5th) Business Day
after any Swingline Loan is made to the relevant Borrower, the applicable
Swingline Lender shall) by written notice given to the applicable
Administrative Agent (provided
such notice requirement shall not apply if either (i) the US Swingline Lender
and the US Administrative Agent are the same entity or (ii) the Canadian
Swingline Lender and the Canadian Administrative Agent are the same entity, as
applicable) not later than 11:00 A.M., New York City time, on the next
succeeding Business Day following such notice require the Revolving Lenders to
acquire participations on such Business Day in all or a portion of the
Swingline Loans then outstanding.  Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving
Lenders will participate.  Promptly upon
receipt of such notice, the applicable Administrative Agent will give notice
thereof to each Revolving Lender, specifying in such notice such Lender’s Pro
Rata Percentage of such Swingline Loan or Loans.  Each Revolving Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to the
applicable Administrative Agent, for the account of the applicable Swingline Lender,
such Lender’s Pro Rata Percentage of such Swingline Loan or Swingline
Loans.  Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever (so long as such payment shall not cause
such Lender’s Revolving Exposure to exceed such Lender’s Revolving
Commitment).  Each Revolving Lender shall
comply with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.02(c) with
respect to Loans made by such Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the applicable Administrative Agent
shall promptly pay to the applicable Swingline Lender the amounts so received
by it from the Revolving Lenders.  The 

 

72

 

applicable
Administrative Agent shall notify Administrative Borrower of any participations
in any Swingline Loan acquired by the Revolving Lenders pursuant to this
paragraph, and thereafter payments in respect of such Swingline Loan shall be
made to such Administrative Agent and not to such Swingline Lender.  Any amounts received by any Swingline Lender
from any Borrower (or other party on behalf of Borrowers) in respect of a
Swingline Loan after receipt by such Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Administrative
Agents.  Any such amounts received by the
Administrative Agents shall be promptly remitted by the Administrative Agents
to the Revolving Lenders that shall have made their payments pursuant to this
paragraph, as their interests may appear. 
The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve Borrowers of any default in the payment thereof.

 

SECTION 2.18.            Letters of Credit.

 

(a)         General.  Subject to the terms and conditions set forth
herein, US Borrowers may request the Issuing Bank, and the Issuing Bank agrees,
to issue Letters of Credit denominated in any Approved Currency for its own
account or the account of a Subsidiary in a form reasonably acceptable to the
US Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period (provided
that US Borrowers shall be a co-applicant, and be jointly and severally liable,
with respect to each Letter of Credit issued for the account of a
Subsidiary).  Upon receipt of an LC
Request in accordance with Section 2.18(b) below, the US Administrative
Agent shall notify the Issuing Bank as to whether the issuance of such Letter
of Credit is authorized.  The Issuing
Bank shall not issue any Letter of Credit without first receiving such
authorization and US Borrowers shall not request the issuance of, any Letter of
Credit at any time if after giving effect to such issuance, the LC Exposure
would exceed the LC Commitment or the total Revolving Exposure would exceed the
limits set forth in clause (b) below.  In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by US Borrowers to, or entered into by
US Borrowers with, the Issuing Bank relating to any Letter of Credit, the terms
and conditions of this Agreement shall control. 
Each of the parties hereto acknowledge and agree that, effective as of
the Closing Date, each of the Existing Issuing Bank Letters of Credit shall be
deemed and shall each constitute a Letter of Credit as if such Existing Issuing
Bank Letters of Credit were originally issued as a Letter of Credit under and
shall be subject to the terms and conditions of this Agreement.  

 

(b)        Request for Issuance, Amendment,
Renewal, Extension; Certain Conditions and Notices.  To request the issuance of a Letter of Credit
or the amendment, renewal or extension of an outstanding Letter of Credit, US
Borrowers shall deliver, by hand or telecopier (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank), an LC Request to the Issuing Bank and the US Administrative Agent not
later than 11:00 a.m. on the third Business Day preceding the requested date of
issuance, amendment, renewal or extension (or such later date and time as is
acceptable to the Issuing Bank).

 

Each LC Request for an
initial issuance of a Letter of Credit shall specify in form and detail
satisfactory to the Issuing Bank the following:

 

(i)            the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day);

 

(ii)           the amount and the currency thereof
(which shall be any Approved Currency);

 

(iii)          the expiry date thereof (which shall
not be later than the close of business on the Letter of Credit Expiration
Date);

 

73

 

(iv)          the name and address of the
beneficiary thereof;

 

(v)           whether the Letter of Credit is to be
issued for its own account or for the account of one of its Subsidiaries (provided that US Borrowers shall be a
co-applicant, and therefor jointly and severally liable, with respect to each
Letter of Credit issued for the account of a Subsidiary);

 

(vi)          the documents to be presented by such
beneficiary in connection with any drawing thereunder;

 

(vii)         the full text of any certificate to be
presented by such beneficiary in connection with any drawing thereunder; and

 

(viii)        such other matters as the Issuing Bank
may require.

 

A request for an amendment,
renewal or extension of any outstanding Letter of Credit shall specify in form
and detail satisfactory to the Issuing Bank:

 

(ix)           the Letter of Credit to be amended,
renewed or extended;

 

(x)            the proposed date of amendment,
renewal or extension thereof (which shall be a Business Day);

 

(xi)           the nature of the proposed amendment,
renewal or extension; and

 

(xii)          such other matters as the Issuing Bank
may require.

 

If requested by the Issuing Bank, US Borrowers also shall submit a
letter of credit application on the Issuing Bank’s standard form in connection
with any request for a Letter of Credit, but in the event of any inconsistency
between such standard form and this Agreement, the terms of this Agreement
shall control.  A Letter of Credit shall
be issued, amended, renewed or extended only if (and, upon issuance, amendment,
renewal or extension of each Letter of Credit, US Borrowers shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension, (i) the LC Exposure shall not exceed the LC Commitment,
(ii) the total Revolving Exposures shall not exceed the lesser of (A) the total
Revolving Commitments minus any Line Reserve and (B) the Borrowing Base minus
the U.S. Minimum Availability Requirement then in effect, (iii) the aggregate
Revolving Exposure plus the aggregate Tranche B Exposure shall not
exceed the amount equal to the Borrowing Base minus the U.S. Minimum
Availability Requirement minus the Line Reserve plus the Tranche
B Borrowing Base and (iv) the conditions set forth in Article IV in
respect of such issuance, amendment, renewal or extension shall have been
satisfied.  Unless the Issuing Bank shall
agree otherwise, no Letter of Credit shall be in an initial amount less than
$100,000, in the case of a Commercial Letter of Credit, or $500,000, in the
case of a Standby Letter of Credit.

 

Upon the issuance of any
Letter of Credit or amendment, renewal, extension or modification to a Letter
of Credit, the Issuing Bank shall promptly notify the US Administrative Agent,
who shall promptly notify each Revolving Lender, thereof, which notice shall be
accompanied by a copy of such Letter of Credit or amendment, renewal, extension
or modification to a Letter of Credit and the amount of such Lender’s
respective participation in such Letter of Credit pursuant to Section 2.18.  On the first Business Day of each calendar
month, the Issuing Bank shall provide to the US Administrative Agent a report
listing all outstanding Letters of Credit and the outstanding amounts and
beneficiaries thereof and the amount and maturities of any LC Acceptances and
the US Administrative Agent shall promptly provide such report to each
Revolving Lender.

 

74

 

(c)         Expiration Date.  Each Letter of Credit shall expire (or be
subject to non-renewal or termination by the US Administrative Agent) at or
prior to the close of business on the earlier of (x) the date which is 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 (y)
the Letter of Credit Expiration Date.  

 

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

 

(e)         Reimbursement.

 

(i)            If the Issuing Bank shall make any
LC Disbursement in respect of a Letter of Credit or LC Acceptance, US Borrowers
(or Canadian Borrower, in the first instance, and US Borrowers, alternatively,
for Letters of Credit governed by Section 2.18(m)) shall reimburse such
LC Disbursement by paying to the Issuing Bank an amount equal to such LC
Disbursement not later than 3:00 p.m., New York City time, on the date that
such LC Disbursement is made if Administrative Borrower shall have received
notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 3:00 p.m., New York City time,
on the Business Day immediately following the day that Administrative Borrower
receives such notice; provided
that US Borrowers may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 that such payment be financed
with ABR Revolving Loans or Swingline Loans in an equivalent amount and, to the
extent so financed, Administrative Borrowers’ obligation to make such payment
shall be discharged and replaced by the resulting ABR Revolving Loans or
Swingline Loans.

 

(ii)           If US Borrowers (or Canadian Borrower
and US Borrowers for Letters of Credit governed by Section 2.18(m))
fail to make such payment when due, the Issuing Bank shall notify the US
Administrative Agent and the US Administrative Agent shall notify each
Revolving Lender of the applicable LC Disbursement, the payment then due from
US Borrowers in respect thereof and such Revolving Lender’s Pro Rata Percentage
thereof.  Each Revolving Lender shall pay
by wire transfer of immediately available funds to the US Administrative Agent
not later than 2:00 p.m., New York City time, on such date (or, if such
Revolving Lender shall have received such notice later than 12:00 noon, New
York City time, on any day, not later than 11:00 a.m., New York City time, on
the immediately following Business Day), an amount equal to such Revolving
Lender’s Pro Rata Percentage of the unreimbursed LC Disbursement in the same
manner as provided in Section 2.02(c) with respect to Revolving Loans
made by such Revolving 

 

75

 

Lender,
and the US Administrative Agent will promptly pay to the Issuing Bank the
amounts so received by it from the Revolving Lenders.  The US Administrative Agent will promptly pay
to the Issuing Bank any amounts received by it from US Borrowers or Canadian
Borrower, as the case may be, pursuant to the above paragraph prior to the time
that any Revolving Lender makes any payment pursuant to the preceding sentence
and any such amounts received by the US Administrative Agent from US Borrowers
or Canadian Borrower, as the case may be, thereafter will be promptly remitted
by the US Administrative Agent to the Revolving Lenders that shall have made
such payments and to the Issuing Bank, as appropriate.

 

(iii)          If any Revolving Lender shall not have
made its Pro Rata Percentage of such LC Disbursement available to the US
Administrative Agent as provided above, each of such Revolving Lender and US
Borrowers severally agree to pay interest on such amount, for each day from and
including the date such amount is required to be paid in accordance with the
foregoing to but excluding the date such amount is paid, to the US
Administrative Agent for the account of the Issuing Bank at (i) in the case of
US Borrower, the rate per annum set forth in Section 2.18(h) and (ii) in
the case of such Lender, at a rate determined by the US Administrative Agent in
accordance with banking industry rules or practices on interbank compensation.

 

(iv)          All payments made pursuant to this Section
2.18(e) shall be in the Approved Currency in which the LC Disbursement
giving rise to such payment is denominated.

 

(f)         Obligations Absolute.  The Reimbursement Obligation of US Borrowers
and Canadian Borrower, as applicable, as provided in Section 2.18(e)
shall be absolute, unconditional and irrevocable, and shall be paid and
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein; (ii) any draft or other document presented under a Letter of
Credit being proved to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; (iii)
payment by the Issuing Bank (or creation of an LC Acceptance) under a Letter of
Credit against presentation of a draft or other document that fails to comply
with the terms of such Letter of Credit; (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.18, constitute a legal or equitable
discharge of, or provide a right of setoff against, the obligations of US
Borrowers and Canadian Borrower, as applicable, hereunder; (v) the fact that a
Default shall have occurred and be continuing; or (vi) any material adverse
change in the business, property, results of operations, prospects or condition,
financial or otherwise, of US Borrowers and its Subsidiaries.  None of the Agents, 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 LC Acceptance 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 US Borrowers or Canadian
Borrower, as applicable, to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by
Borrowers to the extent permitted by applicable Requirements of Law) suffered
by US Borrowers or Canadian Borrower, as applicable, 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.  The parties hereto expressly
agree that, in the absence of gross negligence 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 

 

76

 

without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without responsibility
for further investigation, regardless of any notice or information to the
contrary, or refuse to accept and make payment upon such documents if such
documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)        Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment (or creation of an LC Acceptance) under a Letter of Credit.  The Issuing Bank shall promptly give written
notice to the US Administrative Agent and US Borrowers of such demand for
payment and whether the Issuing Bank has made or will make an LC Disbursement
thereunder (or, in the case of the creation of an LC Acceptance, the date
payment is due thereunder); provided
that any failure to give or delay in giving such notice shall not relieve
Administrative Borrower or Canadian Borrower, as applicable, of its
Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with
respect to any such LC Disbursement (other than with respect to the timing of
such Reimbursement Obligation set forth in Section 2.18(e)).

 

(h)        Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, unless US Borrowers or Canadian Borrower, as applicable,
shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest payable on demand, for
each day from and including the date such LC Disbursement is made to but
excluding the date that US Borrowers or Canadian Borrower, as applicable,
reimburse such LC Disbursement, at the rate per annum determined pursuant to Section
2.06(e).  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 Revolving Lender
pursuant to Section 2.18(e) to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.

 

(i)          Cash Collateralization.  If any Event of Default shall occur and be
continuing, on the Business Day that Administrative Borrower receives notice
from the US Administrative Agent or the Required Lenders (or, if the maturity
of the Loans has been accelerated, Revolving Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit
of cash collateral pursuant to this paragraph, US Borrowers shall deposit on
terms and in accounts satisfactory to the applicable Collateral Agents, in the
name of the applicable Collateral Agents and for the benefit of the Revolving
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to US Borrowers described in Section 8.01(g) or Section
8.01(h).  Funds so deposited shall be
applied by the applicable Collateral Agents to reimburse the Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of outstanding Reimbursement
Obligations or, if the maturity of the Loans has been accelerated (but subject
to the consent of Revolving Lenders with LC Exposure representing greater than
50% of the total LC Exposure), be applied to satisfy other Obligations of US
Borrowers under this Agreement.  If US
Borrowers are required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount plus any accrued interest or realized
profits with respect to such amounts (to the extent not applied as aforesaid)
shall be returned to US Borrowers within three Business Days after all Events
of Default have been cured or waived.

 

(j)          Additional Issuing Banks.  US Borrowers may, at any time and from time
to time, designate one or more additional Revolving Lenders to act as an
issuing bank under the terms of this Agreement, with the consent of the US
Administrative Agent (which consent shall not be unreasonably 

 

77

 

withheld),
the Issuing Bank and such Revolving Lender(s). 
Any Lender designated as an issuing bank pursuant to this paragraph (j)
shall be deemed (in addition to being a Revolving Lender) to be the Issuing
Bank with respect to Letters of Credit issued or to be issued by such Revolving
Lender, and all references herein and in the other Loan Documents to the term “Issuing
Bank” shall, with respect to such Letters of Credit, be deemed to refer to such
Revolving Lender in its capacity as Issuing Bank, as the context shall require.

 

(k)         Resignation or Removal of the
Issuing Bank.  The Issuing Bank may resign
as Issuing Bank hereunder at any time upon at least 30 days’ prior notice to
the Lenders, the Administrative Agents and Administrative Borrower.  The Issuing Bank may be replaced at any time
by written agreement among US Borrowers, each Agent, the replaced Issuing Bank
and the successor Issuing Bank.  US
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank or any such additional Issuing Bank.  At the time any such resignation or
replacement shall become effective, US Borrowers shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section
2.05(c).  From and after the
effective date of any such resignation or replacement or addition, as
applicable, (i) the successor or additional Issuing Bank shall have all the
rights and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued by it thereafter and (ii) references herein to
the term “Issuing Bank” shall be deemed to refer to such successor or such
addition or to any previous Issuing Bank, or to such successor or such addition
and all previous Issuing Banks, as the context shall require.  After the resignation or replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such resignation or replacement, but shall not be required to issue additional
Letters of Credit.  If at any time there
is more than one Issuing Bank hereunder, US Borrowers may, in their discretion,
select which Issuing Bank is to issue any particular Letter of Credit.

 

(l)          Other.  The Issuing Bank shall be under no obligation
to issue any Letter of Credit if

 

(i)            any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit, or any
Requirement of Law applicable to the Issuing Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing
Bank refrain from, the issuance of letters of credit generally or such Letter
of Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the
Issuing Bank in good faith deems material to it; or

 

(ii)           the issuance of such Letter of Credit
would violate one or more policies of the Issuing Bank.

 

The Issuing Bank shall be under no obligation to amend any Letter of
Credit if (A) the Issuing Bank would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

 

(m)        Notwithstanding the foregoing, at no
time shall there be greater than $10 million outstanding of Letters of Credit
issued for the account of Canadian Borrower and/or Canadian Guarantors and any
such Letters of Credit issued for the account of Canadian Borrower and/or the
Canadian Guarantors shall be treated as if issued for the account of a US
Borrower for purposes of 

 

78

 

calculating
the Borrowing Base.  The Canadian
Borrower shall have the primary responsibility for the Reimbursement Obligation
with respect to any such Letter of Credit through the borrowing of Canadian
Revolving Loans; provided, that in the event Canadian Borrower shall not
reimburse such Issuing Bank then such obligation shall be for the account of US
Borrowers as provided in Section 2.18(e).

 

SECTION 2.19.            [Intentionally Deleted.]

 

SECTION 2.20.            Determination of Borrowing Base and Tranche B
Borrowing Base.

 

(a)         Eligible Accounts.  On any date of determination of the Borrowing
Base, the term “Eligible Accounts”
as used herein shall comprise all of the Credit Card Receivables of US
Borrowers and any of the US Borrowing Base Guarantors as arise in the ordinary
course of business, which have been earned by performance, that are not
excluded as ineligible by virtue of one or more of the criteria set forth below
and are reflected in the most recent Borrowing Base Certificate delivered by
the Borrowers to the Collateral Agents and the Administrative Agents.  None of the following shall be deemed to be
Eligible Accounts:

 

(i)            Credit Card Receivables due from
major credit card processors that have been outstanding for more than five (5)
Business Days from the date of sale, or for such longer period(s) as may be
approved by the applicable Collateral Agents;

 

(ii)           Credit Card Receivables due from
major credit card processors with respect to which US Borrowers or any of the
US Borrowing Base Guarantors do not have good, valid and marketable title
thereto, free and clear of any Lien (other than Liens granted to the applicable
Administrative Agent for its own benefit and the benefit of the other Secured
Parties pursuant to the Security Documents, those Liens specified in Section
6.02 (a), (e) and (i) and Permitted Liens having priority by operation of
applicable law over the Lien of the Collateral Agents);

 

(iii)          Credit Card Receivables due from major
credit card processors that are not subject to a first priority (except as
provided in clause (ii), above) security interest in favor of the Collateral
Agents, as applicable, for its own benefit and the benefit of the other Secured
Parties;

 

(iv)          Credit Card Receivables due from major
credit card processors which are disputed, or with respect to which a claim,
counterclaim, offset or chargeback has been asserted, by the related credit
card processor (but only to the extent of such dispute, counterclaim, offset or
chargeback) (it being the intent that chargebacks in the ordinary course by the
credit card processors as contemplated by the applicable Control Agreement
shall not be deemed violative of this clause);

 

(v)           Except as otherwise approved by the
US Administrative Agent and applicable Collateral Agents, Credit Card
Receivables due from major credit card processors as to which the credit card
processor has the right under certain circumstances to require the US Borrowers
or any of the US Borrowing Base Guarantors to repurchase such Accounts from such
credit card processor;

 

(vi)          Except as otherwise approved by the US
Administrative Agent and applicable Collateral Agents, Credit Card Receivables
due from major credit card processors as to which the US Administrative Agent
and the applicable Collateral Agents have not received an acceptable Control
Agreement;

 

79

 

(vii)         Accounts due from major credit card
processors (other than Visa, Mastercard, American Express, Diners Club and
Discover) which the applicable Collateral Agents determine in their
commercially reasonable discretion, acting in good faith, to be unlikely to be
collected; or

 

(viii)        Except as otherwise approved by the
applicable Collateral Agents in their sole discretion, Credit Card Receivables
of US Borrowers and any of the US Borrowing Base Guarantors arising from
Private Label Credit Cards.

 

Notwithstanding the above, the applicable Collateral Agents and the US
Administrative Agent reserve the right, at any time and from time to time after
the Closing Date, to adjust the criteria set forth above, to establish new
criteria and to adjust the applicable advance rate with respect to Eligible
Accounts, in their Permitted Discretion, subject to the approval of the
Supermajority Lenders in the case of adjustments, new criteria or changes in
the applicable advance rates which have the effect of making more credit
available.  The Collateral Agents shall
have the right to establish, modify or eliminate Reserves against Eligible
Accounts (including, without limitation, for estimates, chargeback or other
accrued liabilities or offsets by credit card processors and amounts to adjust
for material claims, offsets, defenses or counterclaims or other material
disputes described in Section 9.01) from time to time in their Permitted
Discretion.

 

(b)        Eligible Inventory.  For purposes of this Agreement, Eligible
Inventory shall exclude any Inventory to which any of the exclusionary criteria
set forth below applies.  The Collateral
Agents shall have the right to establish, modify or eliminate Reserves against
Eligible Inventory from time to time in their Permitted Discretion, upon five
(5) Business Day’s prior written notice to the Administrative Borrower.  In addition, the Collateral Agents and the
Administrative Agents reserve the right, at any time and from time to time
after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust the applicable advance rate with respect
to Eligible Inventory, in their Permitted Discretion, subject to the approval
of the Supermajority Lenders in the case of adjustments, new criteria, changes
in the applicable advance rate or the elimination of Reserves which have the
effect of making more credit available; provided, that (i) any changes to
the eligibility criteria with respect to Eligible Inventory will be made upon
five (5) Business Day’s prior written notice to the Administrative Borrower and
(ii) any reduction in the applicable advance rate with respect to Eligible
Inventory shall require the consent of the Administrative Borrower.  Eligible Inventory shall not include any
Inventory of US Borrowers or any US Borrowing Base Guarantor that:

 

(i)            the applicable Collateral Agents, on
behalf of Secured Parties, do not have a first priority and exclusive perfected
Lien on such Inventory;

 

(ii)           (1) is stored at a leased or rented
location where the aggregate value of Inventory exceeds $250,000 unless the
applicable Collateral Agents have given their prior consent thereto or unless
either (x) a Landlord Access Agreement in respect of such location has been
delivered to the applicable Collateral Agents, or (y) Reserves reasonably
satisfactory to the applicable Collateral Agents have been established with
respect thereto or (2) is stored with a bailee or warehouseman where the
aggregate value of Inventory exceeds $250,000 unless either (x) an acknowledged
bailee waiver letter which is in form and substance satisfactory to the
applicable Collateral Agents and the US Administrative Agent has been received
by the applicable Collateral Agents or (y) Reserves reasonably satisfactory to
the applicable Collateral Agents have been established with respect thereto, or
(3) is located at an owned location subject to a mortgage in favor of a lender
other than any of the Collateral Agents and the Senior Note Collateral Agent
where the aggregate value of Inventory exceeds $250,000 unless either (x)
mortgagee waiver which is in form and substance satisfactory to the applicable
Collateral Agents and the US Administrative Agent has been delivered to the
applicable Collateral Agents or (y) Reserves 

 

80

 

reasonably
satisfactory to the applicable Collateral Agents have been established with
respect thereto;

 

(iii)          (1) is placed on consignment by a
third party consignor with any US Borrower or US Borrowing Base Guarantor as
consignee or (2) is placed on consignment by any US Borrower or US Borrowing
Base Guarantor as consignor with any third party as consignee, unless a valid consignment
agreement which is reasonably satisfactory to applicable Collateral Agents is
in place with respect to such Inventory;

 

(iv)          is covered by a negotiable document of
title, unless such document has been delivered to the applicable Collateral
Agents with all necessary endorsements, free and clear of all Liens except
those in favor of the Collateral Agents and the Lenders and landlords,
carriers, bailees and warehousemen if clause (ii) above has been
complied with;

 

(v)           is to be returned to suppliers;

 

(vi)          is obsolete, unsalable, shopworn,
seconds, damaged or unfit for sale;

 

(vii)         consists of display items, samples or
packing or shipping materials, manufacturing supplies, work-in-process
Inventory, replacement parts or spare parts;

 

(viii)        is not finished goods held for sale in
the ordinary course of US Borrower’s or any US Borrowing Base Guarantor’s, as
applicable, business;

 

(ix)           breaches any of the representations
or warranties pertaining to Inventory set forth in the Loan Documents;

 

(x)            consists of Hazardous Material or
goods that, in either case, can be transported or sold only with licenses that
are not readily available;

 

(xi)           is not covered by casualty insurance
maintained as required by Section 5.04;

 

(xii)          supplies used or consumed in US Borrower’s
business;

 

(xiii)         bill and hold goods;

 

(xiv)        unserviceable or slow moving Inventory;

 

(xv)         inventory returned by retail customers
that is not held for resale;

 

(xvi)        inventory subject to deposit made by
retail customers for sale of Inventory that have not been delivered to the
extent of such deposits; or

 

(xvii)       is subject to any licensing arrangement
the effect of which would be to limit the ability of any Collateral Agent, or
any person selling the Inventory on behalf of such Collateral Agent, to sell
such Inventory in enforcement of such Collateral Agent’s Liens, without further
consent or payment to the licensor or other person.

 

SECTION 2.21.            Determination of Canadian Borrowing Base.

 

(a)         Eligible Canadian Accounts.  On any date of determination of the Canadian
Borrowing Base the term “Eligible Canadian Accounts”
as used herein shall comprise all of the Credit Card 

 

81

 

Receivables
of Canadian Borrower and any of Canadian Borrowing Base Guarantors as arise in
the ordinary course of business, which have been earned by performance, that
are not excluded as ineligible by virtue of one or more of the criteria set
forth below and are reflected in the most recent Borrowing Base Certificate
delivered by the Borrowers to the Collateral Agents and the Administrative
Agents.  None of the following shall be
deemed to be Eligible Accounts:

 

(i)            Credit Card Receivables due from
major credit card processors that have been outstanding for more than five (5)
Business Days from the date of sale or, in the case of Accounts due from
American Express to the Canadian Borrower or any of the Canadian Borrowing Base
Guarantors, that have been outstanding for more than ten (10) Business Days
from the date of sale, or for such longer period(s) as may be approved by the
applicable Collateral Agents;

 

(ii)           Credit Card Receivables due from
major credit card processors with respect to which Canadian Borrower or any of
the Canadian Borrowing Base Guarantors do not have good, valid and marketable
title thereto, free and clear of any Lien (other than Liens granted to the
applicable Administrative Agent for its own benefit and the benefit of the
other Secured Parties pursuant to the Security Documents, those Liens specified
in Section 6.02 (a), (e) and (i) and Permitted Liens having priority by
operation of applicable law over the Lien of the applicable Collateral Agents);

 

(iii)          Credit Card Receivables due from major
credit card processors that are not subject to a first priority (except as
provided in clause (ii), above) security interest in favor of the Collateral
Agents, as applicable, for its own benefit and the benefit of the other Secured
Parties;

 

(iv)          Credit Card Receivables due from major
credit card processors which are disputed, or with respect to which a claim,
counterclaim, offset or chargeback has been asserted, by the related credit
card processor (but only to the extent of such dispute, counterclaim, offset or
chargeback) (it being the intent that chargebacks in the ordinary course by the
credit card processors shall not be deemed violative of this clause);

 

(v)           Except as otherwise approved by the
Canadian Administrative Agent and applicable Collateral Agents, Credit Card
Receivables due from major credit card processors as to which the credit card
processor has the right under certain circumstances to require the Canadian
Borrower or any of the Canadian Borrowing Base Guarantors to repurchase such
Accounts from such credit card processor;

 

(vi)          Except as otherwise approved by the
Canadian Administrative Agent and applicable Collateral Agents, Credit Card
Receivables due from major credit card processors as to which the Canadian
Administrative Agent and the applicable Collateral Agents have not received an
acceptable Control Agreement;

 

(vii)         Accounts due from major credit card
processors (other than Visa, Mastercard, American Express, Diners Club and
Discover) which the applicable Collateral Agents determine in their
commercially reasonable discretion, acting in good faith, to be unlikely to be
collected.; or

 

(viii)        Except as otherwise approved by the
applicable Collateral Agents in their sole discretion, Credit Card Receivables
of Canadian Borrower and any of the Canadian Borrowing Base Guarantors arising
from Private Label Credit Cards.

 

82

 

Notwithstanding the above, the applicable Collateral Agents and the
Canadian Administrative Agent reserve the right, at any time and from time to
time after the Closing Date, to adjust the criteria set forth above, to
establish new criteria and to adjust the applicable advance rate with respect
to Eligible Canadian Accounts, in their Permitted Discretion, subject to the
approval of the Supermajority Lenders in the case of adjustments, new criteria
or changes in the applicable advance rates which have the effect of making more
credit available. The Collateral Agents shall have the right to establish,
modify or eliminate Reserves against Eligible Canadian Accounts (including,
without limitation, for estimates, chargeback or other accrued liabilities or
offsets by credit card processors and amounts to adjust for material claims,
offsets, defenses or counterclaims or other material disputes described in Section
9.01) from time to time in their Permitted Discretion.

 

(b)        Eligible Inventory.  For purposes of this Agreement, Eligible
Canadian Inventory shall exclude any Canadian Inventory to which any of the
exclusionary criteria set forth below applies. 
The applicable Collateral Agents shall have the right to establish,
modify or eliminate Reserves against Eligible Canadian Inventory from time to
time in their Permitted Discretion, upon five (5) Business Day’s prior written
notice to the Administrative Borrower. 
In addition, the applicable Collateral Agents and the Canadian
Administrative Agent reserve the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust the applicable advance rate with respect to Eligible
Canadian Inventory, in their Permitted Discretion, subject to the approval of
the Supermajority Lenders in the case of adjustments, new criteria, changes in
the applicable advance rate or the elimination of Reserves which have the
effect of making more credit available; provided, however, that
(i) any changes to the eligibility criteria with respect to Eligible Canadian
Inventory will be made upon five (5) Business Day’s prior written notice to the
Administrative Borrower and (ii) any reduction in the applicable advance rate
with respect to Eligible Canadian Inventory shall require the consent of the
Administrative Borrower.  Eligible
Canadian Inventory shall not include any Canadian Inventory of Canadian Borrower
or any of the Canadian Borrowing Base Guarantors that:

 

(i)            the applicable Collateral Agents, on
behalf of Secured Parties, do not have a first priority and exclusive perfected
Lien on such Canadian Inventory;

 

(ii)           (1) is stored at a leased or rental
location where the aggregate value of Canadian Inventory exceeds $250,000
unless the applicable Collateral Agents have given their prior consent thereto
or unless either (x) a Landlord Access Agreement in respect of such location
has been delivered to the applicable Collateral Agents, or (y) Reserves
reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto or (2) is stored with a bailee or warehouseman
where the aggregate value of Canadian Inventory exceeds $250,000 unless either
(x) an acknowledged bailee waiver letter which is in form and substance
satisfactory to the applicable Collateral Agents and the Canadian
Administrative Agent has been received by the applicable Collateral Agents or
(y) Reserves reasonably satisfactory to the applicable Collateral Agents have
been established with respect thereto, or (3) is located at an owned location
subject to a mortgage in favor of a lender other than the Collateral Agents and
the Senior Note Collateral Agent where the aggregate value of such Canadian Inventory
exceeds $250,000 unless either (x) a mortgagee waiver which is in form and
substance satisfactory to the applicable Collateral Agents and the Canadian
Administrative Agent has been delivered to the applicable Collateral Agents or
(y) Reserves reasonably satisfactory to the applicable Collateral Agents have
been established with respect thereto;

 

(iii)          (1) is placed on consignment by a
third party consignor with any Canadian Borrower or any Canadian Borrowing Base
Guarantor as consignee or (2) is placed on consignment by any Canadian Borrower
or Canadian Borrowing Base Guarantor as consignor 

 

83

 

with
any third party as consignee, unless a valid consignment agreement which is
reasonably satisfactory to applicable Collateral Agent is in place with respect
to such Canadian Inventory;

 

(iv)          is covered by a negotiable document of
title, unless such document has been delivered to one of the applicable
Collateral Agents with all necessary endorsements, free and clear of all Liens
except those in favor of the Collateral Agents and the Lenders and landlords,
carriers, bailees and warehousemen if clause (ii) above has been
complied with;

 

(v)           is to be returned to suppliers;

 

(vi)          is obsolete, unsalable, shopworn, seconds,
defective, damaged or unfit for sale;

 

(vii)         consists of display items, samples or
packing or shipping materials, manufacturing supplies, work-in-process Canadian
Inventory, replacement or spare parts;

 

(viii)        is not finished goods held for sale in
the ordinary course of Canadian Borrower’s or any of the Canadian Borrowing
Base Guarantor’s, as applicable, business;

 

(ix)           breaches any of the representations
or warranties pertaining to Canadian Inventory set forth in the Loan Documents;

 

(x)            consists of Hazardous Material or
goods that, in either case, can be transported or sold only with licenses that
are not readily available;

 

(xi)           is not covered by casualty insurance
maintained as required by Section 5.04;

 

(xii)          supplies used or consumed in Canadian
Borrower’s business;

 

(xiii)         bill and hold goods;

 

(xiv)        unserviceable or slow moving Canadian
Inventory;

 

(xv)         inventory returned by retail customers
that is not held for resale;

 

(xvi)        inventory subject to deposit made by
retail customers for sale of Inventory that have not been delivered to the
extent of such deposits; or

 

(xvii)       is subject to any licensing arrangement
the effect of which would be to limit the ability of any Collateral Agent, or
any person selling the Canadian Inventory on behalf of such Collateral Agent,
to sell such Canadian Inventory in enforcement of such Collateral Agent’s
Liens, without further consent or payment to the licensor or other person.

 

SECTION 2.22.            Collection Allocation Mechanism.

 

(a)         Notwithstanding any other provision of
this Agreement or any Loan Document, on the CAM Exchange Date, with respect
solely to Revolving Lenders, (i) all Revolving Commitments shall automatically
and without further act be terminated as provided in Section 8 and (ii)
the Revolving Lenders shall automatically and without further act be deemed to
have exchanged interests in the Revolving Loans such that in lieu of the
interest of each Revolving Lender in each Revolving Loan in which it shall
participate as of such date, such Revolving Lender shall hold an interest in
every one of the Revolving Loans, whether or not such Revolving Lender shall
previously have participated therein, equal to such Revolving Lender’s CAM
Percentage thereof; provided that such CAM Exchange will not 

 

84

 

affect
the aggregate amount of the obligations of the Loan Parties to the Revolving
Lenders under the Loan Documents.  Each
Revolving Lender and each Loan Party hereby consents and agrees to the CAM
Exchange, and each Revolving Lender agrees that the CAM Exchange shall be
binding upon its successors and assigns and any person that acquires a
participation in its interests in any Revolving Loan.  Each Loan Party agrees from time to time to
execute and deliver to the Agents all promissory notes and other instruments
and documents as the Agents shall reasonably request to evidence and confirm
the respective interests of the Revolving Lenders after giving effect to the
CAM Exchange, and each Revolving Lender agrees to surrender any promissory
notes originally received by it in connection with its Revolving Loans
hereunder to the Agents against delivery of new promissory notes evidencing its
interests in the Revolving Loans; provided, however, that the
failure of any Loan Party to execute or deliver or of any Revolving Lender to
accept any such promissory note, instrument or document shall not affect the
validity or effectiveness of the CAM Exchange.

 

(b)        As a result of the CAM Exchange, upon
and after the CAM Exchange Date, each payment received by the Administrative
Agents pursuant to any Loan Document in respect of the Specified Obligations,
and each distribution made by the Administrative Agents pursuant to any Loan
Document in respect of the Specified Obligations, shall be distributed to the
Revolving Lenders pro rata in accordance with their respective CAM
Percentages.  Any direct payment received
by a Revolving Lender upon or after the CAM Exchange Date, including by way of
setoff, in respect of a Specified Obligation, shall be paid over to the US
Administrative Agent or the Canadian Administrative Agent, as applicable, for
distribution to the Revolving Lenders in accordance herewith.

 

(c)         In the event that on the CAM Exchange
Date any Letter of Credit shall be outstanding and undrawn in whole or in part,
or any amount drawn under any Letter of Credit shall remain unpaid, each
Revolving Lender shall, before giving effect to the CAM Exchange, promptly pay
over to the Administrative Agents, in immediately available funds and in the
currency that such Letter of Credit is denominated, an amount (determined after
deducting any cash collateral held by the Collateral Agents on behalf of the
Loan Parties with respect to such Letter of Credit) equal to such Revolving
Lender’s Pro Rata Percentage (as notified to such Revolving Lender by the
Administrative Agents), of such Letter of Credit’s undrawn face amount or (to
the extent it has not already done so) any unpaid LC Disbursement under Section
2.18(e)(ii), together with interest thereon from the CAM Exchange Date to
the date on which such amount shall be paid to the applicable Administrative
Agent, at the rate that would be applicable at the time to a Revolving Loan
that is an ABR Loan accruing interest at the ABR Rate in a principal amount
equal to such amount.  The Administrative
Agents shall establish a separate account or accounts for each Revolving Lender
(each, an “L/C Reserve Account”) for the
amounts received with respect to each such Letter of Credit pursuant to the
preceding sentence.  The applicable
Administrative Agent shall deposit in each Revolving Lender’s L/C Reserve
Account such Revolving Lender’s CAM Percentage of the amounts received from the
Revolving Lenders as provided above.  The
Administrative Agents shall have sole dominion and control over each L/C
Reserve Account, and the amounts deposited in each L/C Reserve Account shall be
held in such L/C Reserve Account until withdrawn as provided in paragraph (d),
(e), (f) or (g) below.  The applicable
Administrative Agent shall maintain records enabling it to determine the
amounts paid over to it and deposited in the L/C Reserve Accounts in respect of
each Letter of Credit and the amounts on deposit in respect of each Letter of
Credit attributable to each Revolving Lender’s CAM Percentage.  The amounts held in each Revolving Lender’s
L/C Reserve Account shall be held as a reserve against the LC Obligations due
and owing , shall be the property of such Revolving Lender, shall not
constitute Revolving Loans to or give rise to any claim of or against any Loan
Party and shall not give rise to any obligation on the part of any Borrower to
pay interest to such Revolving Lender, it being agreed that the reimbursement
obligations in respect of Letters of Credit shall arise only at such times as
drawings are made thereunder, as provided in Section 2.18.

 

85

 

(d)        In the event that after the CAM Exchange Date any drawing shall be made
in respect of a Letter of Credit, the applicable Administrative Agent shall, at
the request of the Issuing Bank in respect of such Letter of Credit, withdraw
from the L/C Reserve Account of each Revolving Lender any amounts, up to the
amount of such Revolving Lender’s CAM Percentage of such drawing, deposited in
respect of such Letter of Credit and remaining on deposit and deliver such
amounts to such Issuing Bank in satisfaction of the reimbursement obligations
of the Revolving Lenders under Section 2.18 (but not of any Borrower
under Section 2.18). In the event any Revolving Lender shall default on
its obligation to pay over any amount to the Administrative Agents in respect
of any Letter of Credit as provided in this Section 2.22, the Issuing
Bank in respect thereof shall, in the event of a drawing thereunder, have a
claim against such Revolving Lender to the same extent as if such Revolving
Lender had defaulted on its obligations under Section 2.18, but shall
have no claim against any other Revolving Lender in respect of such defaulted
amount, notwithstanding the exchange of interests in the reimbursement
obligations pursuant to Section 2.22(a). Each other Revolving Lender
shall have a claim against such defaulting Revolving Lender for any damages
sustained by it as a result of such default, including, in the event such
Letter of Credit shall expire undrawn, its CAM Percentage of the defaulted
amount.

 

(e)         In the event that after the CAM Exchange Date any Letter of Credit
shall expire undrawn, the applicable Administrative Agent shall withdraw from
the L/C Reserve Account of each Revolving Lender the amount remaining on
deposit therein in respect of such Letter of Credit and distribute such amount
to such Revolving Lender.

 

(f)         With the prior written approval of the US Administrative Agent or the
Canadian Administrative Agent, as applicable, and the Issuing Bank in respect
of such Letter of Credit, any Revolving Lender may withdraw the amount held in
its L/C Reserve Account in respect of the undrawn amount of any Letter of
Credit. Any Revolving Lender making such a withdrawal shall be unconditionally
obligated, in the event there shall subsequently be a drawing under such Letter
of Credit, to pay over to the applicable Administrative Agent for the account
of such Issuing Bank on demand, its CAM Percentage of such drawing.

 

(g)        Pending the withdrawal by any Revolving Lender of any amounts from its
L/C Reserve Account as contemplated by the above paragraphs, the applicable
Administrative Agent will, at the direction of such Revolving Lender and
subject to such rules as the applicable Administrative Agent may prescribe for
the avoidance of inconvenience, invest such amounts in Cash Equivalents. Each
Revolving Lender that has not withdrawn the amounts in its L/C Reserve Account
as provided in Section 2.22(f) above shall have the right, at intervals
reasonably specified by the applicable Administrative Agent to withdraw the
earnings on investments so made by the Administrative Agents with amounts in
its L/C Reserve Account and to retain such earnings for its own account.

 

(h)        Notwithstanding any other provision of this Agreement, if, as a direct
result of the implementation of the CAM Exchange, any Borrower is required to
withhold Taxes from amounts payable to any Agent, any Revolving Lender or any
Participant hereunder, the amounts so payable to such Agent, such Revolving
Lender or such Participant shall be increased to the extent necessary to yield
to such Agent, such Revolving Lender or such Participant (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement; provided, however, that
such Borrower shall not be required to increase any such amounts payable to
such Revolving Lender or Participant under this Section 2.22 (but,
rather, shall be required to increase any such amounts payable to such
Revolving Lender or Participant to the extent required by Section 2.15)
if such Revolving Lender or Participant was prior to or on the CAM Exchange
Date already a Revolving Lender or Participant with respect to such Borrower. If
a Revolving Lender that is not incorporated in the United States, in its good
faith judgment, is eligible for an exemption from, or reduced rate of, U.S.
federal withholding tax on payments by the U.S. Borrower under this Agreement, 

 

86

 

the
U.S. Borrowers shall not be required to increase any such amounts payable to
such Revolving Lender if such Revolving Lender fails to comply with the
requirements of Section 2.15(e).

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party represents
and warrants to the Administrative Agents, the Collateral Agents, the Issuing
Bank and each of the Lenders that:

 

SECTION 3.01.            Organization; Powers. Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to carry on its business as now conducted
and to own and lease its property and (c) is qualified and in good standing (to
the extent such concept is applicable in the applicable jurisdiction) to do
business in every jurisdiction where such qualification is required, except in
such jurisdictions where the failure to so qualify or be in good standing,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. There is no existing default under any
Organizational Document of any Company or any event which, with the giving of
notice or passage of time or both, would constitute a default by any party
thereunder.

 

SECTION 3.02.            Authorization; Enforceability. The transactions contemplated by the Loan
Documents to be entered into by each Loan Party are within such Loan Party’s
powers and have been duly authorized by all necessary action on the part of
such Loan Party. This Agreement has been duly executed and delivered by each
Loan Party and constitutes, and each other Loan Document to which any Loan
Party is to be a party, when executed and delivered by such Loan Party, will
constitute, a legal, valid and binding obligation of such Loan Party,
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.

 

SECTION 3.03.            No Conflicts. Except as set forth on Schedule 3.03,
the execution, delivery and performance of 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) such as have been obtained or
made and are in full force and effect, (ii) filings necessary to perfect Liens
created by the Loan Documents and (iii) consents, approvals, registrations,
filings, permits or actions the failure to obtain or perform which could not
reasonably be expected to result in a Material Adverse Effect, (b) will not
violate the Organizational Documents of any Company, (c) will not violate any
Requirement of Law, except for violations, defaults or the creation of such
rights that could not reasonably be expected to result in a Material Adverse
Effect, (d) will not violate or result in a default or require any consent or
approval under any indenture, agreement or other instrument binding upon any
Company or its property, or give rise to a right thereunder to require any
payment to be made by any Company, except for violations, defaults or the
creation of such rights that could not reasonably be expected to result in a
Material Adverse Effect, and (e) will not result in the creation or imposition
of any Lien on any property of any Company, except Liens created by the Loan
Documents and Permitted Liens.

 

SECTION 3.04.            Financial Statements; Projections.

 

(a)         Historical Financial Statements. The Borrowers have heretofore delivered to
the Lenders (i) the consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of Holdings and its Subsidiaries
(or their predecessors) as of and for the fiscal years ended January 3, 2004,
January 1, 2005, December 31, 2005 and December 30, 2006, audited by and 

 

87

 

accompanied
by the unqualified opinion of KPMG LLP, independent public accountants (the “Accountants”) and (ii) the unaudited consolidated balance
sheets and related statements of income, stockholders’ equity and cash flows of
the Holdings and its Subsidiaries as of and for the fiscal quarter ended June
30, 2007 (with respect to which the Accountants have performed SAS 100
reviews), in each case, certified by the chief financial officer of US
Borrowers. Such financial statements and all financial statements delivered
pursuant to Section 5.01(a), Section 5.01(b) and Section
5.01(c) since the Closing Date have been prepared in accordance with GAAP
and present fairly and accurately the financial condition and results of operations
and cash flows of the Holdings and its Subsidiaries (or their predecessors,
where applicable) as of the dates and for the periods to which they relate,
subject in the case of unaudited statements, to year-end audit adjustments.

 

(b)        No Liabilities. Except
as set forth in the financial statements referred to in Section 3.04(a)
(including the notes thereto), there are no liabilities of any Company of any
kind, whether accrued, contingent, absolute, determined, determinable or
otherwise, which could reasonably be expected to result in a Material Adverse
Effect, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability, other than
liabilities under the Loan Documents and the Senior Note Documents. Since
December 30, 2006, there has been no event, change, circumstance or occurrence
that, individually or in the aggregate, has had or could reasonably be expected
to result in a Material Adverse Effect.

 

(c)         Forecasts. The forecasts of financial performance of Holdings and its
Subsidiaries furnished to the Lenders have been prepared in good faith by the
Borrowers and based on assumptions believed by the Borrowers to be reasonable.

 

SECTION 3.05.            Properties.

 

(a)         Generally. Each Company has good title to, or valid leasehold interests in, all
its property material to its business, free and clear of all Liens except for,
Permitted Liens and minor irregularities or deficiencies in title that,
individually or in the aggregate, do not interfere with its ability to conduct
its business as currently conducted or to utilize such property for its
intended purpose. The property of the Companies, taken as a whole, (i) is in
good operating order, condition and repair (ordinary wear and tear excepted),
except to the extent that the failure to be in such condition could not
reasonably be expected to result in a Material Adverse Effect and (ii)
constitutes all the property which is required for the business and operations
of the Companies as presently conducted.

 

(b)        Real Property.

 

(i)            Schedules 8(a) and 8(b) to the Perfection Certificate dated the
Closing Date contain a true and complete list of each interest in Real Property
(x) owned by any Company as of the date hereof and describes the type of interest
therein held by such Company and whether such owned Real Property is leased and
if leased whether the underlying Lease contains any option to purchase all or
any portion of such Real Property or any interest therein or contains any right
of first refusal relating to any sale of such Real Property or any portion
thereof or interest therein and (y) leased, subleased or otherwise occupied or
utilized by any Company, as lessee, sublessee, franchisee or licensee, as of
the date hereof and describes the type of interest therein held by such
Company.

 

(ii)           The fair market value (net of existing mortgage debt secured by each
such property) of the Real Property owned by US Borrowers or their US
Subsidiaries located in Colorado Springs, Colorado and Newport News, Virginia
does not exceed $500,000 individually for any such property or $1,000,000 in
the aggregate for all such properties.

 

88

 

(c)         No Casualty Event. No Company has received any written notice
of, nor has any knowledge of, the occurrence or pendency of any Casualty Event
affecting all or any material portion of its property. No Mortgage encumbers
improved Real Property that is located in an area that has been identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards within the meaning of the National Flood Insurance Act of 1968 unless
flood insurance available under such Act has been obtained in accordance with Section
5.04 or the applicable Collateral Agent has waived such requirement in the
Mortgage.

 

(d)        Collateral. Each
Company owns or has rights to use all of the Collateral and all rights with
respect to any of the foregoing used in, necessary for or material to each
Company’s business as currently conducted. The use by each Company of such
Collateral and all such rights with respect to the foregoing do not infringe on
the rights of any person other than such infringement which could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. No claim has been made and remains outstanding that any Company’s
use of any Collateral does or may violate the rights of any third party that
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.

 

SECTION 3.06.            Intellectual Property.

 

(a)         Ownership/No Claims. Each Loan Party owns, or is licensed to
use, all patents, patent applications, trademarks, industrial designs, trade
names, servicemarks, copyrights, technology, trade secrets, proprietary
information, domain names, know-how and processes necessary for the conduct of
its business as currently conducted (the “Intellectual
Property”), except for those the failure to own or license which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No claim has been asserted and is pending by any
person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property in any material
respect, nor does any Loan Party know of any valid basis for any such claim. The
use of such Intellectual Property by each Loan Party does not infringe the
rights of any person, except for such claims and infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

(b)        Registrations. Except
pursuant to licenses and other user agreements entered into by each Loan Party
in the ordinary course of business that are listed in Schedule 12(a) or 12(b)
to the Perfection Certificate, on and as of the date hereof (i) each Loan Party
owns and possesses the right to use, and has done nothing to authorize or
enable any other person to use, any copyright, patent, industrial designs or
trademark (as such terms are defined in the Security Agreement) listed in Schedule
12(a) or 12(b) to the Perfection Certificate and (ii) all
registrations listed in Schedule 12(a) or 12(b) to the Perfection
Certificate are valid and in full force and effect.

 

(c)         No Violations or Proceedings. To each Loan Party’s knowledge, on and as
of the date hereof, there is no material violation by others of any right of
such Loan Party with respect to any copyright, patent, industrial designs or
trademark listed in Schedule 12(a) or 12(b) to the Perfection
Certificate, pledged by it under the name of such Loan Party.

 

SECTION 3.07.            Equity Interests and Subsidiaries.

 

(a)         Equity Interests. Schedules 1(a) and 10(a) to the
Perfection Certificate dated the Closing Date set forth a list of (i) all the
Subsidiaries of Holdings and their jurisdictions of organization as of the
Closing Date and (ii) the number of each class of its Equity Interests
authorized, and the number outstanding, on the Closing Date and the number of
shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights at the Closing Date. All Equity Interests of 

 

89

 

each
Company are duly and validly issued and are fully paid and non-assessable, and,
other than the Equity Interests of US Borrowers, are owned by LNT Center,
directly or indirectly through Wholly Owned Subsidiaries. All Equity Interests
of LNT are owned directly by Holdings. Each Loan Party is the record and beneficial
owner of, and has good and marketable title to, the Equity Interests pledged by
it under the Security Agreement, free of any and all Liens, rights or claims of
other persons, except the security interest created by the Security Agreement,
and there are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of,
any such Equity Interests.

 

(b)        No Consent of Third Parties Required. No consent of any person including any other general or limited
partner, any other member of a limited liability company, any other shareholder
or any other trust beneficiary is necessary or reasonably desirable (from the
perspective of a secured party) in connection with the creation, perfection or
First Priority status of the security interest of the applicable Collateral
Agent in any Equity Interests pledged to such Collateral Agent for the benefit
of the Secured Parties under the Security Agreements or the exercise by such
Collateral Agent of the voting or other rights provided for in any such
Security Agreement or the exercise of remedies in respect thereof, except to
the extent that, with respect only to the transfer of any Equity Interests
in a Nova Scotia unlimited company pledged to a Collateral Agent, the approval
of the board of directors of the relevant Nova Scotia unlimited company or the
pledgor of its Equity Interests therein may be required under any applicable
corporate and securities laws.

 

(c)         Organizational Chart. An accurate organizational chart, showing
the ownership structure of Holdings, the Borrowers and each Subsidiary on the
Closing Date is set forth on Schedule 10(a) to the Perfection Certificate
dated the Closing Date.

 

SECTION 3.08.            Litigation; Compliance with Laws. There are no actions, suits or proceedings
at law or in equity by or before any Governmental Authority now pending or, to
the knowledge of any Company, threatened against or affecting any Company or
any business, property or rights of any Company (i) that involve any Loan
Document or (ii) 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. Except
for matters covered by Section 3.18, no Company or any of its property
is in violation of, nor will the continued operation of its property as
currently conducted violate, any Requirements of Law (including any zoning or
building ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting any Company’s Real Property or
is in default with respect to any Requirement of Law, where such violation or
default, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.

 

SECTION 3.09.            Agreements. No Company is a party to any agreement or instrument or subject to
any corporate or other constitutional restriction that has resulted or could
reasonably be expected to result in a Material Adverse Effect. No Company is in
default in any manner under any provision of any indenture or other agreement
or instrument evidencing Indebtedness, or any other agreement or instrument to
which it is a party or by which it or any of its property is or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect, and no condition exists which, with the giving of notice or the lapse
of time or both, would constitute such a default. Schedule 3.09
accurately and completely lists all material agreements (other than leases of
Real Property set forth on Schedule 8(a) or 8(b) to the Perfection
Certificate dated the Closing Date) to which any Company is a party which are
in effect on the date hereof in connection with the operation of the business
conducted thereby and Borrower has delivered to the Administrative Agents
complete and correct copies of all such material agreements, including any amendments,
supplements or modifications with respect thereto, and all such agreements are
in full force and effect.

 

90

 

SECTION 3.10.            Federal Reserve Regulations. No Company 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. 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, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the regulations
of the Board, including Regulation T, U or X. The pledge of the Securities
Collateral pursuant to the Security Agreements does not violate such
regulations.

 

SECTION 3.11.            Investment Company Act. No Company is an “investment company” or a
company “controlled” by an “investment company,” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.

 

SECTION 3.12.            Use of Proceeds. The Borrowers will use the proceeds of
their respective Revolving Loans, Tranche B Loans and Swingline Loans for
working capital and general corporate purposes (including to effect Permitted
Acquisitions) on and after the Closing Date.

 

SECTION 3.13.            Taxes. Each Company has (a) timely filed or caused to be timely filed all
federal Tax Returns and all material state, provincial, territorial, local and
foreign Tax Returns or materials required to have been filed by it and all such
Tax Returns are true and correct in all material respects and (b) duly and
timely paid, collected or remitted or caused to be duly and timely paid,
collected or remitted all Taxes (whether or not shown on any Tax Return) due
and payable, collectible or remittable by it and all assessments received by
it, except Taxes (i) that are being contested in good faith by appropriate
proceedings and for which such Company has set aside on its books adequate
reserves in accordance with GAAP and (ii) which could not, individually or in
the aggregate, have a Material Adverse Effect. Each Company has made adequate
provision in accordance with GAAP for all material Taxes not yet due and
payable. Each Company is unaware of any proposed or pending tax assessments,
deficiencies or audits that could be reasonably expected to, individually or in
the aggregate, result in a Material Adverse Effect. No Company has ever been a
party to any understanding or arrangement constituting a “tax shelter” within
the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii)
of the Code, or has ever “participated” in a “reportable transaction” within
the meaning of Treasury Regulation Section 1.6011-4, except as, in each case,
could not be reasonably expected to, individually or in the aggregate, result
in a Material Adverse Effect in respect of Taxes.

 

SECTION 3.14.            No Material Misstatements. No information, report, financial
statement, certificate, Borrowing Request, LC Request, exhibit or schedule
furnished by or on behalf of any Company to the Administrative Agents or any
Lender in connection with the negotiation of any Loan Document or included
therein or delivered pursuant thereto, taken as a whole, contained or contains
any material misstatement of fact or omitted or omits to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading as of the date
such information is dated or certified; provided
that to the extent any such information, report, financial statement, exhibit
or schedule was based upon or constitutes a forecast or projection, each
Company represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule.

 

SECTION 3.15.            Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against any Company pending or, to the knowledge
of any Company, threatened. The hours worked by and payments made to employees
of any Company have not been in violation of the Fair Labor Standards Act of
1938, as amended, or any other applicable federal, state, provincial,
territorial, local or foreign law dealing with such matters in any manner which
could reasonably be expected to result in a Material Adverse Effect. All
payments due from any Company, or for which any claim may be made against any
Company, on account of wages and employee health and welfare insurance and
other 

 

91

 

benefits,
have been paid or accrued as a liability on the books of such Company except
where the failure to do so could not reasonably be expected to result in a
Material Adverse Effect. Each Loan Party has withheld all employee withholdings
and has made all employer contributions to be withheld and made by it pursuant
to applicable law on account of any employee benefit plans, employment
insurance and employee income taxes except where such failure to do so could
not reasonably be expected to result in a Material Adverse Effect. The
consummation of the Refinancing did not and 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 Company is bound.

 

SECTION 3.16.            Solvency. As of the Closing Date and after giving effect to the transactions
contemplated by the Loan Documents and after giving effect to the application
of the proceeds of each Loan and the operation of the Contribution, Intercompany
Contracting and Offset Agreement, (a) the fair value of the assets of each Loan
Party (individually and on a consolidated basis with its Subsidiaries) will
exceed its debts and liabilities, subordinated, contingent or otherwise; (b)
the present fair saleable value of the property of each Loan Party
(individually and on a consolidated basis with its Subsidiaries) will be
greater than the amount that will be required to pay the probable liability of
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) each Loan Party
(individually and on a consolidated basis with its Subsidiaries) will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; (d) each Loan Party
(individually and on a consolidated basis with its Subsidiaries) will not have
unreasonably small capital with which to conduct its business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Closing Date and (e) each Loan Party is not “insolvent” as such
term is defined under any bankruptcy, insolvency or similar laws of any
jurisdiction.

 

SECTION 3.17.            Employee Benefit Plans. Each Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder, except
where such failure could not reasonably be expected to result in a Material
Adverse Effect. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events, could reasonably be
expected to result in a Material Adverse Effect of any Company or any of its ERISA
Affiliates or the imposition of a Lien on any of the property of any Company. 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 by more than $1,000,000
the fair market value of the property of all such underfunded Plans. Using
actuarial assumptions and computation methods consistent with subpart I of
subtitle E of Title IV of ERISA, the aggregate liabilities of each Company to
all Multiemployer Plans in the event of a complete withdrawal therefrom, as of
the close of the most recent fiscal year of each such Multiemployer Plan, could
not reasonably be expected to result in a Material Adverse Effect.

 

To the extent applicable,
each Foreign Plan has been maintained in substantial compliance with its terms
and with the requirements of any and all applicable Requirements of Law and has
been maintained, where required, in good standing with applicable regulatory
authorities except where failure to do so could not reasonably be expected to
result in a Material Adverse Effect. No Company has incurred any obligation in
connection with the termination of or withdrawal from any Foreign Plan except
where such obligation could not reasonably be expected to result in a Material
Adverse Effect. The present value of the accrued benefit liabilities (whether
or not vested) under each Foreign Plan which is funded, determined as of the
end of the most recently ended fiscal year of the respective Company on the
basis of actuarial assumptions, each of which is reasonable, did not exceed by
$1,000,000 the current value of the property of such Foreign Plan, and for each
Foreign Plan which is not funded, the obligations 

 

92

 

of such Foreign Plan are properly accrued except where such failure to
accrue could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.18.            Environmental Matters.

 

(a)         Except as, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect:

 

(i)            The Companies and their businesses,
operations and Real Property are in compliance with, and the Companies have no
liability under, any applicable Environmental Law; and under the currently
effective business plan of the Companies, no expenditures or operational
adjustments will be required in order to comply with applicable Environmental
Laws during the next five years;

 

(ii)           The Companies have obtained all Environmental Permits required for the
conduct of their businesses and operations, and the ownership, operation and
use of their property, under Environmental Law, all such Environmental Permits
are valid and in good standing and, under the currently effective business plan
of the Companies, no expenditures or operational adjustments will be required
in order to renew or modify such Environmental Permits during the next five
years;

 

(iii)          There has been no Release or threatened Release of Hazardous Material
on, at, under or from any Real Property or facility presently or formerly
owned, leased or operated by the Companies or their predecessors in interest
that could reasonably be expected to result in liability by the Companies under
any applicable Environmental Law;

 

(iv)          There is no Environmental Claim pending or, to the knowledge of the
Companies, threatened against the Companies, or relating to the Real Property
currently or formerly owned, leased or operated by the Companies or their
predecessors in interest or relating to the operations of the Companies, and
there are no actions, activities, circumstances, conditions, events or
incidents that could reasonably be expected to form the basis of such an
Environmental Claim; and

 

(v)           No person with an indemnity or contribution obligation to the Companies
relating to compliance with or liability under Environmental Law is in default
with respect to such obligation.

 

(b)        (i) No Company is obligated to perform any action or otherwise incur
any expense under Environmental Law pursuant to any order, decree, judgment or
agreement by which it is bound or has assumed by contract, agreement or
operation of law, and no Company is conducting or financing any Response
pursuant to any Environmental Law with respect to any Real Property or any
other location;

 

(i)            No Real Property or facility owned, operated
or leased by the Companies and, to the knowledge of the Companies, no Real
Property or facility formerly owned, operated or leased by the Companies or any
of their predecessors in interest is (i) listed or proposed for listing on the
National Priorities List promulgated pursuant to CERCLA or (ii) listed on the
Comprehensive Environmental Response, Compensation and Liability Information
System promulgated pursuant to CERCLA or (iii) included on any similar list
maintained by any Governmental Authority including any such list relating to
petroleum;

 

93

 

(ii)           No Lien has been recorded or, to the knowledge of any Company,
threatened under any Environmental Law with respect to any Real Property or
other assets of the Companies;

 

(iii)          The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not require any
notification, registration, filing, reporting, disclosure, investigation,
remediation or cleanup pursuant to any Governmental Real Property Disclosure
Requirements or any other applicable Environmental Law; and

 

(iv)          The Companies have made available to the Lenders all material records
and files in the possession, custody or control of, or otherwise reasonably
available to, the Companies concerning compliance with or liability under
Environmental Law, including those concerning the actual or suspected existence
of Hazardous Material at Real Property or facilities currently or formerly
owned, operated, leased or used by the Companies.

 

SECTION 3.19.            Insurance. Schedule 3.19 sets forth a true, complete and correct
description of all insurance maintained by each Company as of the Closing Date.
All insurance maintained by the Companies is in full force and effect, all
premiums have been duly paid, no Company has received notice of violation or
cancellation thereof, the Premises, and the use, occupancy and operation
thereof, comply in all material respects with all Insurance Requirements, and
there exists no default under any Insurance Requirement, except for minor
defaults that, taken as a whole, do not adversely affect the coverage provided
by such insurance. Each Company has insurance in such amounts and covering such
risks and liabilities as are customary for companies of a similar size engaged
in similar businesses in similar locations.

 

SECTION 3.20.            Security Documents.

 

(a)         Security Agreements. The execution and delivery of the Security
Documents by the Loan Parties on the Closing Date, together with the actions
taken on or prior to the date hereof (including (i) the filing of financing
statements and other filings in appropriate form in the offices specified on
Schedule 7 to the initial Perfection Certificate, (ii) the filing of the
Security Agreements or a short form thereof in the United States Patent and
Trademark Office, the United States Copyright Office or the Canadian
Intellectual Property Office, as applicable, and (iii) the delivery to the
applicable Collateral Agent of the Security Agreement Collateral with respect
to which a security interest may be perfected only by possession or control
(all of which Collateral has been so delivered to the extent possession or
control by such Collateral Agent is required by the applicable Security
Document) was and continues to be effective to create in favor of the
Collateral Agents for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in and Lien on the Security Agreement Collateral,
subject to no Liens other than Permitted Liens, and all filings and other
actions necessary or desirable to perfect and maintain the perfection and First
Priority status of such Liens have been duly made or taken and remain in full
force and effect, other than (i) the periodic filing of UCC continuation
statements and PPSA renewal financing change statements in respect of UCC and
PPSA financing statements filed by or on behalf of the Collateral Agent and
(ii) such Security Agreement Collateral subject to or referenced in the US
Security Agreement or Canadian Security Agreements in which a security interest
cannot be perfected (x) under the UCC or PPSA as in effect at the relevant time
in the relevant jurisdiction or (y) by other filings in appropriate form filed
in the offices specified on Schedule 7 to the initial Perfection
Certificate.

 

(b)        [Intentionally Omitted.]

 

94

 

(c)         [Intentionally Omitted.]

 

(d)        Mortgages. Each
Mortgage is effective to create, in favor of the applicable Collateral Agent,
for its benefit and the benefit of the Secured Parties, legal, valid and
enforceable First Priority Liens on, and security interests in, all of the Loan
Parties’ right, title and interest in and to the Mortgaged Properties
thereunder and the proceeds thereof, subject only to Permitted Liens or other
Liens reasonably acceptable to the Senior Note Collateral Agent, and when the
Mortgages are filed in the offices specified on Schedule 8(a) to the
Perfection Certificate dated the Closing Date (or, in the case of any Mortgage
executed and delivered after the date thereof in accordance with the provisions
of Section 5.11 and Section 5.12, unless a Loan Party has
disclosed in writing any issues related to perfection thereof or the security
interest therein to the applicable Collateral Agent when such Mortgage is filed
in the offices specified in the local counsel opinion delivered with respect
thereto in accordance with the provisions of Section 5.11 and Section
5.12), the Mortgages shall constitute fully perfected First Priority Liens
on, and security interests in, all right, title and interest of the Loan Parties
in the Mortgaged Properties and the proceeds thereof, in each case prior and
superior in right to any other person, other than Liens permitted by such
Mortgage.

 

(e)         Valid Liens. Each Security Document, unless a Loan Party has disclosed in writing
any issues related to the legality, enforceability, validity or security
interest therein, delivered pursuant to Section 5.11 and Section 5.12
will, upon execution and delivery thereof, be effective to create in favor of
the applicable Collateral Agent, for the benefit of the applicable Secured
Parties, legal, valid and enforceable Liens on, and security interests in, all
of the Loan Parties’ right, title and interest in and to the Collateral
thereunder, and when all appropriate filings or recordings are made in the
appropriate offices as may be required under applicable law, such Security
Document will constitute fully perfected First Priority Liens on, and security
interests in, all right, title and interest of the Loan Parties in such
Collateral, in each case subject to no Liens other than the applicable
Permitted Liens.

 

SECTION 3.21.            [Intentionally Omitted].

 

SECTION 3.22.            Anti-Terrorism Law. No Loan Party and, to the knowledge of the
Loan Parties, none of its Affiliates is in violation of any Requirement of Law
relating to terrorism or money laundering (“Anti-Terrorism
Laws”), including Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001 (the “Executive
Order”), and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56.

 

No Loan Party and to the
knowledge of the Loan Parties, no Affiliate or broker or other agent of any
Loan Party acting or benefiting in any capacity in connection with the Loans is
any of the following:

 

(i)            a person that is listed in the annex to, or
is otherwise subject to the provisions of, the Executive Order;

 

(ii)           a person owned or controlled by, or acting for or on behalf of, any
person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;

 

(iii)          a person with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

 

(iv)          a person that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order; or

 

95

 

(v)           a person that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control (“OFAC”)
at its official website or any replacement website or other replacement
official publication of such list.

 

No Loan Party and, to the
knowledge of the Loan Parties, no broker or other agent of any Loan Party
acting in any capacity in connection with the Loans (i) conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any person described in paragraph (b) above, (ii)
deals in, or otherwise engages in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order, or (iii) engages
in or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.

 

SECTION 3.23.            [Intentionally Deleted].

 

SECTION 3.24.            Executive Offices; Location of Material
Inventory. Schedule 3.24
sets forth as of the Closing Date all locations in the United States and Canada
where the aggregate value of Inventory owned by the Loan Parties exceeds
$250,000. As of the Closing Date, the location in Canada of each chief
executive office, principal place of business and domicile (within the meaning
of the Civil Code of Quebec), as applicable, of each Canadian Loan Party is as
set out in Schedule 3.24.

 

SECTION 3.25.            Accuracy of Borrowing Base. At the time any Borrowing Base Certificate
is delivered pursuant to this Agreement, (i) each Account and each item of
Inventory included in the calculation of the Borrowing Base satisfies all of
the criteria stated herein to be an Eligible Account and an item of Eligible
Inventory, respectively, (ii) each Account and each item of Inventory included
in the calculation of the Canadian Borrowing Base satisfies all of the criteria
stated herein to be an Eligible Canadian Account and an item of Eligible
Canadian Inventory, respectively, and (iii) each item of Inventory included in
the calculation of the Tranche B Borrowing Base satisfies all of the criteria
stated herein to be an item of Eligible Inventory.

 

SECTION 3.26.            [Intentionally Omitted.]

 

SECTION 3.27.            Common Enterprise. The successful operation and condition of
each of the Loan Parties is dependent on the continued successful performance
of the functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties affects the successful performance and
operation of each other Loan Party. Each Loan Party expects to derive benefit
(and its board of directors or other governing body has determined that it may
reasonably be expected to derive benefit), directly or indirectly, from (i)
successful operations of each of the other Loan Parties, and (ii) the credit
extended by the Lenders to the Borrowers hereunder, both in their separate
capacities and as members of the group of companies. Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose,
will be of direct and indirect benefit to such Loan Party, and is in its best
interest.

 

SECTION 3.28.            No Defaults. No event or circumstance has occurred or exists as of the date of
this Agreement that constitutes a Default or Event of Default

 

ARTICLE IV.

CONDITIONS TO CREDIT EXTENSIONS

 

SECTION 4.01.            Conditions to Effectiveness of this Agreement. This Agreement shall become effective and
the obligations of each Lender hereunder to undertake and continue the 

 

96

 

Commitments
shall be subject to the prior or concurrent satisfaction (except to the extent
that such conditions are permitted to be satisfied on a post-closing basis
pursuant to Section 5.14 herein, in each case, upon mutual agreement of the
Borrowers and the Administrative Agents) of each of the conditions precedent
set forth in this Section 4.01.

 

(a)         Loan Documents. All legal matters incident to this
Agreement, the Credit Extensions hereunder and the other Loan Documents shall
be satisfactory to the Lenders, to the Issuing Bank, the Collateral Agents and
to the Administrative Agents and there shall have been delivered to the
Administrative Agents an executed counterpart of each of the Loan Documents and
the Perfection Certificate. All schedules, exhibits, annexes and other
attachments to each of the Agreement and the other Loan Documents will be in
form and substance mutually agreeable to the Borrowers and the Administrative
Agents.

 

(b)        Corporate Documents.
The Administrative Agents shall have received:

 

(i)            a certificate of the secretary or assistant
secretary of each Loan Party dated the Closing Date, certifying (A) that
attached thereto is a true and complete copy of each Organizational Document of
such Loan Party certified (to the extent applicable) as of a recent date by the
Secretary of State of the state of its organization, (B) that attached thereto
is a true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such person is a party and, in the
case of the Borrowers, the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and effect and
(C) as to the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on behalf
of such Loan Party (together with a certificate of another officer as to the
incumbency and specimen signature of the secretary or assistant secretary
executing the certificate in this clause (i));

 

(ii)           a certificate as to the good standing of each Loan Party (in so-called “long-form”
if available) as of a recent date, from such Secretary of State (or other
applicable Governmental Authority); and

 

(iii)          such other documents as the Lenders, the Issuing Bank or the
Administrative Agents may reasonably request.

 

(c)         Officers’ Certificate. The Administrative Agents shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer(s) and the chief financial officer(s) of the Borrowers,
confirming compliance with the conditions precedent set forth in this Section
4.01 and Section 4.02(b), (c), (d) and (e).

 

(d)        Financial Statements; Projections. The Lenders shall have received the financial statements described in
Section 3.04 and an updated version of the forecasts of the Borrowing
Base (on a monthly basis through December 2008), Excess Availability (on a
monthly basis through December 2008) and the financial performance of Holdings,
the Borrowers, and their respective Subsidiaries, in each case, with results
consistent with those which were provided to the Prior Lenders for the same
periods as provided to the Prior Lenders in connection with the syndication of
the Prior Credit Agreement.

 

(e)         Indebtedness and Minority Interests. After giving effect to the Refinancing and
the other transactions contemplated hereby, no Company shall have outstanding
any Indebtedness or 

 

97

 

preferred
stock other than (i) the Loans and Credit Extensions hereunder, (ii) the Senior
Notes, (iii) the Indebtedness listed on Schedule 6.01(b) and (iv)
Indebtedness owed to any Borrower or any Guarantor.

 

(f)         Opinions of Counsel. The Administrative Agents shall have
received, on behalf of themselves, the other Agents, the Arranger, the Lenders
and the Issuing Bank, a favorable written opinion of (i) Morgan, Lewis &
Bockius LLP, special counsel for the Loan Parties, and (ii) each local and
foreign counsel listed on Schedule 4.01(g), in each case (A) dated the
Closing Date, (B) addressed to the Agents, the Issuing Bank and the Lenders and
(C) covering the matters set forth in Exhibit N and such other matters
relating to the Loan Documents as the Administrative Agents shall reasonably
request.

 

(g)        [Intentionally Omitted].

 

(h)        Requirements of Law.
The Lenders shall be satisfied that Holdings, its Subsidiaries and the
Refinancing shall be in full compliance with all material Requirements of Law,
including Regulations T, U and X of the Board, and shall have received
satisfactory evidence of such compliance reasonably requested by them.

 

(i)          Consents. The Lenders shall be satisfied that all requisite Governmental
Authorities and third parties shall have approved or consented to the
transactions contemplated hereby, except for such consents or approvals the
absence of which could not reasonably be expected to have a Material Adverse
Effect, and there shall be no governmental or judicial action, actual or
threatened, that has or would have, singly or in the aggregate, a reasonable
likelihood of restraining, preventing or imposing burdensome conditions on the
transactions contemplated hereby.

 

(j)          Litigation. There shall be no litigation, public or private, or administrative
proceedings, governmental investigation or other legal or regulatory
developments, actual or threatened, that, singly or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, or could
materially and adversely affect the ability of Holdings, the Borrowers and
their respective Subsidiaries to fully and timely perform their respective
obligations under the Loan Documents, or the ability of the parties to
consummate the financings or transactions contemplated hereby.

 

(k)         Sources and Uses. The sources and uses of the Loans shall be
as set forth in Section 3.12.

 

(l)          Fees. The Arranger, Administrative Agents and Collateral Agents shall have
received all Fees, interest and other amounts due and payable on or prior to
the Closing Date, including, to the extent invoiced, reimbursement or payment
of all reasonable out-of-pocket expenses (including the reasonable legal fees
and expenses of Bingham McCutchen LLP, special counsel to the applicable
Administrative Agents and the applicable Collateral Agents, and the reasonable
fees and expenses of any local counsel, foreign counsel, appraisers,
consultants and other advisors) required to be reimbursed or paid by the
Borrowers hereunder or under any other Loan Document.

 

(m)        Security Documents. The
Agents shall have received the Security Documents in effect on and after the
Closing Date and evidence that all other actions that Agents may deem necessary
or desirable in order to perfect and protect, and continue the perfection and
protection of, the First Priority Liens and security interests created under
the Security Documents have been taken.

 

(n)        Real Property Requirements. The applicable Collateral Agents shall have received:

 

98

 

(i)            a Mortgage encumbering each Mortgaged
Property owned by a US Borrower or US Subsidiary that, together with any
improvements thereon, individually has a fair market value (net of existing
mortgage debt secured by each such property) of greater than $500,000, in each
case, in favor of the applicable Collateral Agents, for the benefit of the
Secured Parties, duly executed and acknowledged by each Loan Party that is the
owner of or holder of any interest in such Mortgaged Property, and otherwise in
form for recording in the recording office of each applicable political
subdivision where each such Mortgaged Property is situated, together with such
certificates, affidavits, questionnaires or returns as shall be required in
connection with the recording or filing thereof to create a lien under
applicable Requirements of Law, and such financing statements and any other
instruments necessary to grant a mortgage lien under the laws of any applicable
jurisdiction, all of which shall be in form and substance reasonably
satisfactory to such Collateral Agent;

 

(ii)           with respect to each such Mortgaged Property, such consents, approvals,
amendments, supplements, estoppels, tenant subordination agreements or other
instruments as shall reasonably be deemed necessary by such Collateral Agent in
order for the owner or holder of the fee or leasehold interest constituting
such Mortgaged Property to grant the Lien contemplated by the Mortgage with
respect to such Mortgaged Property;

 

(iii)          with respect to each Mortgage required under clause (i) above, a policy
of title insurance (or marked up title insurance commitment having the effect
of a policy of title insurance) insuring the Lien of such Mortgage as a valid
First Priority mortgage Lien on the Mortgaged Property and fixtures described
therein in the amount equal to not less than 115% of the fair market value of
such Mortgaged Property and fixtures, which policy (or such marked-up
commitment) (each, a “Title Policy”)
shall (A) be issued by the Title Company, (B) contain a “tie-in” or “cluster”
endorsement, if available under applicable law (i.e., policies which insure against losses regardless of
location or allocated value of the insured property up to a stated maximum
coverage amount), (C) have been supplemented by such endorsements (or where
such endorsements are not available, opinions of special counsel, architects or
other professionals reasonably acceptable to such Collateral Agent) as shall be
reasonably requested by such Collateral Agent (including endorsements on
matters relating to usury, first loss, last dollar, zoning, contiguity,
revolving credit, doing business, non-imputation, public road access, survey,
variable rate, environmental lien, subdivision, mortgage recording tax,
separate tax lot, and so-called comprehensive coverage over covenants and
restrictions), and (D) contain no exceptions to title other than Permitted
Liens and other exceptions acceptable to such Collateral Agent;

 

(iv)          with respect to each such Mortgaged Property, such affidavits,
certificates, information (including financial data) and instruments of
indemnification (including a so-called “gap” indemnification) as shall be
reasonably required to induce the Title Company to issue the Title Policy/ies and
endorsements contemplated above;

 

(v)           evidence reasonably acceptable to such Collateral Agent of payment by
or on behalf of the Borrowers of all Title Policy premiums, search and
examination charges, escrow charges and related charges, mortgage recording
taxes, fees, charges, costs and expenses required for the recording of the
Mortgages and issuance of the Title Policies referred to above;

 

(vi)          with respect to each such Mortgaged Property, copies of all Leases in
which any Borrower or any Subsidiary holds the lessor’s interest. To the extent
any of the foregoing affect any Mortgaged Property, such agreement shall be
subordinate to the Lien of the Mortgage to be recorded against such Mortgaged
Property, either expressly by its terms or pursuant to a 

 

99

 

subordination,
non-disturbance and attornment agreement, and shall otherwise be acceptable to
such Collateral Agent;

 

(vii)         with respect to each such Mortgaged Property, each Company shall have
made all notifications, registrations and filings, to the extent required by,
and in accordance with, all Governmental Real Property Disclosure Requirements
applicable to such Mortgaged Property;

 

(viii)        Surveys reasonably acceptable to Collateral Agents with respect to each
such Mortgaged Property; and

 

(ix)           a completed Federal Emergency Management Agency Standard Flood Hazard
Determination with respect to each such Mortgaged Property.

 

(o)        Insurance. The
Administrative Agents shall have confirmed receipt by Collateral Agents of
copies of, or certificates as to coverage under, the insurance policies and
endorsements required by Section 5.04 and the applicable provisions of
the Security Documents, each of which shall be in form and substance
satisfactory to the Administrative Agents and Collateral Agents.

 

(p)        USA Patriot Act. The
Lenders shall have received, sufficiently in advance of the Closing Date, all
documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money laundering rules and
regulations, including without limitation, the United States PATRIOT Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) including, without
limitation, the information described in Section 11.13.

 

(q)        Initial Borrowing Base Certificate. The Collateral Agents and the Administrative Agents shall have
received a Borrowing Base Certificate dated as of the last day of the fiscal
month of September.

 

(r)         Excess Availability. As of the Closing Date, Excess Availability
shall not be less than $100,000,000 or such lesser amount as GE Capital, after
consultation with the Lenders, may approve.

 

(s)         Repayment of Prior Lender Obligations. The Agents shall have received a fully
executed original of a pay-off letter reasonably satisfactory to Agents
confirming that all outstanding Prior Lender Obligations consisting of, but not
limited to, principal and interest, will be repaid in full from the proceeds of
the Loans and that all Liens upon any of the property of the Borrowers,
Holdings, or any of their Subsidiaries in favor of Prior Lenders shall be
terminated by Prior Lenders immediately upon such payment;

 

(t)         Outstanding Letters of Credit. All outstanding letters of credit issued by
Prior Lenders shall either (i) become Letters of Credit under this Agreement,
(ii) be terminated, (iii) be cash collateralized by the Issuing Bank or (iv) be
supported by back-to-back Letters of Credit issued hereunder, in each case, as
mutually agreed upon by the Agents, the Borrowers and Prior Lenders;

 

(u)        Solvency. The Agents
shall have received a certificate, in form and substance reasonably
satisfactory to each of them, from a Financial Officer of Holdings as to the
solvency of the Loan Parties.

 

(v)        Due Diligence. Agents
shall have received the information and materials listed on the Due Diligence
Request attached hereto as Exhibit T and Agents shall be satisfied with their
review of such information and materials; and

 

100

 

(w)        Certificate re: Indenture Compliance. The Agents shall have received a certificate signed by the chief
executive officer(s) or chief financial officer of each Borrower confirming
that this Agreement is in compliance with the provisions of the Senior Note
Documents.

 

SECTION 4.02.            Conditions to All Credit Extensions. The obligation of each Lender and each
Issuing Bank to make any Credit Extension (including on the Closing Date) shall
be subject to, and to the satisfaction of, each of the conditions precedent set
forth below.

 

(a)         Notice. The applicable Administrative Agent shall have received a Borrowing
Request as required by Section 2.03 (or such notice shall have been
deemed given in accordance with Section 2.03) if Loans are being
requested or, in the case of the issuance, amendment, extension or renewal of a
Letter of Credit, the Issuing Bank and the applicable Administrative Agent
shall have received an LC Request as required by Section 2.18(b) or, in
the case of the Borrowing of a Swingline Loan, the applicable Swingline Lender
and the applicable Administrative Agent shall have received a Borrowing Request
as required by Section 2.17(b).

 

(b)        No Default. The
Borrowers and each other Loan Party shall be in compliance in all material
respects with all the terms and provisions set forth herein and in each other
Loan Document on its part to be observed or performed, and, at the time of and
immediately after giving effect to such Credit Extension and the application of
the proceeds thereof, no Default shall have occurred and be continuing on such
date.

 

(c)         Representations and Warranties. Each of the representations and warranties
made by any Loan Party set forth in Article III hereof or in any other
Loan Document shall be true and correct in all material respects (except that
any representation and warranty that is qualified as to “materiality” or “Material
Adverse Effect” shall be true and correct in all respects) on and as of the
date of such Credit Extension with the same effect as though made on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date.

 

(d)        Compliance with Borrowing Base. After giving pro forma
effect to the proposed Credit Extension, (i) the outstanding Revolving Exposure
plus the outstanding Tranche B Exposure shall not exceed the result of
the Borrowing Base minus the U.S. Minimum Availability Requirement plus
(without duplication) the Canadian Borrowing Base minus the Canadian
Minimum Availability Requirement plus the Tranche B Borrowing Base, in
each case as then in effect, (ii) the sum of all Lenders’ US Revolving
Exposures shall not exceed the result of (A) the Borrowing Base minus
(B) the U.S. Minimum Availability Requirement, in each case as then in effect,
(iii) the sum of all Lenders’ Canadian Exposures shall not exceed the result of
(A) the Canadian Borrowing Base minus (B) the Canadian Minimum
Availability Requirement, in each case as then in effect and (iv) the sum of
all Lenders’ Revolving Exposures shall not exceed the Revolving Commitments
less the Line Reserve then in effect.

 

(e)         No Legal Bar. No order, judgment or decree of any
Governmental Authority shall purport to restrain any Lender from making any
Loans to be made by it. No injunction or other restraining order shall have been
issued, shall be pending or noticed with respect to any action, suit or
proceeding seeking to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans hereunder.

 

Each of the delivery of a
Borrowing Request or an LC Request and the acceptance by the Borrowers of the
proceeds of such Credit Extension shall constitute a representation and
warranty by the Borrowers and each other Loan Party that on the date of such
Credit Extension (both immediately before 

 

101

 

and after giving effect to such Credit Extension and the application of
the proceeds thereof) the conditions contained in Section 4.02(b) – (e)
have been satisfied. The Borrowers shall provide such information as the
Administrative Agents and Collateral Agents may reasonably request to confirm
that the conditions in Section 4.02(b) – (e) have been satisfied.

 

ARTICLE V.

AFFIRMATIVE COVENANTS

 

Each Loan Party warrants,
covenants and agrees with each Administrative Agent, Collateral Agent and
Lender that so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each
Loan, all Fees and all other expenses or amounts payable under any Loan
Document shall have been paid in full and all Letters of Credit have been
canceled or have expired or been fully cash collateralized and all amounts
drawn thereunder have been reimbursed in full, unless the Required Lenders
shall otherwise consent in writing, each Loan Party will, and will cause each
of its Subsidiaries to:

 

SECTION 5.01.            Financial Statements, Reports, etc. Furnish to the Administrative Agents and
each Lender:

 

(a)         Annual Reports. As soon as available and in any event,
within 90 days after the end of each fiscal year, beginning with the fiscal
year ending December 31, 2007, (i) the consolidated balance sheet of Holdings
as of the end of each such fiscal year and related consolidated statements of
income, cash flows and stockholders’ equity for such fiscal year in comparative
form with such financial statements as of the end of, and for, the preceding
fiscal year, and, in each case, notes thereto (including a note with a
consolidating balance sheet and statements of income and cash flows separating
out the results of Holdings, the Borrowers, each Borrowing Base Guarantor and
the aggregate results of all Subsidiaries), all prepared in accordance with
Regulation S-X and accompanied by an opinion of KPMG LLP or other independent
public accountants of recognized national standing satisfactory to the
Administrative Agents (which opinion shall not be qualified as to scope or
contain any going concern or other qualification), stating that such financial
statements fairly present, in all material respects, the consolidated financial
condition, results of operations, cash flows of Holdings as of the dates and
for the periods specified in accordance with GAAP, (ii) a management report in
a form reasonably satisfactory to the Administrative Agents setting forth (A)
statement of income items of Holdings for such fiscal year, showing variance,
by dollar amount and percentage, from amounts for the previous fiscal year and
budgeted amounts and (B) key operational information and statistics for such
fiscal year consistent with internal and industry-wide reporting standards,
including same-store sales, and (iii) a narrative report and management’s
discussion and analysis, in a form reasonably satisfactory to the
Administrative Agents, of the financial condition and results of operations of
Holdings for such fiscal year, as compared to amounts for the previous fiscal
year and budgeted amounts (it being understood that the information required by
clause (i) may be furnished in the form of a Form 10-K);

 

(b)        Quarterly Reports. As
soon as available and in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year, beginning with the first
fiscal quarter ending after the date hereof, (i)(A) the consolidated balance
sheet of Holdings as of the end of each of the first three fiscal quarters and
related consolidated statements of income and cash flows for each such fiscal
quarter and for the then elapsed portion of the fiscal year and (B) the
consolidated balance sheet of Holdings as of the end of each of the first three
fiscal quarters of each fiscal year, beginning with the first fiscal quarter
ending after the date hereof, and related consolidated statements of income and
cash flows for such fiscal quarter and for the then elapsed portion of the
fiscal year, in comparative form with the consolidated statements of income and
cash flows for the comparable periods in the previous fiscal 

 

102

 

year,
and notes, in each case, thereto (including a note with a consolidating balance
sheet and statements of income and cash flows separating out Holdings, the
Borrowers and the Subsidiaries), all prepared in accordance with Regulation S-X
under the Securities Act and accompanied by a certificate of a Financial
Officer stating that such financial statements fairly present, in all material
respects, the consolidated financial condition, results of operations and cash
flows of Holdings as of the date and for the periods specified in accordance
with GAAP consistently applied, and on a basis consistent with audited
financial statements referred to in clause (a) of this Section, subject to
normal year-end audit adjustments, (ii) a management report in a form
reasonably satisfactory to the Administrative Agents setting forth (A)
statement of income items of Holdings for such fiscal quarter and for the then
elapsed portion of the fiscal year, showing variance, by dollar amount and percentage,
from amounts for the comparable periods in the previous fiscal year and
budgeted amounts and (B) key operational information and statistics for such
fiscal quarter and for the then elapsed portion of the fiscal year consistent
with internal and industry-wide reporting standards, including same-store sales
and (iii) management’s discussion and analysis, in a form reasonably
satisfactory to the Administrative Agents, of the financial condition and
results of operations for such fiscal quarter and the then elapsed portion of
the fiscal year, as compared to the comparable periods in the previous fiscal
year and budgeted amounts (it being understood that the information required by
clause (i) may be furnished in the form of a Form 10-Q);

 

(c)         Monthly Reports. Within 30 days after the end of each
of the first two months of each fiscal quarter (i) the unaudited consolidated
balance sheet of Holdings and its Subsidiaries as of the end of such two months
and the related consolidated statements of income and cash flows of Holdings
and its Subsidiaries for such month and for the then elapsed portion of the
fiscal year, in comparative form with the consolidated statements of income and
cash flows for the comparable periods in the previous fiscal year, and (ii) same
store sales information and statistics for such month and for the then elapsed
portion of the fiscal year consistent with internal and industry-wide reporting
standards, each in form and substance reasonably satisfactory to the
Administrative Agent;

 

(d)        Financial Officer’s Certificate. (i) Concurrently with any delivery of financial statements under Section
5.01(a) or (b), a Compliance Certificate certifying that no Default
has occurred or, if such a Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken with
respect thereto; and (ii) concurrently with any delivery of financial
statements under Section 5.01(a) above, beginning with the fiscal year
ending December 31, 2007, a report of the accounting firm opining on or
certifying such financial statements stating that in the course of its regular
audit of the financial statements of Holdings and its Subsidiaries, which audit
was conducted in accordance with generally accepted auditing standards, such
accounting firm obtained no knowledge that any Default insofar as it relates to
financial or accounting matters has occurred or, if in the opinion of such
accounting firm such a Default has occurred, specifying the nature and extent
thereof;

 

(e)         Financial Officer’s Certificate Regarding
Collateral. Concurrently
with any delivery of financial statements under Section 5.01(a), a
certificate of a Financial Officer setting forth the information required
pursuant to the Perfection Certificate Supplement or confirming that there has
been no change in such information since the date of the Perfection Certificate
or latest Perfection Certificate Supplement;

 

(f)         Public Reports. Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by any Company with the Securities and Exchange Commission, the
Ontario Securities Commission or any Governmental Authority succeeding to any
or all of the functions of any said Commission, or with any national or other
securities exchange or securities commission, or distributed to holders of its
Indebtedness pursuant 

 

103

 

to
the terms of the documentation governing such Indebtedness (or any trustee, agent
or other representative therefor), as the case may be;

 

(g)        Management Letters. Promptly
after the receipt thereof by any Company, a copy of any “management letter”
received by any such person from its certified public accountants and the
management’s responses thereto;

 

(h)        Budgets. Within 60
days after the beginning of each fiscal year, a budget for Holdings in form
reasonably satisfactory to the Administrative Agents, but to include balance
sheets, statements of income and sources and uses of cash, for (i) each month
of such fiscal year prepared in detail, including line items for budgeted
Borrowing Base levels and utilization of Revolving Loans and Tranche B Loans
and (ii) each fiscal year thereafter, through and including the fiscal year in
which the Final Maturity Date occurs, prepared in summary form, in each case,
of Holdings, Borrowers and their respective Subsidiaries, with appropriate
presentation and discussion of the principal assumptions upon which such
budgets are based, accompanied by the statement of a Financial Officer of
Borrower to the effect that the budget of Holdings is a reasonable estimate for
the periods covered thereby and, promptly when available, any material
revisions of such budget;

 

(i)          Organization. Concurrently with any delivery of financial
statements under Section 5.01(a), an accurate organizational chart as
required by Section 3.07(c), or confirmation that there are no changes
to Schedule 10(a) to the Perfection Certificate;

 

(j)          Organizational Documents. Promptly provide copies of any
Organizational Documents that have been amended or modified in accordance with
the terms hereof and deliver a copy of any notice of default given or received
by any Company under any Organizational Document within 15 days after such Company
gives or receives such notice; and

 

(k)         Other Information. Promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of any Company, or compliance with the terms of any Loan Document or matters
regarding the Collateral (beyond the requirements contained in Section 9.04)
as the Administrative Agents or any Lender may reasonably request.

 

SECTION 5.02.            Litigation and Other Notices. Furnish to the Administrative Agents and
each Lender written notice of the following promptly (and, in any event, within
three Business Days of the occurrence thereof):

 

(a)         any Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect thereto;

 

(b)        the filing or commencement of, or any threat or notice of intention of
any person to file or commence, any action, suit, litigation or proceeding,
whether at law or in equity by or before any Governmental Authority, (i)
against any Company or any Affiliate thereof that could reasonably be expected
to result in a Material Adverse Effect or (ii) with respect to any Loan
Document;

 

(c)         any development that has resulted in, or could reasonably be expected
to result in a Material Adverse Effect;

 

(d)        the occurrence of a Casualty Event; and

 

104

 

(e)         (i) the incurrence of any material Lien (other than Permitted Liens)
on, or claim asserted against any of the Collateral or (ii) the occurrence of
any other event which could materially affect the value of the Collateral.

 

SECTION 5.03.            Existence; Businesses and Properties.

 

(a)         Do or cause to be done all things necessary to preserve, renew and
maintain in full force and effect its legal existence, except as otherwise
expressly permitted under Section 6.05 or Section 6.06 or, in the
case of any Subsidiary, where the failure to perform such obligations,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

(b)        Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
privileges, franchises, authorizations, patents, copyrights, trademarks and
trade names material to the conduct of its business except where such failure
could reasonably be expected to result in a Material Adverse Effect; maintain
and operate such business in substantially the manner in which it is presently
conducted and operated; comply with all applicable Requirements of Law
(including any and all zoning, building, Environmental Law, ordinance, code or
approval or any building permits or any restrictions of record or agreements
affecting the Real Property) and decrees and orders of any Governmental
Authority, whether now in effect or hereafter enacted, except where the failure
to comply, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect; pay and perform its obligations under
all Leases, Loan Documents and Senior Note Documents; and at all times
maintain, preserve and protect all property material to the conduct of such
business and keep such property in good repair, working order and condition
(other than wear and tear occurring in the ordinary course of business) and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times; provided that
nothing in this Section 5.03(b) shall prevent (i) sales of property,
consolidations or mergers or amalgamations by or involving any Company in
accordance with Section 6.05 or Section 6.06; (ii) the withdrawal
by any Company of its qualification as a foreign corporation in any
jurisdiction where such withdrawal, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect; or (iii) the
abandonment by any Company of any rights, franchises, licenses, trademarks, trade
names, copyrights or patents that such person reasonably determines are not
useful to its business or no longer commercially desirable.

 

SECTION 5.04.            Insurance.

 

(a)         Generally. Keep its insurable property adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
insurance with respect to Mortgaged Properties and other properties material to
the business of the Companies against such casualties and contingencies and of
such types and in such amounts with such deductibles as is customary in the
case of similar businesses operating in the same or similar locations,
including (i) physical hazard insurance on an “all risk” basis, (ii) commercial
general liability against claims for bodily injury, death or property damage
covering any and all insurable claims, (iii) explosion insurance in respect of
any boilers, machinery or similar apparatus constituting Collateral, (iv)
business interruption insurance, (v) worker’s compensation insurance and such
other insurance as may be required by any Requirement of Law and (vi) such
other insurance against risks as the Administrative Agents and the Collateral
Agents may from time to time reasonably require (such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the applicable Administrative Agent and applicable Collateral Agent); provided that with respect to physical
hazard insurance, neither Collateral Agent nor the applicable Company shall
agree to the adjustment of any 

 

105

 

claim
for more than $5.0 million thereunder without the consent of the other (such
consent not to be unreasonably withheld or delayed); provided, further, that no consent of any Company shall be
required during an Event of Default.

 

(b)        Requirements of Insurance. All such insurance shall (i) provide that no cancellation, material
reduction in amount or material reduction in coverage thereof shall be
effective until at least 30 days after receipt by the applicable Collateral
Agent of written notice thereof, (ii) with respect to the Collateral, name the
applicable Collateral Agents as mortgagee (in the case of property insurance)
or additional insured on behalf of the applicable Secured Parties (in the case
of liability insurance) or loss payee (in the case of property insurance), as
applicable, (iii) if reasonably requested by such Collateral Agents, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to such Collateral Agents.

 

(c)         Notice to Agents. Notify the Administrative Agents and the
Collateral Agents immediately whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 5.04 is taken out by any Company; and promptly
deliver to the Administrative Agents and the Collateral Agents a duplicate
original copy of such policy or policies.

 

(d)        Flood Insurance. With
respect to each Mortgaged Property, obtain flood insurance in such total amount
as the Administrative Agents or the Required Lenders may from time to time
reasonably require, if at any time the area in which any improvements located
on any Mortgaged Property is designated a “flood hazard area” in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), and otherwise comply with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as amended
from time to time.

 

(e)         Broker’s Report. Deliver to the Administrative Agents and
the Collateral Agents and the Lenders a report of a reputable insurance broker
with respect to such insurance and such supplemental reports with respect
thereto as the Administrative Agents or the Collateral Agents may from time to
time reasonably request.

 

(f)         Mortgaged Properties. Each Loan Party shall otherwise comply in
all material respects with all Insurance Requirements in respect of the
Premises; provided, however, that
each Loan Party may, at its own expense and after written notice to the
Administrative Agents and the Collateral Agents, (i) contest the applicability
or enforceability of any such Insurance Requirements by appropriate legal
proceedings, or (ii) cause the Insurance Policy containing any such Insurance
Requirement to be replaced by a new policy complying with the provisions of
this Section 5.04.

 

SECTION 5.05.            Obligations and Taxes.

 

(a)         Payment of Obligations. Pay its Indebtedness and other obligations
promptly and in accordance with their terms and pay and discharge promptly when
due all Taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
services, materials and supplies or otherwise that, if unpaid, might give rise
to a Lien other than a Permitted Lien upon such properties or any part thereof;
provided that such payment and
discharge shall not be required with respect to any such Tax, assessment,
charge, levy or claim so long as (x)(i) the validity or amount thereof shall be
contested in good faith by appropriate proceedings timely instituted and
diligently conducted and the applicable Company shall have set aside on its
books adequate reserves or other appropriate provisions with respect thereto in
accordance with GAAP, (ii) such contest operates 

 

106

 

to
suspend collection of the contested obligation, Tax, assessment or charge and
enforcement of a Lien other than a Permitted Lien and (iii) in the case of
Collateral, the applicable Company shall have otherwise complied with the
Contested Collateral Lien Conditions and (y) the failure to pay could not
reasonably be expected to result in a Material Adverse Effect.

 

(b)        Filing of Returns. Timely
and correctly file all material Tax Returns required to be filed by it. Withhold,
collect and remit all Taxes that it is required to collect, withhold or remit.

 

(c)         Tax Shelter Reporting. Each Borrower does not intend to treat the
Loans as being a “reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4. In the event any Borrower determines to take any
action inconsistent with such intention, such Borrower will promptly notify the
Administrative Agents thereof.

 

SECTION 5.06.            Employee Benefits. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code except where such
non-compliance could not reasonably be expected to result in a Material Adverse
Effect and (b) furnish to the Administrative Agents (x) as soon as possible
after, and in any event within 5 Business Days after any Responsible Officer of
any Company knows or has reason to know that, any ERISA Event has occurred
that, alone or together with any other ERISA Event could reasonably be expected
to result in liability of the Companies or any of their ERISA Affiliates in an
aggregate amount that could reasonably be expected to result in a Material
Adverse Effect or the imposition of a Lien, a statement of a Financial Officer
of the Borrowers setting forth details as to such ERISA Event and the action,
if any, that the Companies propose to take with respect thereto, and (y) upon
request by the Administrative Agents, copies of (i) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by any Company with
the Internal Revenue Service with respect to each Plan; (ii) the most recent
actuarial valuation report for each Plan; (iii) all notices received by any
Company from a Multiemployer Plan sponsor or any governmental agency concerning
an ERISA Event; and (iv) such other documents or governmental reports or
filings relating to any Plan as the Administrative Agents shall reasonably
request.

 

SECTION 5.07.            Maintaining Records; Access to Properties and
Inspections; Annual Meetings.

 

(a)         Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law are made of all
dealings and transactions in relation to its business and activities,
including, without limitation, proper records of intercompany transaction and
the Borrowing Base Guarantor Intercompany Loan Amounts with full, true and
correct entries reflecting all payments received and paid (including, without
limitation, funds received by or for the account of Borrower from deposit
accounts of the other Companies). Each Company will permit any representatives
designated by the Administrative Agents or any Lender to visit and inspect the
financial records and the property of such Company at reasonable times during
regular business hours and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agents or any Lender to
discuss the affairs, finances, accounts and condition of any Company with the
officers and employees thereof and advisors therefor (including independent
accountants).

 

(b)        Within 150 days after the end of each fiscal year of the Companies, at
the request of the Administrative Agents or Required Lenders, hold a meeting
(at a mutually agreeable location, venue and time or, at the option of the
Administrative Agents, by conference call, the costs of such venue or call to
be paid by the Borrowers) with all Lenders who choose to attend such meeting,
at which meeting shall be reviewed the financial results of the previous fiscal
year and the financial condition of the Companies and the budgets presented for
the current fiscal year of the Companies.

 

107

 

SECTION 5.08.            Use of Proceeds. Use the proceeds of the Loans only for the
purposes set forth in Section 3.12 and request the issuance of Letters
of Credit only for the purposes set forth in the definition of Commercial
Letter of Credit or Standby Letter of Credit, as the case may be.

 

SECTION 5.09.            Compliance with Environmental Laws;
Environmental Reports.

 

(a)         Comply, and cause all lessees and other persons occupying Real Property
of any Company to comply, in all material respects with all Environmental Laws
and Environmental Permits applicable to its operations and Real Property;
obtain and renew all material Environmental Permits applicable to its
operations and Real Property; and conduct all Responses required by, and in
accordance with, Environmental Laws; provided
that no Company shall be required to undertake any Response to the extent that
its obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to such
circumstances in accordance with GAAP.

 

(b)        If a Default caused by reason of a breach of Section 3.18 or Section
5.09(a) shall have occurred and be continuing for more than 20 days without
the Companies commencing activities reasonably likely to cure such Default in
accordance with Environmental Laws, at the written request of the
Administrative Agents or the Required Lenders through the Administrative
Agents, provide to the Lenders within 45 days after such request, at the
expense of the Borrowers, an environmental assessment report regarding the matters
which are the subject of such Default, including, where appropriate in the
reasonable judgment of the Administrative Agents, soil and/or groundwater
sampling, prepared by an environmental consulting firm and, in the form and
substance, reasonably acceptable to the Administrative Agents and indicating
the presence or absence of Hazardous Materials and the estimated cost of any
compliance or Response to address them.

 

SECTION 5.10.            [Intentionally Deleted].

 

SECTION 5.11.            Additional Collateral; Additional Guarantors.

 

(a)         Subject to the terms of the Intercreditor Agreement and this Section
5.11, with respect to any property acquired after the Closing Date by any
Loan Party that is intended to be subject to the Lien created by any of the
Security Documents (as specified in this Section 5.11), promptly (and in
any event within 60 days after the acquisition thereof) (i) execute and deliver
to the applicable Administrative Agent and the applicable Collateral Agents
such amendments or supplements to the relevant Security Documents or such other
documents as such Administrative Agent or such Collateral Agents shall deem
reasonably necessary or advisable to grant to such Collateral Agents, for their
benefit and for the benefit of the Secured Parties, a Lien on such property
subject to no Liens other than Permitted Liens, and (ii) take all actions
necessary to cause such Lien to be duly perfected to the extent required by
such Security Document in accordance with all applicable Requirements of Law,
including the filing of financing statements in such jurisdictions as may be
reasonably requested by such Administrative Agent. The Borrowers shall
otherwise take such actions and execute and/or deliver to the applicable
Collateral Agents such documents as the applicable Administrative Agent or such
Collateral Agents shall require to confirm the validity, perfection and
priority of the Lien of the Security Documents against such after-acquired
properties.

 

(b)        Subject to the terms of the Intercreditor Agreement, with respect to
any person that is or becomes a Subsidiary after the Closing Date, promptly
(and in any event within 30 days after such person becomes a Subsidiary) (i)
pledge and deliver to the applicable Collateral Agent the certificates, if any,
representing all of the Equity Interests of such Subsidiary, provided that with
respect to any Foreign Subsidiary no more than 65% of the Equity Interests of
any first-tier Foreign Subsidiary of US Borrowers or any US Subsidiary (and no
stock of any other Foreign Subsidiary) shall be so pledged and 

 

108

 

delivered
as security for the US Obligations, together with undated stock powers or other
appropriate instruments of transfer executed and delivered in blank by a duly
authorized officer of the holder(s) of such Equity Interests, (ii)(A) deliver
to the US Collateral Agent as security for the US Obligations all intercompany
notes owing from such Subsidiary to any Loan Party that is a US Borrower or US
Subsidiary and (B) deliver to the Canadian Collateral Agent as security for the
Canadian Obligations all intercompany notes owing from such Subsidiary to any
Loan Party that is a Canadian Borrower or Foreign Subsidiary, in each case,
together with instruments of transfer executed and delivered in blank by a duly
authorized officer of such Loan Party and 
(iii) (A) if such new Subsidiary is a US Subsidiary, cause such new US
Subsidiary to execute and deliver a Joinder Agreement or such comparable documentation
to become a Subsidiary Guarantor and a joinder agreement to the applicable
Security Agreement, substantially in the form annexed thereto, (B) if such new
Subsidiary is a Foreign Subsidiary, cause such new Foreign Subsidiary to
execute and deliver a pledge agreement, security agreement and guarantee
substantially in the form of the applicable Canadian Pledge Agreement, Canadian
Security Agreement and Canadian Guaranty and (C) cause to take all actions
necessary or advisable in the opinion of the applicable Administrative Agent or
the applicable Collateral Agent to cause the Lien created by the applicable
Security Agreement to be duly perfected to the extent required by such
agreement in accordance with all applicable Requirements of Law, including the
filing of financing statements in such jurisdictions as may be reasonably
requested by the applicable Administrative Agent or the applicable Collateral
Agent.

 

(c)         Subject to the terms of the Intercreditor Agreement, promptly grant to
the applicable Collateral Agents, within 60 days of the acquisition thereof, a
security interest in and Mortgage on each Real Property owned in fee by such
Loan Party that is a US Borrower or US Subsidiary, as is acquired by such Loan
Party after the Closing Date and that, together with any improvements thereon,
individually has a fair market value of at least $5,000,000, in each case, as
additional security for the Secured Obligations (unless the subject property is
already mortgaged to a third party to the extent permitted by Section 6.02).
Subject to the terms of the Intercreditor Agreement, such Mortgages shall be
granted pursuant to documentation reasonably satisfactory in form and substance
to the applicable Administrative Agents and the applicable Collateral Agents
and shall constitute valid and enforceable perfected First Priority Liens
subject only to Permitted Liens or other Liens reasonably acceptable to the
such Collateral Agent. Subject to the terms of the Intercreditor Agreement, the
Mortgages or instruments related thereto shall be duly recorded or filed in
such manner and in such places as are required by law to establish, perfect,
preserve and protect the First Priority Liens in favor of the applicable
Collateral Agents required to be granted pursuant to the Mortgages and all
taxes, fees and other charges payable in connection therewith shall be paid in
full. Such Loan Party shall otherwise take such actions and execute and/or
deliver to the applicable Collateral Agents such documents as the applicable
Administrative Agent or such Collateral Agent shall reasonably require to
confirm the validity, perfection and priority of the Lien of any existing
Mortgage or new Mortgage against such after-acquired Real Property (including a
Title Policy, a Survey and local counsel opinion (in form and substance reasonably
satisfactory to such Administrative Agent and such Collateral Agent) in respect
of such Mortgage).

 

(d)        The Borrowers may designate any Subsidiary acquired or formed after the
Closing Date as a Non-Guarantor Subsidiary by written notice to the applicable
Administrative Agent; provided, however,
that if at any time any Non-Guarantor Subsidiary or group of Non-Guarantor
Subsidiaries in the aggregate (other than any Foreign Subsidiary not otherwise
subject to Section 5.11(b)) has assets with either a book value or fair
market value in excess of $1.0 million, then the Borrowers shall, and shall
cause one or more of such Subsidiaries to, comply with Section 5.11(b)
within the time frames set forth therein so that no Non-Guarantor Subsidiary or
group of Non-Guarantor Subsidiaries in the aggregate holds property having
either a book value or fair market value in excess of $1.0 million.

 

109

 

SECTION 5.12.            Security Interests; Further Assurances. Subject to the terms of the Intercreditor
Agreement, promptly, upon the reasonable request of any Administrative Agent,
Collateral Agent or Lender, at the applicable Borrower’s expense, execute,
acknowledge and deliver, or cause the execution, acknowledgment and delivery
of, and thereafter register, file or record, or cause to be registered, filed
or recorded, in an appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Security Documents or otherwise deemed
by such Administrative Agent or such Collateral Agent reasonably necessary or
desirable for the continued validity, perfection and priority of the Liens on
the Collateral covered thereby subject to no other Liens except as permitted by
the applicable Security Document or this Agreement, or obtain any consents or
waivers as may be reasonably necessary or appropriate in connection therewith. Deliver
or cause to be delivered to the applicable Administrative Agent and the
applicable Collateral Agents from time to time such other documentation,
consents, authorizations, approvals and orders in form and substance reasonably
satisfactory to such Administrative Agent and such Collateral Agents as such
Administrative Agent and such Collateral Agents shall reasonably deem necessary
to perfect or maintain the Liens on the Collateral pursuant to the Security
Documents. Upon the exercise by any Administrative Agent, Collateral Agent or
Lender of any power, right, privilege or remedy pursuant to any Loan Document
which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority execute and deliver all
applications, certifications, instruments and other documents and papers that such
Administrative Agent, Collateral Agent or Lender may require. If any
Administrative Agent, any Collateral Agent or the Required Lenders determine
that they are required by a Requirement of Law to have appraisals prepared in
respect of the Real Property of any Loan Party constituting Collateral, the
Borrowers shall provide to the applicable Administrative Agent appraisals that
satisfy the applicable requirements of the Real Estate Appraisal Reform
Amendments of FIRREA, as applicable, and are otherwise in form and substance
satisfactory to such Administrative Agent and the applicable Collateral Agent.

 

SECTION 5.13.            Information Regarding Collateral.

 

(a)         Not effect any change (i) in any Loan Party’s 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 Loan Party’s chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it, domicile (within
the meaning of the Quebec Civil Code) or any office or facility (other than any
Store) at which Collateral owned by it with a value of more than $250,000 is
located (including the establishment of any such new office or facility), (iii)
in any Loan Party’s identity or organizational structure, (iv) in any Loan
Party’s Federal Taxpayer Identification Number or organizational identification
number, if any, or (v) in any Loan Party’s jurisdiction of organization (in
each case, including by merging or amalgamating with or into any other entity,
reorganizing, dissolving, liquidating, reorganizing or organizing in any other
jurisdiction), until (A) it shall have given the applicable Collateral Agents
and the applicable Administrative Agent not less than 30 days’ prior written
notice (in the form of an Officers’ Certificate), or such lesser notice period
agreed to by such Collateral Agents, of its intention so to do, clearly
describing such change and providing such other information in connection
therewith as such Collateral Agents or such Administrative Agent may reasonably
request and (B) it shall have taken all action reasonably satisfactory to such
Collateral Agents to maintain the perfection and priority of the security
interest of such Collateral Agents for the benefit of the Secured Parties in
the Collateral, if applicable. Each Loan Party agrees to promptly provide the
applicable Collateral Agents with certified Organizational Documents reflecting
any of the changes described in the preceding sentence. Each Loan Party also
agrees to promptly notify the applicable Collateral Agents of any change in the
location of any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral is located
(including the establishment of any such new office or facility), other than
changes in location to a Mortgaged Property or a leased property subject to a
Landlord Access Agreement.

 

110

 

(b)        Concurrently with the delivery of financial statements pursuant to Section
5.01(a), deliver to the applicable Administrative Agents and applicable
Collateral Agents a Perfection Certificate Supplement and a certificate of a
Financial Officer and the chief legal officer(s) of the Borrowers certifying
that all UCC financing statements (including fixture filings, as applicable),
PPSA financing statements or financing change statements or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction necessary to protect and perfect the security interests and Liens
under the Security Documents for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).

 

SECTION 5.14.            Post Closing Collateral Matters. Execute and deliver the documents and
complete the tasks set forth on Schedule 5.14, in each case, (i) upon
mutual agreement of the Borrowers and the Administrative Agents in respect of
such documents and tasks to be listed on such schedule and (ii) within the time
limits specified on such schedule. The Administrative Agents may, in their sole
and Permitted Discretion, (i) waive the requirement for the delivery of any of
the documents set forth on such schedule or any actions to be taken by the
Borrowers or any Loan Parties as set forth on such schedule and (ii) waive or
extend the time deadlines set forth on such schedule.

 

SECTION 5.15.            Affirmative Covenants with Respect to Leases. With respect to each Lease, the respective
Loan Party shall perform all the obligations imposed upon the landlord under
such Lease and enforce all of the tenant’s obligations thereunder, except where
the failure to so perform or enforce could not reasonably be expected to result
in a Material Adverse Effect.

 

SECTION 5.16.            Interest Rate Agreements. Within one hundred eighty (180) days after
the Closing Date, US Borrowers shall enter into, and shall maintain, Hedging
Agreements providing for interest rate protection for an amount equal to fifty
percent (50%) of the outstanding principal due on the Senior Notes at any time
on terms and conditions reasonably satisfactory to US Administrative Agent.

 

ARTICLE VI.

NEGATIVE COVENANTS

 

Each Loan Party warrants,
covenants and agrees with each Administrative Agent, each Collateral Agent and
each Lender that, so long as this Agreement shall remain in effect and until
the Commitments have been terminated and the principal of and interest on each
Loan, all Fees and all other expenses or amounts payable under any Loan
Document have been paid in full and all Letters of Credit have been canceled or
have expired or been fully cash collateralized and all amounts drawn thereunder
have been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, no Loan Party will, nor will they cause or permit any
Subsidiaries to:

 

SECTION 6.01.            Indebtedness. Incur, create, assume or permit to exist,
directly or indirectly, any Indebtedness, except

 

(a)         Indebtedness incurred under this Agreement and the other Loan
Documents;

 

(b)        (i) Indebtedness outstanding on the Closing Date and listed on Schedule
6.01(b), (ii) refinancings or renewals thereof; provided that (A) any such refinancing Indebtedness is in an
aggregate principal amount not greater than the aggregate principal amount of
the Indebtedness being renewed or refinanced, plus
the amount of any premiums required to be paid thereon, accrued or capitalized
interest and reasonable fees and expenses associated therewith, (B) such
refinancing Indebtedness has a later or

 

111

 

equal
final maturity and longer or equal weighted average life than the Indebtedness
being renewed or refinanced and (C) the covenants, events of default,
subordination and other provisions thereof (including any guarantees thereof)
shall be, in the aggregate, no less favorable to the Lenders than those
contained in the Indebtedness being renewed or refinanced and (iii) the Senior
Notes and Senior Note Guarantees (including any notes and guarantees issued in
exchange therefor in accordance with the registration rights document entered
into in connection with the issuance of the Senior Notes and Senior Note
Guarantees);

 

(c)         Indebtedness of any Company under Hedging Agreements;

 

(d)        Indebtedness permitted by Section 6.04(i);

 

(e)         To the extent recorded in the Companies’ intercompany account ledgers,
intercompany Indebtedness of the Companies outstanding to the extent permitted
by Section 6.04(d);

 

(f)         Indebtedness in respect of Purchase Money Obligations and Capital Lease
Obligations, and refinancings or renewals thereof (other than refinancings
funded with intercompany advances), in an aggregate amount not to exceed the
greater of (i) $30 million or (ii) 1% of Consolidated Net Tangible Assets, in
either case, at any time outstanding;

 

(g)        Indebtedness incurred by Foreign Subsidiaries and/or Non-Guarantor
Subsidiaries in an aggregate amount not to exceed $15 million at any time
outstanding;

 

(h)        Indebtedness in respect of workers’ compensation claims, self-insurance
obligations, performance bonds, surety appeal or similar bonds and completion
guarantees provided by a Company in the ordinary course of its business;

 

(i)          Contingent Obligations of any Loan Party in respect of Indebtedness
otherwise permitted under this Section 6.01;

 

(j)          Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however,
that such Indebtedness is extinguished within five Business Days of incurrence;

 

(k)         Indebtedness of any seller, the business, person or properties acquired
in a Permitted Acquisition;

 

(l)          Indebtedness arising in connection with endorsement of instruments for
deposit in the ordinary course of business;

 

(m)        [Intentionally Omitted]; and

 

(n)        unsecured Indebtedness of any Company in an aggregate amount not to
exceed $100 million at any time outstanding.

 

SECTION 6.02.            Liens. Create, incur, assume or permit to exist, directly or indirectly, any
Lien on any property now owned or hereafter acquired by it or on any income or
revenues or rights in respect of any thereof, except the following
(collectively, the “Permitted Liens”):

 

112

 

(a)         inchoate Liens for taxes, assessments or governmental charges or levies
not yet due and payable or delinquent and Liens for taxes, assessments or
governmental charges or levies, which (i) are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings (or orders entered in connection with
such proceedings) have the effect of preventing the forfeiture or sale of the
property subject to any such Lien, and (ii) in the case of any such charge or
claim which has or may become a Lien against any of the Collateral, such Lien
and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

 

(b)        Liens in respect of property of any Company imposed by Requirements of
Law, and do not secure Indebtedness for borrowed money, such as carriers’,
warehousemen’s, materialmen’s, landlords’, workmen’s, suppliers’, repairmen’s
and mechanics’ Liens and other similar Liens, and (i) which do not in the
aggregate materially detract from the value of the property of the Companies,
taken as a whole, and do not materially impair the use thereof in the operation
of the business of the Companies, taken as a whole, (ii) which, if they secure
obligations that are then due and unpaid, are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings (or orders entered in connection with
such proceedings) have the effect of preventing the forfeiture or sale of the
property subject to any such Lien, and (iii) in the case of any such Lien which
has become a Lien against any of the Collateral, such Lien and the contest
thereof shall satisfy the Contested Collateral Lien Conditions;

 

(c)         any Lien in existence on the Closing Date and set forth on Schedule
6.02(c) and any Lien granted as a replacement or substitute therefor; provided that any such replacement or
substitute Lien (i) except as permitted by Section 6.01(b) (ii)(A), does
not secure an aggregate amount of Indebtedness, if any, greater than that
secured on the Closing Date and (ii) does not encumber any property other than
the property subject thereto on the Closing Date (any such Lien, an “Existing Lien”);

 

(d)        easements, rights-of-way, restrictions (including zoning restrictions),
covenants, licenses, encroachments, protrusions and other similar charges or
encumbrances, and minor title deficiencies on or with respect to any Real
Property, in each case whether now or hereafter in existence, not (i) securing
Indebtedness, (ii) individually or in the aggregate materially impairing the
value or marketability of such Real Property or (iii) individually or in the
aggregate materially interfering with the ordinary conduct of the business of
the Companies at such Real Property;

 

(e)         Liens arising out of judgments, attachments or awards not resulting in
a Default and in respect of which such Company shall in good faith be
prosecuting an appeal or proceedings for review in respect of which there shall
be secured a subsisting stay of execution pending such appeal or proceedings
and, in the case of any such Lien which has or may become a Lien against any of
the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral
Lien Conditions;

 

(f)         Liens (other than any Lien imposed by ERISA) (x) imposed by
Requirements of Law or deposits made in connection therewith in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance, social security and similar legislation, (y) incurred in the
ordinary course of business to secure the performance of tenders, statutory
obligations (other than excise taxes), surety, stay, customs and appeal bonds,
statutory bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money) or (z) arising by virtue of
deposits made in the ordinary course of business to secure liability for
premiums to insurance carriers; provided
that (i) with respect to clauses (x), (y) and (z) of this paragraph (f), such
Liens are for amounts not yet due and payable or delinquent or, to the extent
such amounts are so due and payable, such amounts are being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance 

 

113

 

with
GAAP, which proceedings or orders entered in connection with such proceedings have
the effect of preventing the forfeiture or sale of the property subject to any
such Lien, (ii) to the extent such Liens are not imposed by Requirements of
Law, such Liens shall in no event encumber any property other than cash and
Cash Equivalents, (iii) in the case of any such Lien against any of the
Collateral, such Lien and the contest thereof shall satisfy the Contested
Collateral Lien Conditions and (iv) the aggregate amount of deposits at any
time pursuant to clause (y) and clause (z) of this paragraph (f) shall not
exceed $250,000 in the aggregate;

 

(g)        Leases of the properties of any Company, so long as such Leases are
subordinate in all respects to the Liens granted and evidenced by the Security
Documents and do not, individually or in the aggregate, (i) interfere in any
material respect with the ordinary conduct of the business of any Company or
(ii) materially impair the use (for its intended purposes) or the value of the
property subject thereto;

 

(h)        Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by any Company in the
ordinary course of business in accordance with the past practices of such
Company;

 

(i)          Liens securing Indebtedness incurred pursuant to Section 6.01(f);
provided that any such Liens
attach only to the property being financed pursuant to such Indebtedness and do
not encumber any other property of any Company;

 

(j)          bankers’ Liens, rights of setoff and other similar Liens existing
solely with respect to cash and Cash Equivalents on deposit in one or more
accounts maintained by any Company, in each case granted in the ordinary course
of business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank with respect to cash management
and operating account arrangements, including those involving pooled accounts
and netting arrangements; provided
that, unless such Liens are non-consensual and arise by operation of law, in no
case shall any such Liens secure (either directly or indirectly) the repayment
of any Indebtedness;

 

(k)         Liens on property of a person existing at the time such person is
acquired or merged with or into or consolidated with any Company to the extent
permitted hereunder (and not created in anticipation or contemplation thereof);
provided that such Liens do not
extend to property not subject to such Liens at the time of acquisition (other
than improvements thereon) and are no more favorable to the lienholders than
such existing Lien;

 

(l)          Liens granted pursuant to the Security Documents to secure the Secured
Obligations;

 

(m)        licenses of Intellectual Property granted by any Company in the
ordinary course of business and not interfering in any material respect with
the ordinary conduct of business of the Companies;

 

(n)        the filing of UCC financing statements or PPSA financing statements or
financing change statements solely as a precautionary measure in connection
with operating leases or consignment of goods;

 

(o)        Liens securing Indebtedness incurred pursuant to Section 6.01(g);
provided that (i) such Liens do
not extend to, or encumber, property which constitutes Collateral and (ii) such
Liens extend only to the property (or Equity Interests) of the Foreign
Subsidiary incurring such Indebtedness;

 

(p)        the existence of the “equal and ratable” clause in the Senior Note
Documents (but not any security interests granted pursuant thereto); and

 

114

 

(q)        Liens with respect to obligations that do not in the aggregate exceed
$10 million at any time outstanding;

 

provided,
however, that no
consensual Liens shall be permitted to exist, directly or indirectly, on any
Securities Collateral, other than Liens granted pursuant to the Security
Documents or the Senior Note Documents. Furthermore, notwithstanding anything
to the contrary contained herein (including any provision for, reference to, or
acknowledgement of, any Lien or Permitted Lien), nothing herein and no approval
by any Administrative Agent, Collateral Agent or Lender of any Lien or
Permitted Lien (whether such approval is verbal or in writing) shall be
construed as or deemed to constitute a subordination by any Administrative
Agent, Collateral Agent or Lender of any Lien or vary any of the terms or priorities
established by the Intercreditor Agreement or other right or interest held by
or for the benefit of any of them in or to any Collateral of any of the Loan
Parties or any part thereof in favor of any Lien or Permitted Lien held by or
for the benefit of any other person.

 

SECTION 6.03.            Sale and Leaseback Transactions. Enter into any Sale and Leaseback Transaction unless it makes any mandatory
prepayment required by Section 2.10.

 

SECTION 6.04.            Investment, Loan and Advances. Directly or indirectly, lend money or
credit (by way of guarantee or otherwise) or make advances to any person, or
purchase or acquire any stock, bonds, notes, debentures or other obligations or
securities of, or any other interest in, or make any capital contribution to,
any other person, or purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract (all of the foregoing, collectively, “Investments”), except that the following
shall be permitted:

 

(a)         Investments outstanding on the Closing Date and identified on Schedule
6.04(a);

 

(b)        the Companies may (i) acquire and hold accounts receivables owing to
any of them if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary terms, (ii) invest in,
acquire and hold cash and Cash Equivalents, (iii) endorse negotiable
instruments held for collection in the ordinary course of business or (iv) make
lease, utility and other similar deposits in the ordinary course of business;

 

(c)         any Borrowing Base Guarantor (other than Holdings) may make
intercompany loans and advances to any other Borrowing Base Guarantor (other
than Holdings) that is a Wholly Owned Subsidiary; provided,
that such loan shall simultaneously be recorded on such Borrowing Base
Guarantor’s ledgers as an intercompany loan, evidenced by a promissory notes
and shall be pledged (and delivered) by such Borrowing Base Guarantor that is
the lender of such intercompany loan as Collateral pursuant to the Security
Agreement, provided  further
that (i) no Borrowing Base Guarantor may make loans to any Foreign Subsidiary
pursuant to this paragraph (d) unless permitted under Section 6.01(g)
and (ii) any loans made pursuant to this paragraph (d) shall be subordinated to
the obligations of the Borrowing Base Guarantors pursuant to an intercompany
note in substantially the form of Exhibit P and may only be repaid in
accordance with Section 6.09(b);

 

(d)        The Borrowers and the Borrowing Base Guarantors may make loans and
advances (including payroll, travel and entertainment related advances) in the
ordinary course of business to their respective employees (other than any loans
or advances to any director or executive officer (or equivalent thereof) that
would be in violation of Section 402 of the Sarbanes-Oxley Act) so long as the
aggregate principal amount thereof at any time outstanding (determined without
regard to any write-downs or write-offs of such loans and advances) shall not exceed
$1.0 million;

 

115

 

(e)         Any Borrower may enter into Hedging Agreements to the extent permitted
by Section 6.01(c);

 

(f)         The Borrowers and the Borrowing Base Guarantors may sell or transfer
amounts and acquire assets to the extent permitted by Section 6.06;

 

(g)        loans and advances to directors, employees and officers of the
Borrowers and the Subsidiaries for bona fide
business purposes and to purchase Equity Interests of Holdings, in aggregate
amount not to exceed $1.0 million at any time outstanding;

 

(h)        Investments (i) by any Company in any Borrower or any Subsidiary
Guarantor, (ii) by a Subsidiary Guarantor in another Subsidiary Guarantor and
(iii) by a Subsidiary that is not a Subsidiary Guarantor in any other
Subsidiary that is not a Subsidiary Guarantor; provided
that any Investment in the form of a loan or advance shall be evidenced by the
Intercompany Note and, in the case of a loan or advance by a Loan Party,
pledged by such Loan Party as Collateral pursuant to the Security Documents;

 

(i)          Investments in securities of trade creditors or customers in the
ordinary course of business received upon foreclosure or pursuant to any plan
of reorganization or liquidation or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers;

 

(j)          Investments made by any Borrower or any Subsidiary as a result of
consideration received in connection with an Asset Sale made in compliance with
Section 6.06;

 

(k)         other Investments in an aggregate amount not to exceed $35 million at
any time outstanding; and

 

(l)          An Investment shall be deemed to be outstanding to the extent not
returned in the same form as the original Investment to any Borrower or any
Subsidiary Guarantor.

 

SECTION 6.05.            Mergers and Consolidations. Wind up, liquidate or dissolve its affairs
or enter into any transaction of merger, amalgamation or consolidation (or
agree to do any of the foregoing at any future time), except that the following
shall be permitted:

 

(a)         Asset Sales in compliance with Section 6.06;

 

(b)        acquisitions in compliance with Section 6.07;

 

(c)         any Company may merge or consolidate with or into any Borrower or any
Subsidiary Guarantor (as long as such Borrower is the surviving person in the
case of any merger, amalgamation or consolidation involving such Borrower and
such Subsidiary Guarantor is the surviving person and remains a Wholly Owned
Subsidiary of Holdings in any other case); provided
that the Lien on and security interest in such property granted or to be
granted in favor of the applicable Collateral Agents under the Security
Documents shall be maintained or created in accordance with the provisions of Section
5.11 or Section 5.12, as applicable; and

 

(d)        any Subsidiary may dissolve, liquidate or wind up its affairs at any
time; provided that such
dissolution, liquidation or winding up, as applicable, could not reasonably be
expected to have a Material Adverse Effect.

 

To the extent the Required
Lenders waive the provisions of this Section 6.05 with respect to the
sale of any Collateral, or any Collateral is sold as permitted by this Section
6.05, such Collateral 

 

116

 

(unless sold to a Company) shall be sold, subject to the terms of the
Intercreditor Agreement, free and clear of the Liens created by the Security
Documents, and the Agents shall take all actions they deem appropriate in order
to effect the foregoing.

 

SECTION 6.06.            Asset Sales. Effect any Asset Sale, or agree to effect any Asset Sale, except that
the following shall be permitted:

 

(a)         disposition of used, worn out, obsolete or surplus property by any
Company in the ordinary course of business and the abandonment or other
disposition of Intellectual Property that is, in the reasonable judgment of the
Borrowers, no longer economically practicable to maintain or useful in the
conduct of the business of the Companies taken as a whole;

 

(b)        Asset Sales (other than Sale and Leaseback Transactions); provided that the aggregate consideration
received in respect of all Asset Sales (other than Sale and Leaseback
Transactions) pursuant to this clause (b) shall not exceed $100 million in any
four consecutive fiscal quarters of the Borrowers;

 

(c)         dispositions as part of Sale and Leaseback Transactions with respect to
any Store, distribution center or corporate office building constructed or
owned by US Borrowers or any of their Subsidiaries;

 

(d)        leases and subleases of real or personal property in the ordinary
course of business and in accordance with the applicable Security Documents;

 

(e)         mergers, amalgamations and consolidations in compliance with Section
6.05; and

 

(f)         Investments in compliance with Section 6.04.

 

To the extent the Required
Lenders waive the provisions of this Section 6.06 with respect to the
sale of any Collateral, or any Collateral is sold as permitted by this Section
6.06, such Collateral (unless sold to a Company) shall be sold free and
clear of the Liens created by the Security Documents, and the Agents shall take
all actions they deem appropriate in order to effect the foregoing.

 

SECTION 6.07.            Acquisitions. Purchase or otherwise acquire (in one or a
series of related transactions) any part of the property (whether tangible or
intangible) of any person (or agree to do any of the foregoing at any future
time), except that the following shall be permitted:

 

(a)         Capital Expenditures by the Borrowers and the Subsidiaries;

 

(b)        purchases and other acquisitions of inventory, materials, equipment and
intangible property in the ordinary course of business;

 

(c)         Investments in compliance with Section 6.04;

 

(d)        leases or subleases of real or personal property in the ordinary course
of business and in accordance with the applicable Security Documents;

 

(e)         Permitted Acquisitions; and

 

(f)         Mergers, amalgamations and consolidations in compliance with Section
6.05;

 

117

 

provided that the Lien on and security interest in such property granted or to
be granted in favor of the applicable Collateral Agents under the Security
Documents shall be maintained or created in accordance with the provisions of Section
5.11 or Section 5.12, as applicable.

 

SECTION 6.08.            Dividends. Authorize, declare or pay, directly or indirectly, any Dividends with
respect to any Company, except that the following shall be permitted:

 

(a)         Dividends by any Company to any Borrower or any Guarantor that is a
Wholly Owned Subsidiary of any Borrower;

 

(b)        so long as no Default shall then exist or would arise therefrom,
payments to Holdings to permit Holdings, and the subsequent use of such
payments by Holdings, to repurchase or redeem Qualified Capital Stock of
Holdings held by officers, directors or employees or former officers, directors
or employees (or their transferees, estates or beneficiaries under their
estates) of any Company, upon their death, disability, retirement, severance or
termination of employment or service; provided
that the aggregate cash consideration paid for all such redemptions and
payments shall not exceed $2.5 million, in any fiscal year, (and up to 100% of
such $2.5 million not used in any fiscal year may be carried forward to the
next succeeding (but no other) fiscal year);

 

(c)         so long as no Default shall then exist or would arise therefrom, (A) to
the extent actually used by Holdings to pay such taxes, costs and expenses,
payments by any Borrower to or on behalf of Holdings in an amount sufficient to
pay franchise taxes and other fees required to maintain the legal existence of
Holdings and (B) payments by any Borrower to or on behalf of Holdings in an
amount sufficient to pay out-of-pocket legal, accounting and filing costs and
other expenses in the nature of overhead in the ordinary course of business of
Holdings, in the case of clauses (A) and (B) in an aggregate amount not to
exceed $5 million in any fiscal year;

 

(d)        Permitted Tax Distributions, so long as Holdings uses such
distributions to pay its taxes; and

 

(e)         payments to Holdings by any Company to permit distributions by
Holdings, and the subsequent use of such payments by Holdings to make
distributions, in an aggregate amount not exceeding the sum of 50% of
Consolidated Net Income for the period from October 2, 2005 to the end of the
most recent fiscal quarter for which financial statements are available plus
100% of the Net Cash Proceeds of Equity Issuances after the Closing Date (to
the extent not used for Permitted Acquisitions), so long as at the time of such
distribution (i) Administrative Borrower has given five (5) Business Days
written notice to Administrative Agents of its intention to make such
distribution, which notice shall specify the amount of such distribution, (ii)
no Triggering Event has occurred and is continuing and (iii) Excess
Availability, after giving effect to such distribution, shall be greater than
$90 million.

 

SECTION 6.09.            Transactions with Affiliates. Enter into, directly or indirectly, any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate of any Company (other than between or
among one or both Borrowers and one or more Subsidiary Guarantors), other than
on terms and conditions at least as favorable to such Company as would
reasonably be obtained by such Company at that time in a comparable arm’s-length
transaction with a person other than an Affiliate, except that the following
shall be permitted:

 

(a)         Dividends permitted by Section 6.08;

 

(b)        Investments permitted by Section 6.04(h) and Section 6.04(i);

 

118

 

(c)         reasonable and customary director, officer and employee compensation
(including bonuses) and other benefits (including retirement, health, stock
option and other benefit plans) and indemnification arrangements, which in the
case of director and executive officer compensation is approved by the Board of
Directors of Borrower;

 

(d)        transactions with customers, clients, suppliers, joint venture partners
or purchasers or sellers of goods and services, in each case in the ordinary
course of business and otherwise not prohibited by the Loan Documents;

 

(e)         so long as no Default exists, (i) the payment of regular management
fees to Sponsor in the amounts and at the times specified in the Management
Services Agreement, as in effect on the Closing Date or as thereafter amended
or replaced in any manner, that, taken as a whole, is not more adverse to the
interests of the Lenders in any material respect than such agreement as it was
in effect on the Closing Date; provided
that payments under this clause (e)(i) shall in any event not exceed $2.0
million per fiscal year plus out of pocket expenses and (ii) the payment of the
“Transaction Fee” as defined in the Management Services Agreement;

 

(f)         the existence of, and the performance by any Loan Party of its obligations
under the terms of, any limited liability company, limited partnership or other
Organizational Document or securityholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which
it is a party on the Closing Date and which has been disclosed to the Lenders
as in effect on the Closing Date, and similar agreements that it may enter into
thereafter; provided, however,
that the existence of, or the performance by any Loan Party of obligations
under, any amendment to any such existing agreement or any such similar
agreement entered into after the Closing Date shall only be permitted by this Section
6.09(f) to the extent not more adverse to the interest of the Lenders in
any material respect, when taken as a whole, than any of such documents and
agreements as in effect on the Closing Date;

 

(g)        sales of Qualified Capital Stock of Holdings to Affiliates of the
Borrowers not otherwise prohibited by the Loan Documents and the granting of
registration and other customary rights in connection therewith; and

 

(h)        any transaction with an Affiliate where the only consideration paid by
any Loan Party is Qualified Capital Stock of Holdings.

 

SECTION 6.10.            [Intentionally omitted.]

 

SECTION 6.11.            Prepayments of Other Indebtedness;
Modifications of Organizational Documents and Other Documents, etc. Directly or indirectly:

 

(a)         make (or give any notice in respect thereof) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of, or any
prepayment or redemption as a result of any asset sale, change of control or
similar event of, any Indebtedness outstanding under the Senior Notes unless
(i) the Administrative Borrower shall have given the Administrative Agents five
(5) Business Day’s prior written notice of its intention to make such payment
or prepayment, which notice shall specify the amount of such payment or
prepayment, (ii) no Triggering Event has occurred and is continuing and (ii)
Excess Availability, after giving effect to such payment or prepayment, shall
be greater than $90 million;

 

119

 

(b)        amend or modify, or permit the amendment or modification of, any
provision of any Loan Document or Senior Note in any manner that is adverse in
any material respect to the interests of the Lenders; or

 

(c)         terminate, amend, modify (including electing to treat any Pledged
Interests (as defined in the Security Agreement) as a “security” under Section
8-103 of the UCC or under the PPSA) or change any of its Organizational
Documents (including by the filing or modification of any certificate of
designation) or any agreement to which it is a party with respect to its Equity
Interests (including any stockholders’ agreement), or enter into any new
agreement with respect to its Equity Interests, other than any such amendments,
modifications or changes or such new agreements which are not adverse in any
material respect to the interests of the Lenders; provided that Holdings may issue such Equity Interests, so
long as such issuance is not prohibited by Section 6.13 or any other
provision of this Agreement, and may amend its Organizational Documents to
authorize any such Equity Interests.

 

SECTION 6.12.            Limitation on Certain Restrictions on
Subsidiaries. Directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrowers or any
Subsidiary, or pay any Indebtedness owed to the Borrowers or a Subsidiary, (b)
make loans or advances to the Borrowers or any Subsidiary or (c) transfer any
of its properties to the Borrowers or any Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) applicable
Requirements of Law; (ii) this Agreement and the other Loan Documents; (iii)
the Senior Note Documents, as in effect on the Closing Date; (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of a Subsidiary; (v) customary provisions restricting
assignment of any agreement entered into by a Subsidiary in the ordinary course
of business; (vi) any holder of a Lien permitted by Section 6.02
restricting the transfer of the property subject thereto; (vii) customary
restrictions and conditions contained in any agreement relating to the sale of
any property permitted under Section 6.06 pending the consummation of
such sale; (viii) any agreement in effect at the time such Subsidiary becomes a
Subsidiary of the Borrowers, so long as such agreement was not entered into in
connection with or in contemplation of such person becoming a Subsidiary of the
Borrowers; (ix) without affecting the Loan Parties’ obligations under Section
5.11, customary provisions in partnership agreements, limited liability
company organizational governance documents, asset sale and stock sale
agreements and other similar agreements entered into in the ordinary course of
business that restrict the transfer of ownership interests in such partnership,
limited liability company or similar person; (x) restrictions on cash or other
deposits or net worth imposed by suppliers or landlords under contracts entered
into in the ordinary course of business; (xi) any instrument governing
Indebtedness assumed in connection with any Permitted Acquisition, which
encumbrance or restriction is not applicable to any person, or the properties
or assets of any person, other than the person or the properties or assets of
the person so acquired; (xii) in the case of any joint venture which is not a
Loan Party in respect of any matters referred to in clauses (b) and (c) above,
restrictions in such person’s Organizational Documents or pursuant to any joint
venture agreement or stockholders agreements solely to the extent of the Equity
Interests of or property held in the subject joint venture or other entity; or
(xiii) any encumbrances or restrictions imposed by any amendments or refinancings
that are otherwise permitted by the Loan Documents or the contracts,
instruments or obligations referred to in clauses (iii) or (viii) above; provided that such amendments or
refinancings are no more materially restrictive with respect to such encumbrances
and restrictions than those prior to such amendment or refinancing.

 

SECTION 6.13.            Limitation on Issuance of Capital Stock.

 

(a)         With respect to Holdings, issue any Equity Interest that is not
Qualified Capital Stock.

 

120

 

(b)        With respect to the Borrowers or any Subsidiary, issue any Equity
Interest (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, any Equity Interest,
except (i) for stock splits, stock dividends and additional issuances of Equity
Interests which do not decrease the aggregate percentage ownership of the
Borrowers and their Subsidiaries in any class of the Equity Interest of any
other Subsidiary; (ii) Subsidiaries of the Borrowers formed after the Closing
Date in accordance with Section 6.14 may issue Equity Interests to
Borrower or the Subsidiary of the Borrowers which is to own such Equity
Interests; and (iii) the Borrowers may issue common stock that is Qualified Capital
Stock to Holdings. All Equity Interests issued in accordance with this Section
6.13(b) shall, to the extent required by Section 5.11 and Section
5.12 or any Security Agreement, be delivered to the applicable Collateral
Agent for pledge pursuant to the applicable Security Agreement.

 

SECTION 6.14.            Limitation on Creation of Subsidiaries. Establish, create or acquire any additional
Subsidiaries without the prior written consent of the Required Lenders; provided that, without such consent, the
Borrowers may (i) establish or create one or more Wholly Owned Subsidiaries of
the Borrowers, (ii) establish, create or acquire one or more Subsidiaries in
connection with an Investment made pursuant to Section 6.04(i), or (iii)
acquire one or more Subsidiaries in connection with a Permitted Acquisition, so
long as, in each case, Section 5.11(b) shall be complied with.

 

SECTION 6.15.            Business.

 

(a)         With respect to Holdings, engage in any business activities or have any
properties or liabilities, other than (i) its ownership of the Equity Interests
of the Borrowers, (ii) obligations under the Loan Documents and the Senior Note
Documents and (iii) activities and properties incidental to the foregoing
clauses (i) and (ii).

 

(b)        With respect to the Borrowers and the Subsidiaries, engage (directly or
indirectly) in any business other than those businesses in which the Borrowers
and its Subsidiaries are engaged on the Closing Date as described in the
Confidential Information Memorandum (or, in the good faith judgment of the Board
of Directors, which are substantially related thereto or are reasonable
extensions thereof).

 

SECTION 6.16.            Limitation on Accounting Changes. Make or permit any change in accounting
policies or reporting practices, without the consent of the Required Lenders,
which consent shall not be unreasonably withheld, except changes that are
required by GAAP.

 

SECTION 6.17.            Fiscal Year. Change its fiscal year-end more than one time prior to the Revolving
Maturity Date (provided that, Administrative Borrower shall provide the
Administrative Agents with forty-five (45) day’s advance written notice of such
change).

 

SECTION 6.18.            No Further Negative Pledge. Enter into any agreement, instrument, deed
or lease which prohibits or limits the ability of any Loan Party to create,
incur, assume or suffer to exist any Lien upon any of their respective
properties or revenues, whether now owned or hereafter acquired, or which
requires the grant of any security for an obligation if security is granted for
another obligation, except the following: 
(1) this Agreement and the other Loan Documents; (2) covenants in
documents creating Liens permitted by Section 6.02 prohibiting further
Liens on the properties encumbered thereby; (3) the Senior Note Documents, as
in effect on the Closing Date; (4) any other agreement that does not restrict
in any manner (directly or indirectly) Liens created pursuant to the Loan
Documents on any Collateral securing the Secured Obligations and does not
require the direct or indirect granting of any Lien securing any Indebtedness
or other obligation by virtue of the granting of Liens on or pledge of property
of any Loan Party to secure the Secured Obligations; and (5) any prohibition or
limitation that (a) exists pursuant to applicable Requirements of Law, (b)
consists of customary restrictions and 

 

121

 

conditions
contained in any agreement relating to the sale of any property permitted under
Section 6.06 pending the consummation of such sale, (c) restricts
subletting or assignment of any lease governing a leasehold interest of the
Borrowers or a Subsidiary, (d) exists in any agreement in effect at the time
such Subsidiary becomes a Subsidiary of the Borrowers, so long as such
agreement was not entered into in contemplation of such person becoming a
Subsidiary or (e) is imposed by any amendments or refinancings that are
otherwise permitted by the Loan Documents of the contracts, instruments or
obligations referred to in clause (3) or (5)(d); provided that such amendments and refinancings are no more
materially restrictive with respect to such prohibitions and limitations than
those prior to such amendment or refinancing.

 

SECTION 6.19.            Anti-Terrorism Law; Anti-Money Laundering.

 

(a)         Directly or indirectly, (i) knowingly conduct any business or engage in
making or receiving any contribution of funds, goods or services to or for the
benefit of any person described in Section 3.22, (ii) knowingly deal in,
or otherwise engage in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order or any other Anti-Terrorism
Law, or (iii) knowingly engage in or conspire to engage in any transaction that
evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the
Loan Parties shall deliver to the Lenders any certification or other evidence
requested from time to time by any Lender in its reasonable discretion,
confirming the Loan Parties’ compliance with this Section 6.19).

 

(b)        Cause or permit any of the funds of such Loan Party that are used to
repay the Loans to be derived from any unlawful activity with the result that
the making of the Loans would be in violation of any Requirement of Law.

 

SECTION 6.20.            Embargoed Person. Cause or permit (a) any of the funds or
properties of the Loan Parties that are used to repay the Loans to constitute
property of, or be beneficially owned directly or indirectly by, any person
subject to sanctions or trade restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that is identified on
(1) the “List of Specially Designated Nationals and Blocked Persons” maintained
by OFAC and/or on any other similar list maintained by OFAC pursuant to any
authorizing statute including, but not limited to, the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701 et
seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or
Requirement of Law promulgated thereunder or that is named as a “listed person”
or “listed entity” or any other similar lists made under any Anti-Terrorism
Laws, with the result that the investment in the Loan Parties (whether directly
or indirectly) is prohibited by a Requirement of Law, or the Loans made by the
Lenders would be in violation of a Requirement of Law, or (2) the Executive
Order, any related enabling legislation or any other similar Executive Orders
or (b) any Embargoed Person to have any direct or indirect interest, of any nature
whatsoever in the Loan Parties, with the result that the investment in the Loan
Parties (whether directly or indirectly) is prohibited by a Requirement of Law
or the Loans are in violation of a Requirement of Law.

 

ARTICLE VII.

GUARANTEE

 

SECTION 7.01.    The Guarantee. The Guarantors (other than the Canadian
Guarantors which have executed and delivered the Canadian Guaranty) and each US
Borrower hereby jointly and severally guarantee, as a primary obligor and not
as a surety to each Secured Party and their respective successors and assigns,
the prompt payment in full when due (whether at stated maturity, by required
prepayment, declaration, demand, by acceleration or otherwise) of the principal
of and interest (including 

 

122

 

any
interest, fees, costs or charges that would accrue but for the provisions of
the Title 11 of the United States Code after any bankruptcy or insolvency
petition under Title 11 of the United States Code or the provisions of any Insolvency
Law) on the Loans made by the Lenders to, and the Notes held by each Lender of,
the Borrowers, and all other Secured Obligations from time to time owing to the
Secured Parties by any Loan Party under any Loan Document or any Hedging
Agreement entered into with a counterparty that is a Secured Party, in each
case strictly in accordance with the terms thereof (such obligations being
herein collectively called the “Guaranteed
Obligations”). The Guarantors (other than the Canadian Guarantors)
and each US Borrower hereby jointly and severally agree that if the Borrowers
or other Guarantor(s) shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, such
Guarantors and each US Borrower will promptly pay the same in cash, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration
or otherwise) in accordance with the terms of such extension or renewal.

 

SECTION 7.02.            Obligations Unconditional. The obligations of the Guarantors and each
US Borrower under Section 7.01 shall constitute a guaranty of payment
and to the fullest extent permitted by applicable Requirements of Law, are
absolute, irrevocable and unconditional, joint and several, irrespective of the
value, genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of the Borrowers under this Agreement, the Notes, if any, or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, irrespective of any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety, Guarantor or US Borrower (except for payment in full). Without
limiting the generality of the foregoing, it is agreed that the occurrence of
any one or more of the following shall not alter or impair the liability of
such Guarantors and each US Borrower hereunder which shall remain absolute,
irrevocable and unconditional under any and all circumstances as described
above:

 

(i)            at any time or from time to time, without
notice to the Guarantors or US Borrowers, the time for any performance of or
compliance with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;

 

(ii)           any of the acts mentioned in any of the provisions of this Agreement or
the Notes, if any, or any other agreement or instrument referred to herein or
therein shall be done or omitted;

 

(iii)          the maturity of any of the Guaranteed Obligations shall be accelerated,
or any of the Guaranteed Obligations shall be amended in any respect, or any
right under the Loan Documents or any other agreement or instrument referred to
herein or therein shall be amended or waived in any respect or any other
guarantee of any of the Guaranteed Obligations or any security therefor shall
be released or exchanged in whole or in part or otherwise dealt with;

 

(iv)          any Lien or security interest granted to, or in favor of, Issuing Bank
or any Lender or Agent as security for any of the Guaranteed Obligations shall
fail to be perfected; or

 

(v)           the release of any other Guarantor or US Borrower pursuant to Section
7.09 or otherwise.

 

The Guarantors (other than
the Canadian Guarantors) and each US Borrower hereby expressly waive diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that any Secured Party exhaust any right, power or remedy or
proceed against the Borrowers 

 

123

 

under this Agreement or the Notes, if any, or any other agreement or
instrument referred to herein or therein, or against any other person under any
other guarantee of, or security for, any of the Guaranteed Obligations. The
Guarantors (other than the Canadian Guarantors) and each US Borrower waive any
and all notice of the creation, renewal, extension, waiver, termination or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance
by any Secured Party upon this Guarantee or acceptance of this Guarantee, and
the Guaranteed Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred in reliance upon this Guarantee, and
all dealings between the Borrowers and the Secured Parties shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. This Guarantee shall be construed as a continuing, absolute,
irrevocable and unconditional guarantee of payment without regard to any right
of offset with respect to the Guaranteed Obligations at any time or from time to
time held by Secured Parties, and the obligations and liabilities of the
Guarantors hereunder shall not be conditioned or contingent upon the pursuit by
the Secured Parties or any other person at any time of any right or remedy
against the Borrowers or against any other person which may be or become liable
in respect of all or any part of the Guaranteed Obligations or against any
collateral security or guarantee therefor or right of offset with respect
thereto. This Guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantors and the
successors and assigns thereof, and shall inure to the benefit of the Lenders,
and their respective successors and assigns, notwithstanding that from time to
time during the term of this Agreement there may be no Guaranteed Obligations
outstanding.

 

SECTION 7.03.            Reinstatement. The obligations of the Guarantors under
this Article VII shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of the Borrowers or other Loan
Party in respect of the Guaranteed Obligations is rescinded or must be
otherwise restored by any holder of any of the Guaranteed Obligations, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise. The
Guarantors jointly and severally agree that they will indemnify each Secured
Party on demand for all reasonable costs and expenses (including reasonable
fees of counsel) incurred by such Secured Party in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law, other than any costs or expenses resulting from the
bad faith or willful misconduct of such Secured Party.

 

SECTION 7.04.            Subrogation; Subordination. Each Guarantor hereby agrees that until the
indefeasible payment and satisfaction in full in cash of all Guaranteed
Obligations and the expiration and termination of the Commitments of the
Lenders under this Agreement it shall waive any claim and shall not exercise
any right or remedy, direct or indirect, arising by reason of any performance
by it of its guarantee in Section 7.01, whether by subrogation or
otherwise, against the Borrowers or any other Guarantor of any of the
Guaranteed Obligations or any security for any of the Guaranteed Obligations. Any
Indebtedness of any Loan Party permitted pursuant to Section 6.01(d)
shall be subordinated to such Loan Party’s Secured Obligations in the manner
set forth in the Intercompany Note evidencing such Indebtedness.

 

SECTION 7.05.            Remedies. Subject to the terms of the Intercreditor Agreement, the Guarantors
jointly and severally agree that, as between the Guarantors and the Lenders,
the obligations of the Borrowers under this Agreement and the Notes, if any,
may be declared to be forthwith due and payable as provided in Section 8.01
(and shall be deemed to have become automatically due and payable in the
circumstances provided in Section 8.01) for purposes of Section 7.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrowers and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether 

 

124

 

or
not due and payable by the Borrowers) shall forthwith become due and payable by
the Guarantors for purposes of Section 7.01.

 

SECTION 7.06.            Instrument for the Payment of Money. Each Guarantor hereby acknowledges that the
guarantee in this Article VII constitutes an instrument for the payment
of money, and consents and agrees that any Lender or Agent, at its sole option,
in the event of a dispute by such Guarantor in the payment of any moneys due
hereunder, shall have the right to bring a motion-action under New York CPLR
Section 3213.

 

SECTION 7.07.            Continuing Guarantee. The guarantee in this Article VII is
a continuing guarantee of payment, and shall apply to all Guaranteed
Obligations whenever arising.

 

SECTION 7.08.            General Limitation on Guarantee Obligations. In any action or proceeding involving any
state corporate limited partnership or limited liability company law, or any
applicable state, provincial, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under Section 7.01 would otherwise be held
or determined to be void, voidable, invalid or unenforceable, or subordinated
to the claims of any other creditors, on account of the amount of its liability
under Section 7.01, then, notwithstanding any other provision to the
contrary, the amount of such liability shall, without any further action by
such Guarantor, any Loan Party or any other person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

 

SECTION 7.09.            Release of Guarantors. If, in compliance with the terms and
provisions of the Loan Documents, all or substantially all of the Equity
Interests or property of any Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a person or
persons, none of which is a Borrower or a Subsidiary, such Transferred
Guarantor shall, upon the consummation of such sale or transfer, be released from
its obligations under this Agreement (including under Section 11.03
hereof) and its obligations to pledge and grant any Collateral owned by it
pursuant to any Security Document and, in the case of a sale of all or
substantially all of the Equity Interests of the Transferred Guarantor, the
pledge of such Equity Interests to the applicable Collateral Agents pursuant to
the Security Agreements shall be released, and the applicable Collateral Agents
shall take such actions as are necessary to effect each release described in
this Section 7.09 in accordance with the relevant provisions of the
Security Documents, including the return of any certificates or securities in
the possession of such Collateral Agents; provided
that such Guarantor is also released from its obligations under the Senior Note
Documents, on the same terms.

 

ARTICLE VIII.

EVENTS OF DEFAULT

 

SECTION 8.01.            Events of Default. Upon the occurrence and during the
continuance of the following events (“Events
of Default”):

 

(a)         default shall be made in the payment of any principal of any Loan or
any Reimbursement Obligation when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment (whether
voluntary or mandatory) thereof or by acceleration thereof or otherwise;

 

(b)        default shall be made in the payment of any interest on any Loan or any
Fee or any other amount (other than an amount referred to in paragraph (a)
above) due under any Loan Document, 

 

125

 

when
and as the same shall become due and payable, and such default shall continue
unremedied for a period of three Business Days;

 

(c)         any representation or warranty made or deemed made in or in connection
with any Loan Document or the borrowings or issuances of Letters of Credit
hereunder, or any representation, warranty, statement or information contained
in any report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;

 

(d)        default shall be made in the due observance or performance by any
Company of any covenant, condition or agreement contained in Section 5.02,
Section 5.03(a) or Section 5.08 or in Article VI;

 

(e)         default shall be made in the due observance or performance by any
Company of any covenant, condition or agreement contained in any Loan Document
(other than those specified in paragraphs (a), (b) or (d) immediately above)
and such default shall continue unremedied or shall not be waived for a period
of 30 days after written notice thereof from the Administrative Agents or any
Lender to the Borrowers;

 

(f)         any Company shall (i) fail to pay any principal or interest, regardless
of amount, due in respect of any Indebtedness (other than the Obligations),
when and as the same shall become due and payable beyond any applicable grace
period, or (ii) fail to observe or perform any other term, covenant, condition
or agreement contained in any agreement or instrument evidencing or governing
any such Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such Indebtedness or a
trustee or other representative on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such Indebtedness to
become due prior to its stated maturity or become subject to a mandatory offer
purchase by the obligor; provided
that it shall not constitute an Event of Default pursuant to this paragraph (f)
unless the aggregate amount of all such Indebtedness referred to in clauses (i)
and (ii) exceeds $5 million at any one time (provided
that, in the case of Hedging Obligations, the amount counted for this purpose
shall be the amount payable by all Companies if such Hedging Obligations were
terminated at such time);

 

(g)        an involuntary proceeding shall be commenced (including the filing of
any notice of intention in respect thereof) or an involuntary petition shall be
filed in a court of competent jurisdiction seeking (i) relief in respect of any
Company or of a substantial part of the property of any Company, under Title 11
of the U.S. Code, as now constituted or hereafter amended, or any other Insolvency
Law, federal, state, provincial or foreign bankruptcy, insolvency, receivership
or similar law; (ii) the appointment of a receiver, interim receiver, receiver
and manager, liquidator, trustee, custodian, sequestrator, conservator or
similar official for any Company or for a substantial part of the property of
any Company; or (iii) the winding-up or liquidation of any Company; and 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;

 

(h)        any Company shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Insolvency Law, federal, state,
provincial or foreign bankruptcy, insolvency, receivership, incorporation law
in any jurisdiction or similar law; (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any proceeding or the filing of
any petition described in clause (g) above; (iii) apply for or consent to the
appointment of a receiver, interim receiver, receiver and manager, liquidator,
trustee, custodian, sequestrator, conservator or similar official for any
Company or for a substantial part of the property of any Company; (iv) file an
answer admitting the material allegations of 

 

126

 

a
petition filed against it in any such proceeding; (v) make a general assignment
for the benefit of creditors; (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due; (vii) take any
action for the purpose of effecting any of the foregoing; or (viii) wind up or
liquidate;

 

(i)          one or more judgments, orders or decrees for the payment of money in an
aggregate amount in excess of $5 million shall be rendered against any Company
or any combination thereof and the same shall remain undischarged, unvacated or
unbonded for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to levy upon properties of any Company to enforce any such judgment;

 

(j)          one or more ERISA Events or noncompliance with respect to Foreign Plans
shall have occurred that, in the reasonable opinion of the Required Lenders,
when taken together with all other such ERISA Events and noncompliance with
respect to Foreign Plans, could reasonably be expected to result in a Material
Adverse Effect or in the imposition of a Lien on any properties of a Company;

 

(k)         any security interest and Lien purported to be created by any Security
Document shall cease to be in full force and effect, or shall cease to give the
applicable Collateral Agents for the benefit of the applicable Secured Parties,
the Liens, rights, powers and privileges purported to be created and granted
under such Security Document (including a perfected first priority security
interest in and Lien on all of the Collateral thereunder (except as otherwise
expressly provided in this Agreement or such Security Document)) in favor of
such Collateral Agents, or shall be asserted by the Borrowers or any other Loan
Party not to be a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in or Lien on the Collateral covered thereby;

 

(l)          any Loan Document or any material provisions thereof shall at any time
and for any reason be declared by a court of competent jurisdiction to be null
and void, or a proceeding shall be commenced by any Loan Party or any other
person, or by any Governmental Authority, seeking to establish the invalidity
or unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or any Loan Party shall repudiate or deny any portion of
its liability or obligation for the Obligations;

 

(m)        there shall have occurred a Change in Control;

 

(n)        any Company shall be prohibited or otherwise restrained from conducting
the business theretofore conducted by it in any manner that has or could
reasonably be expected to result in a Material Adverse Effect by virtue of any
determination, ruling, decision, decree or order of any court or Governmental
Authority of competent jurisdiction;

 

then, and in every such event (other than an event with respect to
Holdings or any Borrower described in paragraph (g) or (h) above), and at any
time thereafter during the continuance of such event, the Administrative Agents
may, and at the request of the Required Lenders shall, by notice to the
Borrowers, take either or both of the following actions, at the same or
different times:  (i) terminate forthwith
the Commitments and (ii) declare the Loans and Reimbursement Obligations then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans and Reimbursement Obligations so declared to be due and
payable, together with accrued interest thereon and any unpaid accrued Fees and
all other Obligations of the Borrowers accrued hereunder and under any other
Loan Document, shall become forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrowers and the Guarantors, anything contained herein
or in any other Loan Document to the contrary notwithstanding; and in any
event, with respect to Holdings or any Borrower described in paragraph (g) or
(h) above, the 

 

127

 

Commitments shall automatically terminate and the principal of the
Loans and Reimbursement Obligations then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other Obligations of the
Borrowers accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrowers and the Guarantors, anything contained herein or in any other Loan
Document to the contrary notwithstanding.

 

SECTION 8.02.            Rescission. If at any time after termination of the Commitments or acceleration
of the maturity of the Loans, the Borrowers shall pay all arrears of interest
and all payments on account of principal of the Loans and Reimbursement
Obligations owing by it that shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law,
on overdue interest, at the rates specified herein) and all Defaults (other
than non-payment of principal of and accrued interest on the Loans due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant Section
11.02, then upon the written consent of the Required Lenders and written
notice to Administrative Borrower, the termination of the Commitments or the
acceleration and their consequences may be rescinded and annulled; but such
action shall not affect any subsequent Default or impair any right or remedy
consequent thereon. The provisions of the preceding sentence are intended
merely to bind the Lenders and the Issuing Bank to a decision that may be made
at the election of the Required Lenders, and such provisions are not intended
to benefit the Borrowers and do not give the Borrowers the right to require the
Lenders to rescind or annul any acceleration hereunder, even if the conditions
set forth herein are met.

 

SECTION 8.03.            Application of Proceeds. Subject to the terms of the Intercreditor
Agreement, the proceeds received by the applicable Collateral Agents in respect
of any sale of, collection from or other realization upon all or any part of
the Collateral pursuant to the exercise by such Collateral Agents of their
remedies shall be applied, in full or in part, together with any other sums
then held by such Collateral Agents pursuant to this Agreement, promptly by
such Collateral Agents as follows:

 

(a)         First, to the payment of all reasonable costs and
expenses, fees, commissions and taxes of such sale, collection or other
realization including compensation to such Collateral Agents and their agents
and counsel, and all expenses, liabilities and advances made or incurred by
such Collateral Agents in connection therewith and all amounts for which such
Collateral Agents are entitled to indemnification pursuant to the provisions of
any Loan Document, together with interest on each such amount at the highest
rate then in effect under this Agreement from and after the date such amount is
due, owing or unpaid until paid in full;

 

(b)        Second, to the payment of all other reasonable costs and expenses of such
sale, collection or other realization including compensation to the other
Secured Parties and their agents and counsel and all costs, liabilities and
advances made or incurred by the other Secured Parties in connection therewith,
together with interest on each such amount at the highest rate then in effect
under this Agreement from and after the date such amount is due, owing or
unpaid until paid in full;

 

(c)         Third, without duplication of amounts applied
pursuant to clauses (a) and (b) above, to the indefeasible payment in full in
cash, pro rata, of interest and
other amounts constituting Obligations, (other than (i) Obligations in respect
of Tranche B Loans, and (ii) principal, Reimbursement Obligations and
obligations of the type described in clause (d) in the definition of “Obligations”)
and any fees, premiums and scheduled periodic payments due under Hedging
Agreements constituting Secured Obligations and any interest accrued thereon,
in each case equally and ratably in accordance with the respective amounts
thereof then due and owing;

 

128

 

(d)        Fourth, to the indefeasible payment in full in cash, pro rata, of principal amount of the
Obligations (including Reimbursement Obligations, but excluding (i) obligations
of the type described in clause (d) in the definition of “Obligations” and (ii)
Obligations in respect of Tranche B Loans) and any breakage, termination or
other payments under Hedging Agreements constituting Secured Obligations and
any interest accrued thereon;

 

(e)         Fifth, to the
indefeasible payment in full in cash, pro rata, of
interest and other amounts (other than principal) constituting Obligations in
respect of each of the Tranche B Loans;

 

(f)         Sixth, to the
indefeasible payment in full in cash, pro rata, of
principal amount of Obligations in respect of each of the Tranche B Loans;

 

(g)        Seventh, to the indefeasible payment in full in cash, pro rata, of obligations of the type
described in clause (d) in the definition of “Obligations”;

 

(h)        Eighth, the balance,
if any, to the person lawfully entitled thereto (including the applicable Loan
Party or its successors or assigns) or as a court of competent jurisdiction may
direct.

 

In the event that any such
proceeds are insufficient to pay in full the items described in clauses (a)
through (d) of this Section 8.02, the Loan Parties shall remain liable,
jointly and severally, for any deficiency. Each Loan Party acknowledges the
relative rights, priorities and agreements of the Senior Note Secured Parties,
as set forth in the Intercreditor Agreement and this Agreement, including as
set forth in this Section 8.03.

 

ARTICLE IX.

COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS

 

Each Loan Party warrants,
covenants and agrees with each Lender that so long as this Agreement shall
remain in effect and until the Commitments have been terminated and the
principal of and interest on each Loan, all Fees and all other expenses or
amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired or been fully cash
collateralized and all amounts drawn thereunder have been reimbursed in full,
unless Collateral Agents and Administrative Agents or the Required Lenders
shall otherwise consent in writing:

 

SECTION 9.01.            Collateral Accounts.

 

(a)         The Borrowers and each Borrowing Base Guarantor shall notify the
Collateral Agents promptly of:  (i) any
material delay in the performance by the Borrowers or any Borrowing Base
Guarantor of any of their material obligations to any Account Debtor or the
assertion of any material claims, offsets, defenses or counterclaims by any
Account Debtor, or any material disputes with Account Debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information known to any Loan Party relating to the financial condition of any
Account Debtor and (iii) any event or circumstance which, to any Loan Party’s
knowledge, would result in any Account no longer constituting an Eligible
Account. The Borrowers and each Borrowing Base Guarantor hereby agree not to
grant to any Account Debtor any credit, discount, allowance or extension, or to
enter into any agreement for any of the foregoing, without the applicable
Collateral Agents consent, except in the ordinary course of business in
accordance with practices and policies previously disclosed in writing to the
Collateral Agents. So long as no Event of Default exists or has 

 

129

 

occurred
and is continuing, the Borrowers and each Borrowing Base Guarantor may settle,
adjust or compromise any claim, offset, counterclaim or dispute with any
Account Debtor. At any time that an Event of Default exists or has occurred and
is continuing, the applicable Collateral Agents shall, at their option, have
the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with Account Debtors of any Loan Party or grant any
credits, discounts or allowances.

 

(b)        With respect to each Account: 
(i) the amounts shown on any invoice delivered to Collateral Agents or
schedule thereof delivered to Collateral Agents shall be true and complete in
all material respects, (ii) no payments shall be made thereon except payments
immediately delivered to Collateral Agents pursuant to the terms of this
Agreement or any applicable Security Document (to the extent so required),
(iii) there shall be no setoffs, deductions, contras, defenses, counterclaims
or disputes existing or asserted with respect thereto except as reported to
Collateral Agents and promptly reflected in the reporting of the Borrowing
Base, in accordance with the terms of this Agreement, and (iv) none of the
transactions giving rise thereto will violate any applicable laws or
regulations, all documentation relating thereto will be legally sufficient
under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms.

 

(c)         Collateral Agents shall have the right at any time or times, in
Collateral Agents’ name or in the name of a nominee of a Collateral Agent, to
verify the validity, amount or any other matter relating to any Account or
other Collateral, by mail, telephone, e-mail, facsimile transmission or
otherwise. To facilitate the exercise of the right described in the immediately
preceding sentence, the Borrowers hereby agrees to provide Collateral Agents
upon request the name and address of each Account Debtor of the Borrowers and
Borrowing Base Guarantors.

 

SECTION 9.02.            Accounts; Cash Management.

 

The Borrowers and each
Guarantor shall maintain a cash management system which is acceptable to the
Administrative Agents and the applicable Collateral Agents (the “Cash Management System”), which shall
operate as follows:

 

(a)         All funds held by Borrowers or any other Loan Party (other than funds
being collected pursuant to the provisions stated below) shall be deposited in
one or more bank accounts or securities investment accounts, in form and
substance reasonably satisfactory to applicable Collateral Agents subject to
the terms of the Security Agreement and applicable Control Agreements.

 

(b)        The Borrowers shall establish and maintain in such Borrower’s name, at
their sole expense, and shall cause each Guarantor to establish and maintain in
such Guarantor’s name, at its sole expense blocked accounts or lockboxes and
related deposit accounts, which, on the Closing Date, shall consist of accounts
and related lockboxes maintained by the financial institutions as described on Schedule
9.02 hereto (in each case, “Blocked Accounts”),
as the applicable Collateral Agent may specify, with such banks as are
acceptable to the applicable Collateral Agents into which the Borrowers and
Guarantors shall promptly deposit and direct their respective Account Debtors
to directly remit all payments on Accounts and all payments constituting
proceeds of Inventory or other Collateral (other than proceeds of a Casualty
Event or an Asset Sale that do not require a permanent repayment under Loan
Documents) in the identical form in which such payments are made, whether by
cash, check or other manner and shall be identified and segregated from all
other funds of the Loan Parties. The Borrowers and Guarantors shall deliver, or
cause to be delivered, to the applicable Collateral Agents a Control Agreement
duly authorized, executed and delivered by each bank where a Blocked Account
for the benefit of the Borrowers or any Guarantor is maintained, and by each
bank where any other deposit account is from time to time maintained. The
Borrowers shall further execute and deliver, and shall cause each Guarantor to
execute and deliver, such agreements and documents as the applicable Collateral
Agents may require in connection with such Blocked Accounts and such Control
Agreements. The Borrowers and Guarantors shall not establish any deposit
accounts after the Closing Date, unless the 

 

130

 

Borrowers
or Guarantor (as applicable) have complied in full with the provisions of Section
9.01 herein with respect to such deposit accounts. Borrowers agree that
from and after the delivery of an Activation Notice (as defined below) all
payments made to such Blocked Accounts or other funds received and collected by
the applicable Collateral Agents or any Lender, whether in respect of the
Accounts, as proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to the applicable Collateral Agents and Lenders in respect
of the Obligations and therefor shall constitute the property of such
Collateral Agents and Lenders to the extent of the then outstanding
Obligations.

 

(c)         With respect to the Blocked Accounts of US Borrowers and such
Guarantors (other than Guarantors organized under the laws of Canada) as the
applicable Collateral Agents shall determine in their sole discretion, the
applicable bank maintaining such Blocked Accounts shall agree to forward daily
all amounts in each Blocked Account to one of the Blocked Accounts designated
as a concentration account in the name of US Borrowers (the “US  Concentration Account”)
at the bank that shall be designated as the Concentration Account bank for US
Borrowers (the “US Concentration Account Bank”), which, on the Closing Date,
shall be account #8900338261 maintained by The Bank of New York (or other
financial institution acceptable to the applicable Collateral Agents);
provided, however, that amounts in the Blocked Accounts with numbers
2000028308229, 2000028308245, 2000028308261, 2000028308274, 2000028308258 and
2000028308232 maintained at Wachovia Bank, National Association (the “US Tax
Bank”) will be combined into account #2000028308216 (the “Master Tax
Account”) at Wachovia Bank, National Association. The US Concentration
Account Bank and US Tax Bank shall agree, from and after the receipt of a
notice (an “Activation Notice”) from the
applicable US Collateral Agent (which Activation Notice may or, upon
instruction of the Required Lenders, shall be given by such Collateral Agent at
any time from and after the occurrence of a Trigger Event which is continuing
at the time of such notice) pursuant to the applicable Control Agreement, to
forward daily all amounts in the US Concentration Account to the account
designated as collection account  (the “US  Collection Account”)
which shall be under the exclusive dominion and control of the US
Administrative Agent.

 

(d)        With respect to the Blocked Accounts of Canadian Borrower and such
Guarantors organized under the laws of Canada as the applicable Collateral
Agents shall determine in their sole discretion, the applicable bank
maintaining such Blocked Accounts shall agree to forward daily all amounts in
each Blocked Account to one of the Blocked Accounts designated as a
concentration accounts in the name of Canadian Borrower (the “Canadian  Concentration
Accounts” and together with the US Concentration Account and Master
Tax Account, the “Concentration Accounts”)
at the bank that shall be designated as the Concentration Account bank for
Canadian Borrower (the “Canadian Concentration Account Bank” and
together with the US Concentration Account Bank, the “Concentration
Account Banks”), which, on the Closing Date, shall be account nos.
1496-666 and 4688-785 maintained by The Bank of Montreal  (or
other financial institution acceptable to the applicable Collateral Agents). The
Canadian Concentration Account Bank shall agree, from and after the receipt of
a notice an Activation Notice (which Activation Notice may or, upon instruction
of the Required Lenders, shall be given by such Collateral Agent at any time
from and after the occurrence of a Trigger Event which is continuing at the
time of such notice) pursuant to the applicable Control Agreement, to forward
daily all amounts in the Canadian Concentration Account to the account
designated as collection account (the “Canadian  Collection Account” and together with the
US Collection Account, the “Collection Accounts”)
which shall be under the exclusive dominion and control of the Canadian
Administrative Agent.

 

(e)         With respect to the Blocked Accounts of such Guarantors as the
respective Collateral Agents shall determine in their sole discretion, the
applicable bank maintaining such Blocked Accounts shall agree, from and after
the receipt of an Activation Notice (which Activation Notice may or, upon
instruction of the Required Lenders, shall be given by the applicable
Collateral Agents at any time from 

 

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and
after a Trigger Event), to forward all amounts in each Blocked Account to the
US Collection Account and/or Canadian Collection Account, as applicable, and to
commence the process of daily sweeps from such Blocked Account into the
applicable Collection Accounts.

 

(f)         Any provision of this Section 9.02 to the contrary
notwithstanding, (A) Loan Parties may maintain payroll accounts and trust
accounts that are not a part of the Cash Management System provided that
no Loan Party shall accumulate or maintain cash in such accounts as of any date
of determination in excess of checks outstanding against such accounts as of
that date and amounts necessary to meet minimum balance requirements and (B)
Loan Parties may maintain local cash accounts that are not a part of the Cash
Management System which individually do not at any time contain funds in excess
of $500,000 and, together with all other such local cash accounts, do not
exceed $5 million.

 

(g)        (i)  The US Administrative Agent
shall apply all funds received in the US Collection Account on a daily basis to
the repayment of the Obligations of the US Borrowers and its US Subsidiaries to
either, at its option, (a) outstanding US Swingline Loans or (b) in accordance
with any instructions received under Section 2.10(g). From and after the
delivery of an Activation Notice, unless Administrative Agents and Collateral
Agents determine to release such funds to Borrowers in accordance with the
following sentence, US Administrative Agent shall apply all such funds in the
US Collection Account on a daily basis to the repayment of (a) first,
Fees and reimbursable expenses of the US Administrative Agent and the US
Collateral Agent then due and payable; (b) second, interest then due and
payable on all Loans (other than Canadian Revolving Loans and Tranche B Loans),
(c) third, Overadvances (other than such Overadvances comprised of
Canadian Revolving Loans), (d) fourth, the Swingline Loans, (e) fifth,
ABR Revolving Loans (other than Canadian Revolving Loans and Tranche B Loans),
(f) sixth, Eurodollar Revolving Loans (other than Canadian Revolving
Loans and Tranche B Loans), together with all accrued and unpaid interest
thereon (provided, however, payments on Eurodollar Revolving Loans with respect
to which the application of such payment would result in the payment of the
principal prior to the last day of the relevant Interest Period shall be
transferred to the Cash Collateral Account to be applied to the Eurodollar
Revolving Loans (other than Canadian Revolving Loans and Tranche B Loans) on
the last day of the relevant Interest Period of such Eurodollar Revolving Loan
or to the Obligations of the US Borrowers and its Domestic Subsidiaries as they
come due (whether at stated maturity, by acceleration or otherwise)) (g) seventh,
interest then due and payable on all ABR Tranche B Loans, (h) eighth,
all ABR Tranche B Loans, (i) ninth, interest then due and payable on all
Eurodollar Tranche B Loans and (j) tenth, all Eurodollar Tranche B Loans.
Notwithstanding the foregoing sentence, after payment in full has been made of
the amounts required under subsections (a)-(c) above, upon US Borrower’s
request and as long as no Default has occurred and is continuing and all other
conditions precedent to a Borrowing have been satisfied, any additional funds
deposited in the US Collection Account or Cash Collateral Account shall be
released to US Borrower. In addition, if consented to by the Administrative
Agents, the Collateral Agents and the Required Lenders, such funds in the US
Collection Account or Cash Collateral Account may be released to Borrowers. Notwithstanding
the above, if the applicable Administrative Agent has declared the Loans and/or
Reimbursement Obligations then outstanding to be forthwith due and payable in
whole or in part pursuant to Section 8.01, the US Administrative Agent
shall apply all funds received in the Collection Account in accordance with Section
8.03.

 

(ii)           The Canadian Administrative Agent shall apply all funds received in the
Canadian Collection Account on a daily basis to the repayment of the Canadian
Obligations to either, at its option, (a) outstanding Canadian Swingline Loans
or (b) in accordance with any instructions received under Section 2.10(g).
From and after the delivery of an Activation Notice, unless Administrative
Agents and Collateral Agents determine to release such funds to Borrowers in
accordance with the following sentence, Canadian Administrative Agent shall
apply all such 

 

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funds
in the Canadian Collection Account on a daily basis to the repayment of  (a) first, Fees and reimbursable
expenses of the Canadian Administrative Agent and the Canadian Collateral Agent
then due and payable; (b) second, to interest then due and payable on
all Canadian Revolving Loans, (c) third, Overadvances comprised of
Canadian Revolving Loans, (d) fourth, the Swingline Loans,  (e) fifth pro rata,
Canadian Prime Rate Loans, and (f) sixth, Bankers’ Acceptances in
accordance with Section 2.03(xi). Notwithstanding the foregoing
sentence, after payment in full has been made of the amounts required under
subsections (a)-(c) above, upon Canadian Borrower’s request and as long as no
Default has occurred and is continuing and all other conditions precedent to a
Borrowing have been satisfied, any additional funds deposited in the Canadian
Collection Account or Cash Collateral Account shall be released to Canadian Borrower.
In addition, if consented to by the Administrative Agents, the Collateral
Agents and the Required Lenders, such funds in the Canadian Collection Account
or Cash Collateral Account may be released to Borrowers. Notwithstanding the
above, if the applicable Administrative Agent has declared the Loans and/or
Reimbursement Obligations then outstanding to be forthwith due and payable in
whole or in part pursuant to Section 8.01, the Collateral Agents shall
apply all funds received in the Collection Account in accordance with Section
8.03.

 

(h)        The Borrowers and their directors, officers, employees, agents and
other Affiliates and Borrowing Base Guarantors (each a “Related Person”)
shall (i) hold in trust for the applicable Administrative Agent, for the benefit
of itself and Lenders, all checks, cash and other items of payment received by
such Borrower or any such Related Person, and (ii) promptly, in any event
within two (2) Business Days, after receipt by such Borrower or any such
Related Person, deposit or cause the same to be deposited, any monies, checks,
notes, drafts or any other payment relating to and/or proceeds of Accounts,
Inventory or other Collateral which come into their possession or under their
control in the applicable Blocked Accounts, or remit the same or cause the same
to be remitted, in kind, to the applicable Collateral Agents. Each Borrower on
behalf of itself and each Related Person thereof acknowledges and agrees that
all cash, checks or other items of payment constituting proceeds of Collateral
are part of the Collateral. All proceeds of the sale or other disposition of
any Collateral, shall be deposited directly into the applicable Blocked
Accounts. In no event shall the same be commingled with Borrowers’ own funds. US
Borrowers agrees to reimburse US Collateral Agents and Canadian Borrower agrees
to reimburse Canadian Collateral Agent on demand for any amounts owed or paid
to any bank at which a Blocked Account is established or any other bank or
person involved in the transfer of funds to or from the Blocked Accounts
arising out of such Collateral Agents’ payments to or indemnification of such
bank or person.

 

(i)          Each Borrower may maintain, in its name, an account (each a “Disbursement
Account” and collectively, the “Disbursement Accounts”) at Bank of
New York Mellon Corporation or another bank reasonably acceptable to the
applicable Agent into which such Agent shall, from time to time, deposit
proceeds of Loans made to such Borrower pursuant to Section 2.02 for use
by such Borrower solely in accordance with the provisions of Section 5.08.

 

SECTION 9.03.            Inventory. With respect to the Inventory: 
(a) the Borrowers and Borrowing Base Guarantors shall at all times
maintain records of Inventory reasonably satisfactory to Collateral Agents,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, the cost therefor and daily withdrawals
therefrom and additions thereto; (b) any of the Administrative Agents’ and
Collateral Agents’ officers, employees or agents shall have the right, at any
time or times, in the name of such Administrative Agent or Collateral Agent, as
applicable, any designee of the Administrative Agents, Collateral Agents or the
Borrowers, to verify the validity, amount or any other matter relating to
Accounts or Inventory by mail, telephone, electronic communication, personal
inspection or otherwise and to conduct field audits of the financial affairs
and Collateral of the Loan Parties, and the Borrowers shall cooperate fully
with the Administrative Agents and Collateral 

 

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Agents
in an effort to facilitate and promptly conclude any such verification process;
(c) the Loan Parties shall cooperate fully with the Collateral Agents and their
agents during all Collateral field audits and Inventory Appraisals which shall
be conducted, in each case, (i) by persons acceptable to the Collateral Agents
(it being understood that Great American Appraisal & Valuation Services, L.L.C.
and the Durkin Group are deemed acceptable to the Collateral Agents), (ii) at
the expense of the Borrowers and (iii) (A) (1) not more than once in any twelve
(12) month period or (2) following either (x) a time period when Excess
Availability (without taking into account the deduction of the Total Minimum
Availability Requirement from the computation of Excess Availability as set
forth in clause (e) of the definition thereof) does not exceed $90,000,000 or
(y) a Trigger Event, more frequently at any Collateral Agent’s reasonable
request or (B) at such additional other times as Borrowers shall reasonably
determine; (d) neither the Borrowers nor any Borrowing Base Guarantor shall
sell Inventory to any customer on approval, or any other basis which entitles
the customer to return (except for the right of customers for Inventory which
is defective or non-conforming) or may obligate any Loan Party to repurchase
such Inventory; and (e) Borrowers and Borrowing Base Guarantor shall keep the
Inventory in good and marketable condition.

 

SECTION 9.04.            Borrowing Base-Related Reports. The Borrowers shall deliver or cause to be
delivered (at the expense of the Borrowers) to the Collateral Agents and the
Administrative Agents the following:

 

(a)         in no event less frequently than 20 days after the end of each month, a
Borrowing Base Certificate from the Borrowers accompanied by such supporting
detail and documentation as shall be requested by the applicable Collateral
Agent in its reasonable credit judgment, provided, that if at any time
the Average Excess Availability (without taking into account the deduction of
the Total Minimum Availability Requirement from the computation of Excess
Availability as set forth in clause (e) of the definition thereof) is less than
$90 million and so long as Borrowers do not maintain Average Excess
Availability (without taking into account the deduction of the Total Minimum
Availability Requirement from the computation of Excess Availability as set
forth in clause (e) of the definition thereof) in excess of $90 million for a
period of three (3) consecutive fiscal months, Borrowers shall deliver
additional weekly roll-forward of Accounts and Inventory referenced in
paragraph (b) below within five (5) Business Days after the end of each
calendar week, and, if requested by the applicable Collateral Agents, a
Borrowing Base Certificate (prepared weekly to reflect results satisfactory to
such Collateral Agents) within five (5) Business Days after the end of each
calendar week, or more frequent Borrowing Base Certificates reflecting shorter
periods as reasonably requested by such Collateral Agents. Each Borrowing Base
Certificate shall reflect all information through the end of the appropriate
period for Borrowers and each Borrowing Base Guarantor;

 

(b)        upon request by the Collateral Agents, and in no event less frequently
than 30 days after the end of (i) each month, a monthly trial balance showing
Accounts outstanding aged from statement date as follows:  1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more, accompanied by a comparison to the prior month’s trial
balance and such supporting detail and documentation as shall be requested by
the Collateral Agents in their reasonable credit judgment and (ii) each month,
a summary of Inventory by location and type accompanied by such supporting
detail and documentation as shall be requested by the Collateral Agents in
their reasonable credit judgment (in each case, together with a copy of all or
any part of such delivery requested by any Lender in writing after the Closing
Date);

 

(c)         on the date any Borrowing Base Certificate is delivered pursuant to Section
9.04(a) or at such more frequent intervals as the Collateral Agents may
request from time to time (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), (i) a copy
of the ledger registering the Borrowing Base Guarantor Intercompany Loan Amount
as of the date of the Borrowing Base Certificate and (ii) a collateral report
with respect to the Loan Parties, including 

 

134

 

all
additions and reductions (cash and non-cash) with respect to intercompany loan
accounts of the Borrowers and Borrowing Base Guarantors, accompanied by such
supporting detail and documentation as shall be requested by the Collateral
Agents in their reasonable credit judgment;

 

(d)        at the time of delivery of each of the financial statements delivered
pursuant to Section 5.01(a) and (b), a reconciliation of the
Accounts trial balance and quarter-end Inventory reports of the Borrowers and
Borrowing Base Guarantors to the general ledger of such Loan Party, in each
case, accompanied by such supporting detail and documentation as shall be
requested by the Collateral Agents in their reasonable credit judgment;

 

(e)         a list of any applications for the registration of any patent,
trademark or copyright with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency which any Loan
Party has filed in the prior fiscal quarter; and

 

(f)         such other reports, statements and reconciliations with respect to the
Borrowing Base, Canadian Borrowing Base or Collateral of any or all Loan
Parties as the Collateral Agents shall from time to time request in its
reasonable credit judgment.

 

The delivery of each
certificate and report or any other information delivered pursuant to this Section
9.04 shall constitute a representation and warranty by the Borrowers that
the statements and information contained therein are true and correct in all
material respects on and as of such date.

 

SECTION 9.05.            Rescission of Activation Notice. Notwithstanding any of the provisions of Section
9.02, after Collateral Agents have delivered an Activation Notice and upon
delivery of a certificate (provided, such certificate may not be delivered more
than once in any 360 day period) by a Financial Officer of the Borrowers to the
Collateral Agents certifying that (i) the Average Excess Availability has
exceeded $90 million  for the
previous fiscal quarter and (ii) no Default has occurred or is continuing, the
Collateral Agents shall rescind the Activation Notice by written notice, as
necessary, to the applicable Concentration Account Banks and any such other
banks to which Collateral Agents had issued such Activation Notice and
following such rescission the Cash Management System shall be operated as if no
such Activation Notice had been given.

 

ARTICLE X.

THE ADMINISTRATIVE AGENTS AND THE COLLATERAL AGENTS

 

SECTION 10.01.         Appointment and Authority. Each of the Lenders and the Issuing Bank
hereby irrevocably appoints GE Capital, to act on its behalf as the US
Administrative Agent and as US Collateral Agent hereunder and under the other
Loan Documents and authorizes such Agent to take such actions on its behalf and
to exercise such powers as are delegated to such Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. Each of the Lenders and the Issuing Bank hereby irrevocably appoints
GE Canada, to act on its behalf as a Canadian Collateral Agent hereunder and
under the other Loan Documents and authorizes such Agent to take such actions
on its behalf and to exercise such powers as are delegated to such Agent by the
terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto. Each of the Lenders and the Issuing Bank hereby
irrevocably appoints The Bank of New York, to act on its behalf as the Senior
Note Collateral Agent hereunder and under the other Loan Documents and
authorizes such Agent to take such actions on its behalf and to exercise such
powers as are delegated to such Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative
Agents, the Collateral Agents, the Lenders and the

 

135

 

Issuing
Bank, and neither Borrowers nor any other Loan Party shall have rights as a
third party beneficiary of any of such provisions.

 

SECTION 10.02.         Rights as a Lender. Each person serving as an Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each person serving as an Agent hereunder in its
individual capacity. Such person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Borrowers or any Subsidiary
or other Affiliate thereof as if such person were not an Agent hereunder and
without any duty to account therefor to the Lenders.

 

SECTION 10.03.         Exculpatory Provisions.

 

(a)         No Agent shall have any duties or obligations except those expressly
set forth herein and in the other Loan Documents. Without limiting the
generality of the foregoing, no Agent:

 

(i)            shall be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing;

 

(ii)           shall have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that such Agent is required
to exercise as directed in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be expressly provided for herein
or in the other Loan Documents); provided
that such Agent shall not be required to take any action that, in its judgment
or the judgment of its counsel, may expose such Agent to liability or that is
contrary to any Loan Document or applicable Requirements of Law; and

 

(iii)          shall, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Borrowers or any of its Affiliates
that is communicated to or obtained by the person serving as such Agent or any
of its Affiliates in any capacity.

 

(b)        No Agent shall be liable for any action taken or not taken by it (x)
with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary, or as such Agent
shall believe in good faith shall be necessary, under the circumstances as
provided in Section 11.02) or (y) in the absence of its own gross
negligence or willful misconduct. No Agent shall be deemed to have knowledge of
any Default unless and until notice describing such Default is given to such
Agent by the Borrowers, a Lender or the Issuing Bank.

 

(c)         No Agent shall be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to such Agent. Without
limiting the generality of the foregoing, the use of the term “agent” in this
Agreement with reference to the Administrative Agents or the Collateral Agents
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any 

 

136

 

applicable
law. Instead, such term us used merely as a matter of market custom and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

 

(d)        Canadian Administrative Agent represents and warrants to the Canadian
Borrower that on the Closing Date and throughout the term of this Agreement it
is not a “non-resident” within the meaning of the ITA.

 

SECTION 10.04.         Reliance by Agent. Each Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper person. Each Agent also may rely upon
any statement made to it orally or by telephone and believed by it to have been
made by the proper person, and shall not incur any liability for relying
thereon. In determining compliance with any condition hereunder to the making
of a Loan, or the issuance of a Letter of Credit, that by its terms must be
fulfilled to the satisfaction of a Lender or the Issuing Bank, the
Administrative Agents and the Collateral Agents may presume that such condition
is satisfactory to such Lender or the Issuing Bank unless such Administrative
Agent or such Collateral Agent shall have received notice to the contrary from
such Lender or the Issuing Bank prior to the making of such Loan or the
issuance of such Letter of Credit. Each Agent may consult with legal counsel
(who may be counsel for the Borrowers), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

 

SECTION 10.05.         Delegation of Duties. Each Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub-agents appointed by such Agent. Each
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers by or through their respective Related Parties. The
exculpatory provisions of this Article shall apply to any such sub-agent and to
the Related Parties of each Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

 

SECTION 10.06.         Resignation of Agent. Each Agent may at any time give notice of
its resignation to the Lenders, the Issuing Bank and the Borrowers. Upon
receipt of any such notice of resignation, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor, which shall
be a bank with an office in the United States or in the case of a successor to
the Canadian Administrative Agent, a person which  (i) (A) is not a “non-resident” within the
meaning of the ITA, or (B) is an “Authorized Foreign Bank” within the meaning
of the Bank Act for purposes of
the ITA and which becomes a party hereunder in the ordinary course of its trade
and business that is its “Canadian banking business” for purposes of the ITA
and (ii) which has provided a representation and warranty substantially in the
form of that contained in Section 10.03(d), or an Affiliate of any such
bank with an office in the United States. If no such successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may on behalf of the Lenders and the Issuing Bank, appoint a
successor Agent meeting the qualifications set forth above provided that if the
Agent shall notify Borrower and the Lenders that no qualifying person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by such
Agent on behalf of the Lenders or the Issuing Bank under any of the Loan
Documents, the retiring Agent shall continue to hold such collateral security
as nominee until such time as a successor Collateral Agent is appointed) and (2)
all payments, communications and determinations provided to be made by, to or
through an Agent shall instead be made by or to each 

 

137

 

Lender
and the Issuing Bank directly, until such time as the Required Lenders appoint
a successor Agent as provided for above in this paragraph. Upon the acceptance
of a successor’s appointment as Agent hereunder, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of
the retiring (or retired) Agent, and the retiring Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrowers to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrowers and such successor. After the retiring Agent’s resignation hereunder
and under the other Loan Documents, the provisions of this Article X and
Section 11.03 shall continue in effect for the benefit of such retiring
Agent, its sub-agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while the retiring Agent
was acting as Agent.

 

SECTION 10.07.         Non-Reliance on Agent and Other Lenders. Each Lender and the Issuing Bank
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender and the Issuing Bank also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender and based on such documents
and information as it shall from time to time deem appropriate, continue to
make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder.

 

SECTION 10.08.         No Other Duties, etc. Anything herein to the contrary
notwithstanding, none of the Bookrunners, Arrangers, Syndication Agents,
Documentation Agents listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as an Administrative Agent, a
Collateral Agent, a Lender or the Issuing Bank hereunder.

 

SECTION 10.09.         Indemnification. The Lenders severally agree to indemnify
each Agent in its capacity as such (to the extent not reimbursed by the
Borrowers or the Guarantors and without limiting the obligation of the
Borrowers or the Guarantors to do so), ratably according to their respective
outstanding Loans and Commitments in effect on the date on which
indemnification is sought under this Section 10.09 (or, if
indemnification is sought after the date upon which all Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such outstanding Loans and Commitments as in effect immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (whether before or after the
payment of the Loans) be imposed on, incurred by or asserted against such Agent
in any way relating to or arising out of, the Commitments, this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that are
found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent’s gross negligence or willful
misconduct. The agreements in this Section 10.09 shall survive the
payment of the Loans and all other amounts payable hereunder.

 

SECTION 10.10.         Overadvances. The Administrative Agents shall not,
without the prior consent of Lenders, make (and shall prohibit the Issuing
Banks and Swingline Lenders, as applicable, from making) any Revolving Loans or
provide any Letters of Credit to the Borrowers on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans, Swingline
Loans, or Letters of Credit would either (i) cause the aggregate amount of the
Revolving Exposure to exceed the Borrowing Base or (ii) be made when one or
more of the other conditions precedent to the making of Loans 

 

138

 

hereunder
cannot be satisfied except, that, Administrative Agents may make (or cause to
be made) such additional Revolving Loans or Swingline Loans or provide such
additional Letters of Credit on behalf of Lenders (each an “Overadvance” and collectively, the “Overadvances”), intentionally and with
actual knowledge that such Loans or Letters of Credit will be made without the
satisfaction of the foregoing conditions precedent, if the Administrative
Agents deem it necessary or advisable in their discretion to do so, provided,
that: (a) the total principal amount of the Overadvances to the Borrowers which
Administrative Agents may make or provide (or cause to be made or provided)
after obtaining such actual knowledge that the conditions precedent have not
been satisfied, shall not exceed the amount equal to $30 million outstanding at any time and shall not cause the
Revolving Exposure to exceed the Revolving Commitments of all of the Lenders or
the Revolving Exposure of a Lender to exceed such Lender’s Revolving
Commitment, (b) without the consent of all Lenders, (i) no Overadvance shall be
outstanding for more than sixty (60)  days
and (ii) after all Overadvances have been repaid, Administrative Agents shall
not make any additional Overadvance unless sixty (60) days or more have elapsed
since the last date on which any Overadvance was outstanding and (c)
Administrative Agents shall be entitled to recover such funds, on demand from
the Borrowers together with interest thereon for each day from the date such
payment was due until the date such amount is paid to such Administrative Agent
at the interest rate provided for in Section 2.06(e). Each Lender shall
be obligated to pay such Administrative Agent the amount of its Pro Rata
Percentage of any such Overadvance provided, that such Administrative Agent is
acting in accordance with the terms of this Section 10.10 and provided
further, if a CAM Exchange shall have occurred, then the Pro Rata
Percentage of any such Overadvance shall be calculated by reference to the CAM
Percentage.

 

SECTION 10.11.         Concerning the Collateral and the Related
Loan Documents. Each Lender
and Issuing Bank authorizes and directs Agents to enter into this Agreement and
the other Loan Documents. Further, each Lender and Issuing Bank hereby
authorizes and directs the Agents to enter into any modifications,
confirmations, reaffirmations, acknowledgements or other amendments to the
Security Documents and the other Loan Documents as such Agent deems necessary
or desirable in order to perfect and protect, and to continue the perfection,
priority and protection of, the Liens and security interests created under the
Security Documents and/or other Loan Documents. Each Lender agrees that any
action taken by Agents or Required Lenders in accordance with the terms of this
Agreement or the other Loan Documents and the exercise by Agents or Required
Lenders of their respective powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon
all of the Lenders.

 

SECTION 10.12.         Field Audit, Examination Reports and Other
Reports. By signing this
Agreement, each Lender:

 

(a)         is deemed to have requested that Agents furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
and report with respect to the Borrowing Base prepared or received by Agents
(each field audit or examination report and report with respect to the
Borrowing Base being referred to herein as a “Report” and collectively, “Reports”),
appraisals with respect to the Collateral and financial statements with respect
to Borrowers and its Subsidiaries received by Agents;

 

(b)        expressly agrees and acknowledges that Agents (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained
in any Report, appraisal or financial statement;

 

(c)         expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agents or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers’ 

 

139

 

and
Guarantors’ books and records, as well as on representations of Borrowers’ and
Guarantors’ personnel; and

 

(d)        agrees to keep all Reports confidential and strictly for its internal
use in accordance with the terms of Section 11.12, and not to distribute or use
any Report in any other manner.

 

ARTICLE XI.

MISCELLANEOUS

 

SECTION 11.01.         Notices.

 

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

 

(i)            if to any Loan Party, to US Borrowers at:

 

6 Brighton Road

Clifton, New Jersey 07012

Attention:  Frank Rowan

Telephone: (973) 614-2009

Email:  FRowan@lnt.com

 

(ii)           if to General Electric Capital Corporation, as US Administrative Agent,
US Collateral Agent and US Swingline Lender, to it at:

 

General Electric Capital
Corporation

 

401 Merritt Seven

Norwalk, Connecticut  06851

Attention: Linens ‘N Things
Account Manager

Facsimile No: (203) 956-4002

 

with a copy to each of the
other Agents

as set forth herein and, except with respect to

communications under Sections 5.01 and 9.04, to:

 

Bingham McCutchen LLP

150 Federal Street

Boston, Massachusetts  02110

Attention: Robert A.J. Barry

Facsimile No:  (617) 951-8736

 

(iii)          if to GE Canada Finance Holding Company, as Canadian Administrative
Agent, Canadian Collateral Agent and Canadian Swingline Lender, to it at:

 

GE
Canada Finance Holding Company

123
Front Street

Suite
1400

Toronto,
Ontario

 

140

 

M5J
2M2

Attention: Linens ‘N Things,
Inc., Account Manager

Facsimile No.: (416)
202-6226

 

with a copy to each of the
other Agents

as set forth herein and, except with respect to

communications under Sections 5.01 and 9.04, to:

 

Bingham McCutchen LLP

150 Federal Street

Boston, Massachusetts  02110

Attention: Robert A.J. Barry

Facsimile No:  (617) 951-8736

 

(iv)          if to Wachovia Bank, National Association, as Issuing Bank, to it at:

 

Wachovia Bank, National
Association

1133 Avenue of the Americas

New York, New York 10036

Attention:  Portfolio Manager

Telecopier No.:  (212) 545-4283

 

with a copy to the other
Agents as set

forth herein

 

(v)           if to Wells Fargo Retail Finance, LLC and Affiliates, as Issuing Bank, to it at:

 

Wells Fargo Retail Finance,
LLC

One
Boston Place

18th
Floor

Boston,
MA  02108

Attention: Danielle
Baldinelli

Facsimile No: 617-523-4027

 

with a copy to the other
Agents as set

forth herein

 

(vi)          if to Bank of America, N.A., as Issuing Bank, to it at:

 

Bank of America, N.A.

MA5-100-09-09

100 Federal Street

Boston, MA 02110

Attention:  Account Specialist

Telecopier No.:  617-434-4339

 

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

 

Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given 

 

141

 

when sent (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient). Notices delivered through electronic
communications to the extent provided in paragraph (b) below, shall be
effective as provided in said paragraph (b).

 

(b)        Electronic Communications. Notices and other communications to the Lenders and the Issuing Bank
hereunder may (subject to Section 11.01(d)) be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agents; provided that the foregoing shall not
apply to notices to any Lender or the Issuing Bank pursuant to Article II
if such Lender or the Issuing Bank, as applicable, has notified the
Administrative Agents that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agents, the Collateral
Agents or the Borrowers may, in their discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to procedures
approved by it (including as set forth in Section 11.01(d)); provided that approval of such procedures
may be limited to particular notices or communications.

 

Unless the applicable
Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement); provided that
if such notice or other communication is not sent during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been sent at the opening of business on the next business day for the
recipient, and (ii) notices or communications posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor.

 

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

 

(d)        Posting. Each Loan
Party hereby agrees that it will provide to the Administrative Agents all
information, documents and other materials that it is obligated to furnish to
the Administrative Agents pursuant to this Agreement and any other Loan
Document, including all notices, requests, financial statements, financial and
other reports, certificates and other information materials, but excluding any
such communication that (i) relates to a request for a new, or a conversion of
an existing, Borrowing or other extension of credit (including any election of
an interest rate or interest period relating thereto), (ii) relates to the
payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (iii) provides notice of any Default under this
Agreement or (iv) is required to be delivered to satisfy any condition
precedent to the effectiveness of this Agreement and/or any borrowing or other
extension of credit hereunder (all such non-excluded communications,
collectively, the “Communications”),
by transmitting the Communications in an electronic/soft medium in a format
reasonably acceptable to the US Administrative Agent at such e-mail address(es)
provided to the Borrowers from time to time or in such other form, including
hard copy delivery thereof, as the Administrative Agents shall require. In
addition, each Loan Party agrees to continue to provide the Communications to
the Administrative Agents in the manner specified in this Agreement or any
other Loan Document or in such other form, including hard copy delivery
thereof, as the Administrative Agents shall require. Nothing in this Section
11.01(d) shall prejudice the right of the Agents, any Lender or any Loan
Party to give any notice or other communication pursuant to this Agreement or any
other Loan Document in any other manner specified in this Agreement or any
other Loan Document or as any such Agent shall require.

 

142

 

To the extent consented to
by any Administrative Agent in writing from time to time, the applicable
Administrative Agent agrees that receipt of the Communications by such
Administrative Agent at its e-mail address(es) set forth above shall constitute
effective delivery of the Communications to such Administrative Agent for
purposes of the Loan Documents; provided
that the Borrowers shall also deliver to such Administrative Agent an executed
original of each Compliance Certificate required to be delivered hereunder.

 

Each Loan Party further
agrees that the Administrative Agents may make the Communications available to
the Lenders by posting the Communications on Intralinks or a substantially
similar electronic transmission system (the “Platform”).
The Platform is provided “as is” and “as available.”  The Agents do not warrant the accuracy or
completeness of the Communications, or the adequacy of the Platform and
expressly disclaim liability for errors or omissions in the communications. No
warranty of any kind, express, implied or statutory, including, without
limitation, any warranty of merchantability, fitness for a particular purpose,
non-infringement of third party rights or freedom from viruses or other code
defects, is made by any Agent in connection with the Communications or the
Platform. In no event shall the Administrative Agents or any of its Related
Parties have any liability to the Loan Parties, any Lender or any other person
for damages of any kind, including direct or indirect, special, incidental or
consequential damages, losses or expenses (whether in tort, contract or
otherwise) arising out of any Loan Party’s or any Administrative Agent’s
transmission of communications through the Internet, except to the extent the
liability of such person is found in a final non-appealable judgment by a court
of competent jurisdiction to have resulted from such person’s gross negligence
or willful misconduct.

 

SECTION 11.02.         Waivers; Amendment.

 

(a)         Generally. No failure or delay by any Agent, 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 each Agent,
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 any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by this Section 11.02, 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 any Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time. No
notice or demand on the Borrowers in any case shall entitle the Borrowers to
any other or further notice or demand in similar or other circumstances.

 

(b)        Required Consents. Subject
to the terms of the Intercreditor Agreement and to Section 11.02(c) and (d)
neither this Agreement nor any other Loan Document nor any provision hereof or
thereof may be waived, amended, supplemented 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
Administrative Agents, the Collateral Agents (in the case of any Security
Document) and the Loan Party or Loan Parties that are party thereto, in each
case with the written consent of the Required Lenders; provided that no such agreement shall be
effective if the effect thereof would:

 

(i)            increase the Commitment of any Lender without
the written consent of such Lender (it being understood that no amendment,
modification, termination, waiver or consent 

 

143

 

with
respect to any condition precedent, covenant or Default shall constitute an
increase in the Commitment of any Lender);

 

(ii)           reduce the principal amount or premium of any Loan or LC Disbursement
or reduce the rate of interest thereon (other than interest pursuant to Section
2.06(d)), or reduce any Fees payable hereunder, or change the form or
currency of payment of any Obligation, without the written consent of each
Lender directly affected thereby (it being understood that any amendment or
modification to the financial definitions in this Agreement shall not
constitute a reduction in the rate of interest for purposes of this clause
(ii));

 

(iii)          (A) change the scheduled final maturity of any Loan, (B) postpone the
date for payment of any Reimbursement Obligation or any interest or fees
payable hereunder, (C) change the amount of, waive or excuse any such payment
(other than waiver of any increase in the interest rate pursuant to Section
2.06(e)), or (D) postpone the scheduled date of expiration of any
Commitment or any Letter of Credit beyond the Revolving Maturity Date, in any
case, without the written consent of each Lender directly affected thereby;

 

(iv)          increase the maximum duration of Interest Periods hereunder, without
the written consent of each Lender directly affected thereby;

 

(v)           permit the assignment or delegation by the Borrowers of any of their
rights or obligations under any Loan Document, without the written consent of
each Lender;

 

(vi)          release Holdings or all or substantially all of the Subsidiary
Guarantors from their Guarantee (except as expressly provided in Article VII),
or limit their liability in respect of such Guarantee, without the written
consent of each Lender;

 

(vii)         except as provided for in the Intercreditor Agreement, release all or a
substantial portion of the Collateral from the Liens of the Security Documents
or alter the relative priorities of the Secured Obligations entitled to the
Liens of the Security Documents, in each case without the written consent of
each Lender (it being understood that additional Classes of Loans consented to
by the Required Lenders may be equally and ratably secured by the Collateral
with the then existing Secured Obligations under the Security Documents);

 

(viii)        change Section 2.14(b), (c) or (d) in a manner
that would alter the pro rata
sharing of payments or setoffs required thereby or any other provision in a
manner that would alter the pro rata
allocation among the Lenders of Loan disbursements, including the requirements
of Section 2.02(a), Section 2.17(d) and Section 2.18(d),
without the written consent of each Lender directly affected thereby;

 

(ix)           change any provision of this Section 11.02(b), (c), or (d),
without the written consent of each Lender directly affected thereby (except
for additional restrictions on amendments or waivers for the benefit of Lenders
of additional Classes of Loans consented to by the Required Lenders);

 

(x)            change the percentage set forth in the
definition of “Required Lenders,” “Supermajority Lenders” or any other
provision of any Loan Document (including this Section) specifying the number
or percentage of Lenders (or Lenders of any Class) 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 (or each Lender of such
Class, as the case may be), other than to increase such percentage or number or
to give any additional Lender or 

 

144

 

group
of Lenders such right to waive, amend or modify or make any such determination
or grant any such consent;

 

(xi)           change the application of payments as among or between Classes under Section
2.10(f), Section 8.03 or Section 9.02(g) without the written
consent of the Lenders of each Class that is being allocated a lesser
prepayment as a result thereof (it being understood that the Required Lenders
may waive, in whole or in part, any prepayment under Section 2.10(f) so
long as the application, as between Classes, of any portion of such prepayment
that is still required to be made is not changed and, if additional Classes of
Revolving Loans under this Agreement consented to by the Required Lenders are
made, such new Revolving Loans may be included on a pro rata basis in the various prepayments required pursuant
to Section 2.10(f));

 

(xii)          [Intentionally
Deleted];

 

(xiii)         change or waive any provision of Article X as the same applies
to any Agent, or any other provision of this Agreement as the same applies to
the rights or obligations of any Agent, in each case without the written
consent of such Agent;

 

(xiv)        change or waive any obligation of the Lenders relating to the issuance
of or purchase of participations in Letters of Credit, without the written
consent of the applicable Administrative Agent and the Issuing Bank; or

 

(xv)         change or waive any provision hereof relating to Swingline Loans
(including the definition of “US Swingline Commitment” or “Canadian Swingline
Commitment”), without the written consent of the applicable Swingline Lender;

 

(xvi)        amend or modify the definition of (a) “U.S. Minimum Availability
Requirement” or (b) “Canadian Minimum Availability Requirement” or the usage of
either such term in any of Sections 2.01(a), 2.01(b), 2.01(c), 2.10(b)(5),
2.10(b)(9), 2.17, 2.18(b) or 4.02(d), without the written consent of each
Lender;

 

provided,
further, that

 

(1)           any waiver, amendment or modification prior to the completion of the
syndication of the Commitments and Loans (as determined by the Arranger) may
not be effected without the written consent of the Arranger ; and

 

(2)           any waiver, amendment or modification of the Intercreditor Agreement
(and any related definitions) may be effected by an agreement or agreements in
writing entered into among the Collateral Agents, the US Administrative Agent,
the Required Lenders and the Senior Note Collateral Agent (without the consent
of any Loan Party, so long as such amendment, waiver or modification does not
impose any additional duties or obligations on the Loan Parties or alter or
impair any right of any Loan Party under the Loan Documents).

 

(c)         Collateral. Without the consent of any other person, the applicable Loan Party or
Parties and the Administrative Agents and/or the Collateral Agents may (in its
or their respective sole discretion, or shall, to the extent required by any
Loan Document) enter into any amendment or waiver of any Loan Document, or
enter into any new agreement or instrument, to effect the granting, perfection,
protection, expansion or enhancement of any security interest in any Collateral
or additional property to become Collateral for the benefit of the Secured
Parties, or as required by local law to give effect to, or 

 

145

 

protect
any security interest for the benefit of the Secured Parties, in any property
or so that the security interests therein comply with applicable Requirements
of Law.

 

(d)        Dissenting Lenders. If,
in connection with any proposed change, waiver, discharge or termination of the
provisions of this Agreement as contemplated by Section 11.02(b), the
consent of the Required Lenders or Supermajority Lenders, as applicable, is
obtained but the consent of one or more of such other Lenders whose consent is
required is not obtained, then the Borrowers shall have the right to replace
all, but not less than all, of such non-consenting Lender or Lenders (so long
as all non-consenting Lenders are so replaced) with one or more persons
pursuant to Section 2.16 so long as at the time of such replacement each
such new Lender consents to the proposed change, waiver, discharge or
termination.

 

SECTION 11.03.         Expenses; Indemnity; Damage Waiver.

 

(a)         Costs and Expenses. The Borrowers and Guarantors shall pay (i)
all reasonable out-of-pocket expenses incurred by the Administrative Agents,
the Collateral Agents and their respective Affiliates (including the reasonable
fees, charges and disbursements of counsel for the Administrative Agents and/or
the Collateral Agents) in connection with the syndication of the credit
facilities provided for herein (including the obtaining and maintaining of
CUSIP numbers for the Loans), the preparation, negotiation, execution, delivery
and administration of this Agreement and the other Loan Documents, including
any Inventory Appraisal, or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), including in connection
with post-closing searches to confirm that security filings and recordations
have been properly made, (ii) all reasonable out-of-pocket expenses incurred by
the Issuing Banks in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder, (iii)
all reasonable out-of-pocket expenses incurred by the Administrative Agents,
the Collateral Agents, any Lender or the Issuing Banks (including the
reasonable fees, charges and disbursements of any counsel for the
Administrative Agents, the Collateral Agents, any Lender or the Issuing Banks),
in connection with the enforcement or protection or attempted enforcement or
protection of its rights (A) in connection with this Agreement and the other
Loan Documents, including its rights under this Section 11.03, or (B) in
preserving and protecting, or attempting to preserve or protect its interests
in the Collateral, or (C) 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 and (iv) all documentary and similar taxes and charges in
respect of the Loan Documents.

 

(b)        Indemnification by Borrower. Each of the Borrowers and Guarantors shall indemnify the
Administrative Agents (and any sub-agent thereof), the Collateral Agents (and
any sub-agent thereof) each Lender and the Issuing Bank, and each Related Party
of any of the foregoing persons (each such person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee) incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Borrowers or any other Loan Party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby, (ii) any Loan or Letter of
Credit or the use or proposed 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 or threatened Release of Hazardous Materials on,
at, under or from any property owned, leased or operated by any Company at any
time, or 

 

146

 

any
Environmental Claim related in any way to any Company, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrowers or any other Loan Party, 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 (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or (y)
result from a claim brought by the Borrowers or any other Loan Party against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if the Borrowers or such Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

 

(c)         Reimbursement by Lenders. To the extent that any Borrowers or
Guarantors for any reason fails to indefeasibly pay any amount required under
paragraph (a) or (b) of this Section 11.03 to be paid by it to the
Administrative Agents (or any sub-agent thereof), the Collateral Agents, the
Issuing Bank, the Swingline Lenders or any Related Party of any of the
foregoing, each applicable Lender severally agrees to pay to the Administrative
Agent (or any such sub-agent), the Collateral Agents (or any sub-agent
thereof), the Issuing Bank, the Swingline Lenders or such Related Party, as the
case may be, such Lender’s pro  rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Swingline Lenders or the Issuing Bank in its capacity as
such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Swingline Lenders or Issuing Bank in connection with
such capacity. The obligations of the Lenders under this paragraph (c) are
subject to the provisions of Section 2.14. For purposes hereof, a Lender’s
“pro  rata share” shall be determined based upon its share of the
sum of the total Revolving Exposure and unused Commitments at the time.

 

(d)        Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Requirements of Law, no
Loan Party shall assert, and each Loan Party hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or
the use of the proceeds thereof. No Indemnitee referred to in paragraph (b)
above shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.

 

(e)         Payments. All amounts due under this Section shall be payable not later than
three (3) Business Days after demand therefor.

 

SECTION 11.04.         Successors and Assigns.

 

(a)         Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrowers
may not assign or otherwise transfer any of their rights or obligations
hereunder without the prior written consent of the Administrative Agent, the
Collateral Agents, the Issuing Bank, the Swingline Lenders and each Lender and
no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the 

 

147

 

provisions
of paragraph (b) of this Section 11.04, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section 11.04 or
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of paragraph (f) of this Section (and any other attempted
assignment or transfer by Borrower or any Lender shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in paragraph (d) of this
Section and, to the extent expressly contemplated hereby, the other
Indemnitees) any legal or equitable right, remedy or claim under or by reason
of this Agreement.

 

(b)        Assignments by Lenders.
Any Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that

 

(i)            except in the case of any assignment made in
connection with the syndication of the Commitment and Loans by GE Capital or an
assignment of the entire remaining amount of the assigning Lender’s Commitment
and the Loans at the time owing to it or in the case of an assignment to a
Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the applicable Commitment is not then in
effect, the principal outstanding balance of the Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $5.0 million, in the case of any
assignment in respect of Revolving Loans and/or Revolving Commitments, unless
the applicable Administrative Agent and, so long as no Default has occurred and
is continuing, the Borrowers otherwise consent (each such consent not to be
unreasonably withheld or delayed);

 

(ii)           each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement
with respect to the Loan or the Commitment assigned, except that this clause
(ii) shall not permit any Lender to assign all or a portion of its rights and
obligations among separate tranches or to separate Lenders on a non-pro rata basis;

 

(iii)          after the Effective Date (as defined in the related Assignment and
Assumption), the assigning Lender shall hold the same percentage of Canadian
Revolving Loans as compared to Revolving Loans as such Lender held prior to the
such Effective Date;

 

(iv)          the parties to each assignment shall execute and deliver to the
applicable Administrative Agent an Assignment and Assumption, together with the
Assigning Lender’s original Note (if any) and a processing and recordation fee
of $3,500, and the Eligible Assignee, if it shall not be a Lender, shall
deliver to the applicable Administrative Agent an Administrative Questionnaire;
and

 

(v)           in the case of an assignment of rights and obligations hereunder by a
Canadian Lender, such Lender shall use its commercially reasonable efforts to
assign such rights and obligations to an Eligible Assignee which qualifies as
an Eligible Canadian Lender.

 

Subject to acceptance and recording thereof by the applicable
Administrative Agent pursuant to paragraph (c) of this Section 11.04,
from and after the effective date specified in each Assignment and Assumption,
the Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender, including a 

 

148

 

Canadian Revolving Lender, as applicable, under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Section 2.12, Section 2.13, Section 2.15 and Section
11.03 with respect to facts and circumstances occurring prior to the
effective date of such assignment. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
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 (d) of this Section 11.04.

 

(c)         Register. The applicable Administrative Agent, acting solely for this purpose
as an agent of the Borrowers, shall maintain at one of its offices, a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive,
and the Borrowers, the Administrative Agents, 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 contrary. The Register shall be available for
inspection by the Borrowers, the Issuing Bank, the Collateral Agents, the
Swingline Lenders and any Lender (with respect to its own interest only), at
any reasonable time and from time to time upon reasonable prior notice.

 

(d)        Participations. Any
Lender may at any time, without the consent of, or notice to, the Borrowers,
the Administrative Agents, the Issuing Bank or the Swingline Lenders sell
participations to any person (other than a natural person or the Borrowers or
any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans 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 Administrative Agents and the
Lenders and Issuing Bank shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement.

 

Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce 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 clause (i), (ii) or
(iii) of the first proviso to Section 11.02(b) that affects such
Participant. Subject to paragraph (e) of this Section, the Borrowers agree that
each Participant shall be entitled to the benefits of Section 2.12, Section
2.13 and Section 2.15 (subject to the requirements of those
Sections) 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
11.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.14 as though it were a Lender.

 

(e)         Limitations on Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 2.12, Section 2.13 and Section
2.15 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 Borrowers’ prior written
consent.

 

149

 

(f)         Certain Pledges. Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto. In the case of any Lender that is a fund that invests
in bank loans, such Lender may, without the consent of the Borrowers or the
Administrative Agents, collaterally assign or pledge all or any portion of its
rights under this Agreement, including the Loans and Notes or any other
instrument evidencing its rights as a Lender under this Agreement, to any
holder of, trustee for, or any other representative of holders of, obligations
owed or securities issued, by such fund, as security for such obligations or
securities.

 

SECTION 11.05.         Survival of Agreement. All covenants, agreements, representations
and warranties made by the Loan Parties 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 Section
2.12, Section 2.14, Section 2.15 and Article X shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the payment
of the Reimbursement Obligations, the expiration or termination of the Letters
of Credit and the Commitments or the termination of this Agreement or any
provision hereof.

 

SECTION 11.06.         Counterparts; Integration; Effectiveness;
Electronic Execution.

 

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

 

(b)        Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like
import in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable Requirement of Law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

150

 

SECTION 11.07.         Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 11.08.         Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender, the Issuing Bank, and each of their respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable Requirements of Law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender, the Issuing Bank or any such
Affiliate to or for the credit or the account of the Borrowers or any other
Loan Party against any and all of the obligations of the Borrowers or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document
to such Lender or the Issuing Bank, irrespective of whether or not such Lender
or the Issuing Bank shall have made any demand under this Agreement or any
other Loan Document and although such obligations of the Borrowers or such Loan
Party may be contingent or unmatured or are owed to a branch or office of such
Lender or the Issuing Bank different from the branch or office holding such
deposit or obligated on such indebtedness. The rights of each Lender, the
Issuing Bank and their respective Affiliates under this Section are in addition
to other rights and remedies (including other rights of setoff) that such
Lender, the Issuing Bank or their respective Affiliates may have. Each Lender
and the Issuing Bank agrees to notify the Borrowers and the Administrative
Agents promptly after any such setoff and application; provided that the failure to give such
notice shall not affect the validity of such setoff and application.

 

SECTION 11.09.         Governing Law; Jurisdiction; Consent to
Service of Process.

 

(a)         Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of New York, without regard to
conflicts of law principles that would require the application of the laws of
another jurisdiction.

 

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

 

(c)         Waiver of Venue. Each Loan Party hereby irrevocably and
unconditionally waives, to the fullest extent permitted by applicable
Requirements of Law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in Section
11.09(b). Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by applicable Requirements of Law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

151

 

(d)        Service of Process. Each
party hereto irrevocably consents to service of process in any action or
proceeding arising out of or relating to any Loan Document, in the manner
provided for notices (other than telecopier) in Section 11.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
hereto to serve process in any other manner permitted by applicable
Requirements of Law.

 

SECTION 11.10.         WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE AGENTS AND THE LENDERS
HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE REQUIREMENTS OF
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 BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 11.11.         Headings. Article and Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and shall
not affect the construction of, or be taken into consideration in interpreting,
this Agreement.

 

SECTION 11.12.         Treatment of Certain Information;
Confidentiality. Each of the
Administrative Agents, the Lenders and the Issuing Bank agrees to maintain the
confidentiality of the Information (as defined below) for a period of two (2)
years following the receipt thereof, except that Information may be disclosed
(a) to its Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, advisors and other representatives (it
being understood that the persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable Requirements of Law or
by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section
11.10, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (ii) any actual or prospective counterparty (or its advisors) to any
swap or derivative transaction relating to the Borrowers and their obligations
or (iii) any rating agency for the purpose of obtaining a credit rating
applicable to any Lender, (g) with the consent of the Borrowers or (h) to the
extent such Information (x) becomes publicly available other than as a result
of a breach of this Section or (y) becomes available to the Administrative
Agents, any Lender, the Issuing Bank or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrowers. For purposes of
this Section, “Information” means
all information received from the Borrowers or any of their Subsidiaries
relating to the Borrowers or any of their Subsidiaries or any of their
respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis
prior to disclosure by Borrower or any of its Subsidiaries; provided that, in the case of information received from
Borrower or any of its Subsidiaries after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any person required
to maintain the confidentiality of Information as provided in this Section
shall be considered to have complied with its obligation to do so if such
person has exercised the same degree of 

 

152

 

care
to maintain the confidentiality of such Information as such person would accord
to its own confidential information.

 

SECTION 11.13.         USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agents (for itself and not on
behalf of any Lender) hereby notifies the Borrowers that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”),
it is required to obtain, verify and record information that identifies the
Borrowers, which information includes the name, address and tax identification
number of the Borrowers and other information regarding the Borrowers that will
allow such Lender or the Administrative Agent, as applicable, to identify the
Borrowers in accordance with the Act. This notice is given in accordance with
the requirements of the Act and is effective as to the Lenders and the
Administrative Agents.

 

SECTION 11.14.         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 which are treated as interest on such
Loan under applicable Requirements of Law (collectively, the “Charges”), shall exceed the maximum lawful
rate (the “Maximum Rate”) which
may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable Requirements of 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.

 

SECTION 11.15.         Lender Addendum. Each Lender party to this Agreement on the
date hereof, shall do so by delivering to the applicable Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrowers and the such
Administrative Agent.

 

SECTION 11.16.         Obligations Absolute. To the fullest extent permitted by
applicable Requirements of Law, all obligations of the Loan Parties hereunder
shall be absolute and unconditional irrespective of:

 

(a)         any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of any Loan Party;

 

(b)        any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto against any Loan Party;

 

(c)         any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure from any Loan Document or any other agreement or
instrument relating thereto;

 

(d)        any exchange, release or non-perfection of any other Collateral, or any
release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Obligations;

 

(e)         any exercise or non-exercise, or any waiver of any right, remedy, power
or privilege under or in respect hereof or any Loan Document; or

 

153

 

(f)         any other circumstances which might otherwise constitute a defense available
to, or a discharge of, the Loan Parties.

 

SECTION 11.17.         Dollar Equivalent Calculations. For purposes of this Agreement, the Dollar
Equivalent of each Loan that is an Approved Currency Revolving Loan and the
Dollar Equivalent of the stated amount of each Letter of Credit that is an
Approved Currency Letter of Credit shall be calculated on the date when any
such Loan is made, such Letter of Credit is issued, on the first Business Day
of each month and at such other times as designated by the applicable
Administrative Agent. Such Dollar Equivalent shall remain in effect until the
same is recalculated by such Administrative Agent as provided above and notice
of such recalculation is received by the Borrowers, it being understood that
until such notice of such recalculation is received, the Dollar Equivalent
shall be that Dollar Equivalent as last reported to the Borrowers by such
Administrative Agent. Such Administrative Agent shall promptly notify the
Borrowers and the Lenders of each such determination of the Dollar Equivalent.

 

SECTION 11.18.         Judgment Currency.

 

(a)         The Borrowers’ obligation hereunder and under the other Loan Documents
to make payments in the applicable Approved Currency (pursuant to such
obligation, the “Obligation Currency”)
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than the Obligation
Currency, except to the extent that such tender or recovery results in the
effective receipt by the applicable Administrative Agent or the respective
Lender of the full amount of the Obligation Currency expressed to be payable to
such Administrative Agent or such Lender under this Agreement or the other Loan
Documents. If, for the purpose of obtaining or enforcing judgment against the
Borrowers in any court or in any jurisdiction, it becomes necessary to convert
into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation Currency,
the conversion shall be made at the Dollar Equivalent, and in the case of other
currencies, the rate of exchange (as quoted by such Administrative Agent or if
such Administrative Agent does not quote a rate of exchange on such currency,
by a known dealer in such currency designated by such Administrative Agent)
determined, in each case, as of the Business Day immediately preceding the day
on which the judgment is given (such Business Day being hereinafter referred to
as the “Judgment Currency Conversion Date”).

 

(b)        If there is a change in the rate of exchange prevailing between the
Judgment Currency Conversion Date and the date of actual payment of the amount
due, the Borrowers covenant and agree to pay, or cause to be paid, such
additional amounts, if any (but in any event not a lesser amount) as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial
award at the rate of exchange prevailing on the Judgment Currency Conversion
Date.

 

(c)         For purposes of determining the Dollar Equivalent or any other rate of
exchange for this Section 11.18, such amounts shall include any premium
and costs payable in connection with the purchase of the Obligation Currency.

 

SECTION 11.19.         Special Provisions Relating to Currencies
Other Than Dollars.

 

(a)         All funds to be made available to the applicable Administrative Agent
pursuant to this Agreement in Canadian dollars shall be made available to such
Administrative Agent in immediately available, freely transferable, cleared
funds to such account with such bank in such principal financial center in
Canada as such Administrative Agent shall from time to time nominate for this
purpose.

 

154

 

(b)        In relation to the payment of any amount denominated in Canadian
dollars, no Administrative Agent shall be liable to the Borrowers or any of the
Lenders for any delay, or the consequences of any delay, in the crediting to
any account of any amount required by this Agreement to be paid by such
Administrative Agent if such Administrative Agent shall have taken all relevant
and necessary steps to achieve, on the date required by this Agreement, the
payment of such amount in immediately available, freely transferable, cleared
funds (in Canadian dollars) to the account with the bank in the principal
financial center in Canada which the Borrowers or, as the case may be, any
Lender shall have specified for such purpose. In this Section 11.19(b), “all relevant steps” means all such steps as
may be prescribed from time to time by the regulations or operating procedures
of such clearing or settlement system as such Administrative Agent may from
time to time determine for the purpose of clearing or settling payments of
Canadian dollars. Furthermore, and without limiting the foregoing, such
Administrative Agent shall not be liable to the Borrowers or any of the Lenders
with respect to the foregoing matters in the absence of its gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision or pursuant to a binding arbitration award or
as otherwise agreed in writing by the affected parties).

 

SECTION 11.20.         Intercreditor Agreement. Notwithstanding anything herein to the
contrary, each Lender acknowledges that the Lien and security interest granted
to the Collateral Agents pursuant to the Security Documents and the exercise of
any right or remedy by such Collateral Agents thereunder are subject to the
provisions of the Intercreditor Agreement. In the event of any conflict between
the terms of the Intercreditor Agreement and the Security Documents, the terms
of the Intercreditor Agreement shall govern and control. The parties hereto
consent to the collateral agents under the Prior Credit Agreement and the
Senior Note Collateral Agent terminating the Control Agreements entered into
under the Prior Credit Agreement.

 

[Signature
Pages Follow]

 

155

 

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

 

	
   

  	
  US BORROWERS:

  
	
   

  	
  LINENS ‘N THINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS CENTER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CANADIAN BORROWER:

  
	
   

  	
  LINENS ‘N THINGS CANADA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDINGS:

  
	
   

  	
  LINENS HOLDING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BLOOMINGTON MN., L.T., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

	
   

  	
  LNT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT WEST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VENDOR FINANCE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT LEASING II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT VIRGINIA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT MERCHANDISING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

	
   

  	
  LNT LEASING III, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITADEL LNT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS CANADA LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By: Linens ‘N Things Investment Canada II Company,

  its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS INVESTMENT CANADA I

  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS INVESTMENT CANADA II

  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ FRANCIS M. ROWAN

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Rowan

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION

  
	
   

  	
  as US Collateral Agent, US Administrative Agent, US 

  Swingline Lender and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ MARK J. FORTI

  	
   

  
	
   

  	
  Name:

  	
  Mark J. Forti

  
	
   

  	
  Title:

  	
  Duly Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  GE CANADA FINANCE HOLDING COMPANY

  
	
   

  	
  as Canadian Collateral Agent, Canadian Administrative

  Agent, Canadian Swingline Lender and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ RICHARD ZENI

  	
   

  
	
   

  	
  Name:

  	
  Richard Zeni

  
	
   

  	
  Title:

  	
  Duly Authorized Signatory

  

 

 

Annex I to

Credit Agreement

 

Applicable Margin

 

	
   

  	
   

  	
  Revolving Loans

  	
   

  
	
  Average
  Excess 

  Availability for Preceding 

  Fiscal Quarter

  	
   

  	
  Eurodollar/ 

  Acceptance

  Fees

  	
   

  	
  ABR/Canadian

  Prime

  	
   

  
	
  Level I:
  <$125 million

  	
   

  	
  1.75

  	
  %

  	
  0.25

  	
  %

  
	
  Level II:
  > $125 million 

  and < $350 million

  	
   

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  
	
  Level
  III: > $350 million 

  and < $475 million

  	
   

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  
	
  Level IV:
  > $475 million

  	
   

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  

 

Tranche B
Loans:  The
Applicable Margin with respect to Tranche B Loans (consisting of per annum rate
margins) shall be 2.75% in the case of Eurodollar Loans and, in the event the
Adjusted LIBOR Rate is not available, 1.25% in the case of ABR Loans.

 

Applicable Fee

 

	
   

  	
   

  	
  Fee

  	
   

  
	
  Level I

  	
   

  	
  0.375

  	
  %

  
	
  Level II

  	
   

  	
  0.375

  	
  %

  
	
  Level III

  	
   

  	
  0.375

  	
  %

  
	
  Level IV

  	
   

  	
  0.250

  	
  %

  

 

Each change in the Applicable Margin or Applicable Fee resulting from a
change in the Excess Availability shall be effective with respect to all Loans
and Letters of Credit outstanding on and after the date of delivery to the
Administrative Agents of the financial statements and certificates required by Section
5.01(a) or (b) and Section 5.01(d) (as well as the Borrowing
Base Certificate for the last month of such fiscal quarter), respectively,
indicating such change until the date immediately preceding the next date of
delivery of such financial statements and certificates (and related Borrowing
Base Certificate) indicating another such change. Notwithstanding the
foregoing, the Average Excess Availability shall be deemed to be in (i) Level
II from the Closing Date to the date of delivery to the Administrative Agents
of the financial statements and certificates required by Section 5.01(b) and
Section 5.01(d) (as well as the Borrowing Base Certificate for the month ended
November 30, 2007) and (ii) Level I (A) at any time during which the Borrowers
have failed to deliver the financial statements and certificates required by Section
5.01(a) or (b) and Section 5.01(d), respectively, and
(B) at any time during the existence of an Event of Default.Exhibit 10.1

EMPLOYMENT AGREEMENT

This
EMPLOYMENT AGREEMENT (the “Agreement”) is
entered into this 6th day of September, 2007, between THE CHEESECAKE
FACTORY INCORPORATED, a Delaware corporation (the “Company”)
and Russell Bendel (the “Executive”).

WHEREAS, on August
14, 2007 the Compensation Committee (the “Compensation Committee”)
of the Board of Directors (the “Board”) of the
Company approved and authorized the entry into this Agreement with the
Executive; and

WHEREAS, the
parties desire to enter into this Agreement setting forth the terms and
conditions for the employment relationship between the Executive and the
Company;

NOW, THEREFORE, in
consideration of the promises and mutual covenants and agreements herein
contained and intending to be legally bound hereby, the Company and the
Executive hereby agree as follows:

1.             Employment.  The
Executive is employed as the President and Chief Operations Officer of the
Cheesecake Factory Restaurants Inc., a wholly owned subsidiary of the Company.  In such capacity, the Executive shall have
such duties and responsibilities to the Company and its subsidiaries as may be
designated to the Executive by the Board from time to time and as are not
inconsistent with the Executive’s position. 
The Executive shall devote substantially all the Executive’s working
time, attention and energies to the business and affairs of the Company and the
Company’s subsidiaries.  The Executive
shall report directly to the Chief Executive Officer of the Company.  While employed by the Company during the Term
of this Agreement, the Executive shall not serve as the member of the board of
directors of any other for-profit corporation or as the manager of any limited
liability company.  Without the prior written
approval of the Chief Executive Officer, the Executive shall not serve as the
member of the board of directors or trustees of any non-profit or charitable
organization; provided, however, such restriction shall not apply to The
Cheesecake Factory Oscar and Evelyn Overton Foundation or the California
Restaurant Association.

2.             Term.  The initial “Term of this
Agreement” shall mean the period commencing on the date hereof and
ending on September 6, 2010.  On such
date, and on each subsequent September 6th thereafter, the
Term of this Agreement shall be automatically extended for one additional
calendar year unless, at least ninety (90) days prior to September 6th of each year during the Term of this
Agreement, either the Company or the Executive shall give notice not to extend
this Agreement.  Unless otherwise
terminated earlier in accordance with Section 9, “The Term of this Agreement”
shall mean, for purposes of this Agreement, such initial three-year term and
subsequent extensions, if any.

3.             Benefits.  During
the Term of this Agreement, Executive shall be eligible for the following
compensation and benefits:

(a)           Annual
Salary. Subject to the
further provisions of this Agreement, the Company shall pay the Executive
during the Term of this Agreement a base salary at an annual rate during the Term
equal to $450,000, with such salary to be adjusted at such times, if any, and
in such amounts as determined by the Compensation Committee (“Annual Salary”), provided, however,
the Executive’s Annual Salary shall not be decreased without the Executive’s
prior written consent unless the annual salaries of all other Executive
Officers are proportionately decreased. 
Any increase in salary shall not serve to limit or reduce any other
benefit or obligation of the Company hereunder. 
The Company shall pay such salary to the Executive, in equal
installments, not less frequently than monthly in accordance with the Company’s
standard payroll practices for employees who are Executive Officers of the
Company.  The Executive’s participation
in deferred compensation, discretionary and/or performance bonus, retirement,
stock option and/or other employee benefit plans and in fringe benefits shall
not reduce the Executive’s Annual Salary.

(b)           Equity Grant. Subject to the approval by the
Compensation Committee of the Company’s Board of Directors (“Compensation
Committee”), the Executive shall be granted an initial grant of 100,000
non-qualified stock options, which vest twenty percent (20%) each year over a
five-year period on the first (1st), second (2nd), third (3rd), fourth (4th), and fifth (5th) anniversary dates of the grant date, respectively, subject to the
Company meeting certain earnings goals, as described in Executive’s award
agreement, at an exercise price equal to fair market value of the Company’s
stock on the date of grant, plus 35,000
restricted shares of the Company’s stock, which restrictions lapse at the rate
of sixty percent (60%) on the 3rd anniversary of the grant date, and twenty
percent (20%) on each of the fourth (4th) and fifth (5th) anniversary dates of the grant
date, respectively, all in accordance with the terms and conditions of The
Cheesecake Factory Incorporated 2001 Omnibus Stock Incentive Plan.

Executive
also shall be eligible for consideration for future equity awards, in
accordance with the terms
and conditions of The Cheesecake Factory Incorporated 2001 Omnibus Stock
Incentive Plan, as such plan may be modified or amended from time to time,
or such other or additional equity programs as may be established by the
Company from time to time for its Executive Officers. The Compensation
Committee shall determine the amount and timing of such awards, if any, under
the Company’s equity compensation plans.

(c)           Automobile. The
option to participate in the Company’s leased car program (currently a BMW-7
series automobile with insurance coverage) or, in lieu of participating in the
leased car program, the right to receive an automobile allowance in the amount
of one thousand two hundred dollars ($1200.00) per month, in accordance with
the Company’s policies and procedures for the leased car program and subject to
all applicable taxes and withholdings.

(d)           Participation
in Bonus, Retirement and Employee Benefit Plans.

(i)            While
employed by the Company during the Term of this Agreement, the Executive shall
be entitled to participate equitably with other Executive Officers in any plan
of the Company relating to pension, profit sharing, life insurance, education,
or other retirement or employee benefits that the Company has adopted or may
adopt for the benefit of its Executive Officers, to the extent eligible
thereunder by virtue of the Executive’s position, tenure and salary, including
without limitation, The Cheesecake
Factory Incorporated Executive Savings Plan and The Cheesecake Factory Incorporated Amended and Restated Annual
Performance Incentive

 2
 

Plan. The Compensation Committee shall
determine the amount and timing of awards, if any, under the Company’s bonus
plans. In the event any Executive retirement or employee benefit provides for a
receipt of compensation in a year subsequent to the year in which it was no
longer subject to a substantial risk of forfeiture, that benefit shall not be
given to the Executive unless that benefit is either exempt from Section 409A
or compliant with Section 409A.

(ii)           For
fiscal year 2007 only, Executive shall receive a prorated share of additional
compensation based upon his length of employment with the Company during fiscal
year 2007, in an amount equal to forty-two percent (42%) of his Annual Salary
for fiscal 2007 multiplied by a fraction, the numerator of which is the number
of days Executive is employed by the Company in fiscal year 2007 and the
denominator of which is 365 (“2007
Additional Compensation”). The 2007 Additional Compensation shall be
made to Executive in lieu of Executive’s participation in The Cheesecake Factory Incorporated Amended
and Restated Annual Performance Incentive Plan for Fiscal 2007 and shall be due
and payable to Executive on January 15, 2008 provided that Executive is
employed by the Company through and including the last day of the Company’s
2007 fiscal year.

(e)           Paid Vacation.
While employed by the Company during the Term of this Agreement, the Executive
shall be entitled to an annual paid vacation in accordance with the Company’s
general administrative policy but in no event less than the greater of the
amount of paid vacation time provided to other Executive Officers, or three
weeks per year.

4.             Relocation.  Executive’s
offices shall be at the corporate headquarters of the Company, currently
located in Calabasas Hills, California, and Executive shall, when not traveling
on Company business, work at such corporate offices. The Company shall
reimburse Executive for his reasonable relocation expenses and/or make the
following payments to Executive to assist in his relocation from Orange County
to the greater Los Angeles Metropolitan area: (i) reimburse reasonable
temporary housing costs in the Calabasas Hills, California area for a one or
two-bedroom, furnished apartment, not to exceed a period of three months from
the date of employment; (ii)  reimburse
up to three visits, including meals, rental car or mileage and gas for
Executive’s personal car, and accommodations, in accordance with the Company’s
policies for travel reimbursement, for Executive and his spouse to search for
permanent housing in the greater Los Angeles Metropolitan Area; (iii) reimburse
customary expenses incurred for the packing, shipping and unpacking of all
household goods from Orange County to Los Angeles County;  (iv) 
make a one time payment of thirty-five thousand dollars ($35,000),
subject to normal and customary withholdings, payable within two weeks of
Executive’s first day of employment; and (v) if Executive permanently relocates
his primary residence to the greater Los Angeles Metropolitan area during the
first two years of the Term of this Agreement, 
(A) reimburse real estate commissions (not to exceed six percent (6%) of
sales price), in connection with the sale of Executive’s current home located
in Orange County,  and (B) reimburse
actual customary closing costs (excluding required repairs, payment of interest
for money borrowed, prepayment penalties, and loan fees), in connection with
the sale of Executive’s current home located in Orange County,  plus an amount equal to the following taxes
which are assessed with respect to such closing costs: 25% Federal Supplemental
Tax, applicable State Supplemental Taxes, if any, and 7.65% Social Security and
Medicare, less (C) thirty-five thousand dollars ($35,000) previously paid to
Executive under Section 4(iv) above.  If
Executive voluntarily terminates his employment with the Company, other than
because of a Constructive Termination, or is terminated for Cause, within a two
year period from the effective date of this Agreement,

 3
 

Executive agrees to reimburse the Company for the costs and expenses
incurred by the Company under this Section 4 (iii), (iv) and (v) (“Reimbursables”)
on a prorata basis, such reimbursement to be equal to the total Reimbursables,
less the amount derived by multiplying the total Reimburseables by a fraction,
the numerator of which is the number of months of employment completed with the
Company as of the Date of Termination and the denominator of which is 24.

5.             Health Insurance
Premiums; Fringe Benefits.  While
employed by the Company during the Term of this Agreement, the Company shall
pay a portion of Executive’s premium for medical, dental and vision care
insurance with respect to the Executive and the Executive’s immediate family
members under the Company’s employee medical insurance policies to the extant
provided to other Executive Officers of the Company and based upon the most
comprehensive medical, dental and vision care insurance plan offered to the
Company’s Executive Officers.  In addition
and while employed by the Company during the Term of this Agreement, the
Executive shall be entitled to receive all other fringe benefits that are now
or may be hereafter provided to the Company’s other Executive Officers.  The Company shall appropriately adjust such
fringe benefits to the extent that the level or amount of any fringe benefit is
based upon seniority, compensation levels, or geographic location.

6.             Business Expenses.  While employed by the Company during the Term
of this Agreement, the Executive shall be entitled to incur and be reimbursed
for all reasonable business expenses. 
The Company shall reimburse the Executive for all these expenses
provided the Executive provides, from time to time, of an itemized account of
such expenditures setting forth the date, the purposes for which incurred, and
the amounts thereof, together with such receipts showing payments in conformity
with the Company’s established policies and procedures.

7.             Indemnity.  To the fullest extent permitted by the General
Corporation Law of the State of Delaware as the same exists or may hereafter be
amended, the Company shall indemnify and hold the Executive harmless from any
cost, expense or liability arising out of or relating to any acts or decisions
made by the Executive on behalf of or in the course of performing services for
the Company to the same extent the Company indemnifies and holds harmless other
Executive Officers and in accordance with the Company’s established
policies.  The indemnification provided
by this Section 7 shall not be deemed exclusive of any other rights to which
the Executive may be entitled under the Company’s certificate of incorporation,
any bylaw, agreement, contract, vote of the stockholders or disinterested
directors or pursuant to the direction (howsoever embodied) of any court of
competent jurisdiction or otherwise.

8.             Certain Terms
Defined.  For purposes of this
Agreement:

(a)           “Affiliate” shall mean a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with the person specified.

(b)           “Base Salary” means, as of any date of termination of
employment, the highest Annual Salary of the Executive in any of the last three
fiscal years preceding such date of termination of employment.

 4
 

(c)           “Beneficial Owner” shall have the meaning given to such term
in the Exchange Act and the rules and regulations thereunder.

(d)           “Cause” means a termination of employment upon:  (i) the failure by the Executive to perform
the Executive’s duties with the Company (other than any such failure resulting
from the Executive’s incapacity due to physical or mental illness), after there
has been delivered to the Executive a written demand for performance from the
Company which demand specifically identifies the basis for the Company’s belief
that the Executive has not substantially performed the Executive’s duties;
(ii)  dishonesty, incompetence or gross
negligence in the discharge of the Executive’s duties; (iii) theft,
embezzlement, fraud, breach of confidentiality, or unauthorized disclosure or
use of inside information, recipes, processes, customer or employee lists,
trade secrets, or other Company proprietary information; (iv) willful material
violation of any law, rule or regulation of any governing authority or of the
Company’s policies and procedures, including, without limitation, the Company’s
Code of Ethics and Code of Conduct applicable to the Executive; (v) material
breach of any agreement with the Company; (vi) intentional conduct that is
injurious to the reputation, business or assets of the Company; or (vii)
solicitation of the Company’s agents or staff members to work for any other
business entity.

(e)           A
“Change of Control” occurs if:

(i)            any
Person (other than the Executive) or that Person’s Affiliate is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 33 1/3% or more of the combined voting power of the Company’s then
outstanding voting securities (“Voting Securities”);
or

(ii)           the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation (or other entity), other than:

(1)           a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the Voting
Securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation;

(2)           a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires more than 50% of the
combined voting power of the Company’s then outstanding Voting Securities; or

(3)           a
merger or consolidation that would result in the directors of the Company (who
were directors immediately prior thereto) continuing to constitute at least 50%
of all directors of the surviving entity after such merger or consolidation.

In this
subparagraph (ii), “surviving entity” shall mean only an entity in which all
the Company’s stockholders immediately before such merger or consolidation
(determined without taking into account any stockholders properly exercising
appraisal or similar rights) become stockholders by the terms of such merger or
consolidation, and the phrase “directors of the Company (who were directors
immediately prior thereto)” shall include only individuals who

 5
 

were
directors of the Company at the beginning of the 24 consecutive month period
preceding the date of such merger or consolidation.

(iii)          the stockholders of the Company approve a
plan of complete liquidation or an agreement for the sale or disposition of all
or substantially all of the Company’s assets; or

(iv)          during
any period of 24 consecutive months, individuals, who at the beginning of such
period constitute the Board of Directors of the Company, and any new director
whose election by the Board of Directors, or whose nomination for election by
the Company’s stockholders, was approved by a vote of at least one-half (1/2)
of the directors then in office (other than in connection with a contested
election), cease for any reason to constitute at least a majority of the Board
of Directors.

(f)            “Code” means the Internal Revenue Code of 1986, as amended.

(g)           “Constructive Termination” means the occurrence of one or
more of the following events without the Executive’s written consent: (i), a
relocation of the Executive’s principal business office to a location which is
in excess of a forty-five (45) mile-radius from the Executive’s principal
business office in the Company’s corporate headquarters in Calabasas Hills,
California; or (ii) the significant reduction of the Executive’s title, duties
or responsibilities relative to the Executive’s title, duties or
responsibilities in effect immediately prior to such reduction; or (iii) a
decrease in the Executive’s Annual Salary or a decrease and/or discontinuation
of any benefit plan or program, or level of participation in any such plan or
program, from the current plans, programs or levels currently applicable to
Executive Officers, which decrease or discontinuation does not apply to all
Executive Officers, or a failure to include the Executive in any new benefit
plan or program offered to other Executive Officers; or (iv) the failure of the
Company to honor any of the material provisions of this Agreement after receipt
of written notice of such failure from Executive and opportunity to remedy such
failure within thirty (30) days of receipt of such notice.

(h)           “Date of Termination” means the date of actual receipt of a
Notice of Termination given under Section 16 below or any later date specified
therein (but not more than fifteen (15) days after the giving of the Notice of
Termination), as the case may be; provided that (i) if the Executive’s
employment is terminated by the Company for any reason other than because of
the Executive’s death or as a result of the Executive becoming Permanently
Disabled, the Date of Termination is the date on which the Company gives notice
to the Executive of such termination or the Executive gives notice to the
Company that a Constructive Termination has occurred; (ii) if the Executive’s
employment is terminated due to Permanent Disability, the Date of Termination
is the date of actual receipt of a Notice of Termination; and (iii) if the
Executive’s employment is terminated due to the Executive’s death, the Date of
Termination shall be the date of death. 
The Company’s receipt of a notification by Executive of a Constructive
Termination shall not be deemed to constitute the Company’s acknowledgement,
agreement or admission that a Constructive Termination has occurred.

(i)            “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 6
 

(j)            “Executive Officer” means a person who is the Company’s
President and Chief Operating Officer – Restaurant Division or an Executive
Vice President of the Company.

(k)           “Involuntary Separation” means an involuntary separation as
that term is defined in Regulation Section 1.409A-1(b)(9)(iii).

(l)            “Notice of Termination” means a written notice that (i)
indicates the specific termination provision in this Agreement relied upon;
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provision so indicated; and (iii) specifies the Date of Termination.

(m)          “Person” is given the meaning as such term is used in
Sections 13(d) and 14(d) of the Exchange Act; provided, however, that unless
this Agreement provides to the contrary, the term shall not include the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.

(n)           “Permanent Disability” shall mean a physical or mental
condition that occurs and persists and which, in the written opinion of a
licensed physician selected by the Board in good faith, has rendered the
Executive unable to perform the Executive’s duties hereunder for a period of
ninety (90) consecutive days or more, or a period of ninety (90)
non-consecutive days in any one year period, and, in the written opinion of
such physician, the condition will continue for an indefinite period of not
less than an additional ninety (90) day period, rendering the Executive unable
to return to the Executive’s duties on a full time basis.

(o)           “Regulations” means the official Treasury Department
interpretation of the Internal Revenue Code.

(p)           “Section 409A” means Section 409A of the Code, and the
Regulations promulgated thereunder.

(q)           “Separation from Service” means a separation from service as
that term is used in Code Section 409A(a)(2)(i) and the Regulations thereunder.

(r)            “Specified Employee” means a specified employee as that term
is used in Code Section 409A(a)(2)(B)(i) and the Regulations thereunder.

(s)           “Voluntary Separation with Good Reason” means a voluntary
separation as that term is defined in Regulation Section 1.409A-1(h)(2).

9.             Termination of
Agreement.

(a)           Death
or Disability.  This Agreement shall
terminate automatically upon the Executive’s death or upon receipt of a Notice
of Termination in the event that Executive is Permanently Disabled.

 7
 

(b)           Cause.  The Company may terminate this Agreement at
any time concurrently with or after a termination of Executive’s employment for
Cause.

(c)           Constructive
Termination.  The Executive may
terminate this Agreement at any time within sixty (60) days after the
occurrence of a Constructive Termination.

(d)           Notice
of Termination.  Any termination of
the Executive’s employment by the Company for Cause or without Cause, or by the
Executive following a Constructive Termination, shall be communicated by Notice
of Termination to the other party, given in accordance with Section 16.  A Notice of Termination by the Company shall
be signed by the Company’s Chief Executive Officer.  Any termination due to Permanent Disability
shall be by written notice given in accordance with Section 16.

10.           Certain Benefits
Upon Termination.

(a)           If (i) during the Term
of this Agreement, the Company terminates the Executive’s employment for any
reason other than for Cause (including by reason of death or Permanent
Disability) or (ii) within 18 months after a Change of Control that occurs
during the Term of this Agreement, the Company terminates the Executive’s
employment (whether or not the Term of this Agreement has ended without
renewal) for any reason other than for Cause, or (iii) the Executive terminates
this Agreement at any time within sixty (60) days of the occurrence of a
Constructive Termination, then the following shall apply: (I) the Company shall
pay the Executive a “Severance Payment” in cash equal to one times the
Executive’s Base Salary (1/2 the Executive’s Base Salary if termination is by
reason of death); (II) the Company shall pay or provide to the Executive all
other benefits, as specified in Section 10(b) below; (III) all installments of
options to purchase shares of the Company’s Common Stock that are scheduled to
become exercisable within thirty-six (36) months of the Date of Termination
shall become exercisable and vest as of the Date of Termination subject to
expiration or termination as set forth in the applicable stock option plan or
agreement; and (IV) the Company shall pay the Executive a performance
achievement bonus under the Company’s Annual Performance Incentive Plan that is
proportionately adjusted to take into account the period of actual service by
the Executive during the Company’s fiscal year in which the Executive’s
employment is terminated, provided that
the Compensation Committee certifies in writing that the performance incentive
target for that fiscal year has been achieved and such payment is not
inconsistent with Section 162(m) of the Code and the regulations thereunder.

(b)           If Section 10(a) above
applies, then the Company shall provide the following additional benefits to
Executive: (i) for a 12 month period after the Date of Termination (the “Continuation Period”), the Company shall, at its expense,
continue on behalf of the Executive and the Executive’s dependents and
beneficiaries, medical, dental, vision care, and hospitalization benefits (or
such comparable alternative benefits determined by the Company, in its
discretion) that (I) were provided to Executive at any time during the 90-day
period prior to the Date of Termination, or (II) if termination is within 18
months of a Change of Control, were provided to Executive prior to such Change
of Control (provided the level of such benefits shall in no event be lower than
the Executive’s level of benefits on the Date of Termination).  The Company’s obligation hereunder with
respect to benefits under this Section 10(b) shall be limited to the extent
that the Executive obtains any such benefits pursuant to the Executive’s

 8
 

subsequent
employer’s benefit plans, if any, in which case the Company may reduce the
coverage of any benefits it is required to provide the Executive under this
Section 10(b) so long as the aggregate coverages and benefits of the combined
benefit plans are no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This Section 10(b) shall not be
interpreted so as to limit any benefits to which the Executive, the Executive’s
dependents or beneficiaries may be entitled under any of the Company’s other
employee benefit plans, programs or practices following a termination of
employment, including without limitation, retiree medical and life insurance
benefits, except as provided in this Section. Retiree medical and life
insurance benefits shall be limited by and be designed to either (A) be exempt
from Section 409A by reason of qualification under Regulation Section
1.409A-1(a)(9)(v)(B) and/or (D) (which shall be aggregated with all other
benefits which would qualify thereunder) or (B) be compliant with the
requirements of Regulation Section 1.409A-3(i).

(c)           In the event that the
Executive’s employment is terminated for any reason, the Company shall pay to
the Executive:  (i) all accrued but
unpaid salary and amounts due to the Executive as of the Date of Termination,
and (ii) all accrued but unpaid or unused vacation, sick pay or expense reimbursement
benefit, up to the Date of Termination.

(d)           In
the event that the Executive’s employment is terminated by reason of the
Executive’s death or if the Executive is not a Specified Employee, the Company
shall make all cash payments to which the Executive is entitled pursuant to
Section 10(a)(I) within thirty (30) days following the Executive’s Separation
from Service, provided that the Company may delay payment in the case of the
Executive’s death until the Executive’s executor or personal representative has
been appointed and qualified pursuant to the laws in effect in the Executive’s
jurisdiction of residence at the time of the Executive’s death.  If the Executive, as of the date of
Separation from Service, is a Specified Employee under Section 409A, then the
Company shall, unless as otherwise provided in this paragraph, pay to the
Executive all amounts due and owing under Section 10(a)(I) on that date which
is five (5) business days following the date that is six (6) months after the
date of Executive’s Separation from Service, provided that the Executive’s
employment is not terminated for Cause. 
If the Executive is a Specified Employee and it is determined that
Section 10(a)(I) provides payment only in the event of Involuntary Separation
or Voluntary Separation with Good Reason, then the Company shall pay to the
Executive within thirty (30) days of the date of Executive’s Separation from
Service such amounts of the separation pay not to exceed the maximum limit
permitted under Regulation Section 1.409-1(b)(9)(iii)(2).  Any amounts which remain unpaid after paying
all amounts permitted by the dollar limitation under Regulation Section
1.409-1(b)(9)(iii)(2), shall be paid five (5) business days following the date
that is six (6) months after the Employee’s Separation from Service.  Notwithstanding the foregoing, the Company
shall pay such cash payments over a one year period, on a bi-weekly basis
commencing when such payments shall first become payable.

(ii)           The
timing and payment of any performance achievement bonus to which the Executive
is entitled pursuant to Section 10(a)(IV) shall be determined as set forth in
the Company’s Annual Performance Incentive Plan.

(e)           In
the event that the Executive’s employment terminates by reason of the Executive’s
death, the applicable Severance Payment and other benefits provided in this
Section 10 shall be paid to the Executive’s estate or as the Executive’s
executor shall direct.

 9

(f)            In the event that the
Executive’s employment is terminated other than by reason of death or because
the Executive has become “disabled” as defined in Section 409A(a)(2)(C) of the
Code, the Company shall make all cash payments to which the Executive is entitled
pursuant to Section 10(a)(I) on that date which is five (5) business days
following the date that is six (6) months after the Date of Termination of the
Executive’s employment.  In the event
that the Executive’s employment is terminated by reason of the Executive’s
death or because the Executive has become disabled as defined in Section
409A(a)(2)(C) of the Code, the Company shall make all cash payments to which
the Executive is entitled pursuant to Section 10(a)(I) within thirty (30) days
following the Date of Termination, provided that the Company may defer payment
in the case of the Executive’s death until the Executive’s executor or personal
representative has been appointed and qualified pursuant to the laws in effect
in the Executive’s jurisdiction of residence at the time of the Executive’s
death.  Notwithstanding the foregoing,
the Company may pay such cash payments over a one year period, on a bi-weekly
basis commencing when such payments shall first become payable.  The timing of the payment of any performance
achievement bonus to which the Executive is entitled pursuant to Section
10(a)(IV) shall be determined as set forth in the Company’s Annual Performance
Incentive Plan.

(g)           In the event the
Executive is entitled hereunder to any payments or benefits set forth in this
Section 10, the Executive shall have no obligation or duty to mitigate. The provisions for
Severance Payment and other benefits contained in this Section 10 may be
triggered only once during the term of this Agreement, so that, for example,
should the Executive be terminated because of a Permanent Disability, and
should there be a Change of Control and Constructive Termination thereafter,
then the Executive would be entitled to be paid under this Section 10 only
once. In addition, the Executive shall not be entitled to receive severance
benefits of any kind from any wholly owned subsidiary or other affiliated
entity of the Company if, in connection with the same event or series of
events, the Severance Payment and other benefits provided for in this Section
10 previously have been paid.

(h)           (i)            In the event that any
payment or benefit (within the meaning of Section 280G(b)(2) of the Code), to
the Executive or for his or her benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, his or her employment with the Company or a
change in ownership or effective control of the Company or of a substantial
portion of its assets (a “Payment” or “Payments”), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive will be entitled to receive
an additional payment (the “Additional Payment”)
in an amount such that after payment by the Executive of all taxes (including
any interest or penalties, other than interest and penalties imposed by reason
of the Executive’s failure to file timely a tax return or pay taxes shown due
on his return, imposed with respect to such taxes and the Excise Tax),
including any Excise Tax imposed upon the Additional Payment, the Executive
retains an amount of the Additional Payment equal to the Excise Tax imposed
upon the Payments.

(ii)           An initial determination as
to whether an Additional Payment is required pursuant to this Agreement and the
amount of such Additional Payment shall be made at the Company’s expense by an
accounting firm selected by the Company and reasonably acceptable

 10
 

to the
Executive which is designated as one of the four largest accounting firms in
the United States (the “Accounting Firm”).  The Accounting Firm shall provide its
determination (the “Determination”),
together with detailed supporting calculations and documentation to the Company
and the Executive within five (5) days of the Termination Date, if applicable,
or such other time as requested by the Company or by the Executive (provided
the Executive reasonably believes that any of the Payments may be subject to
the Excise Tax) and if the Accounting Firm determines that no Excise Tax is
payable by the Executive with respect to a Payment or Payments, it shall
furnish the Executive with an opinion reasonably acceptable to the Executive
that no Excise Tax will be imposed with respect to any such Payment or
Payments.  Within ten (10) days of the
delivery of the Determination to the Executive, the Executive shall have the
rights to dispute the Determination (the “Dispute”).  The Additional Payment, if any, as determined
pursuant to this Section 10(h) shall be paid by the Company to the Executive
within five (5) days following the date that is six (6) months after the
Employee’s Separation From Service, unless the Separation From Service is by
reason of death of the Executive, or the Executive is not a Specified Employee,
then such payments shall be made within thirty (30) days from the Employee’s
Separation From Service.  The existence
of the Dispute shall not in any way affect the Executive’s right to receive the
Additional Payment in accordance with the Determination.  Upon the final resolution of a Dispute, the
Company shall pay to the Executive any additional amount required by such
resolution within five (5) days following the date that is six (6) months after
the Employee’s Separation From Service, unless the Separation From Service is
by reason of death of the Executive, or the Executive is not a Specified Employee,
then such payments shall be made within thirty (30) days from the Employee’s
Separation From Service.  If there is no
Dispute, the Determination shall be binding, final and conclusive upon the
Company and the Executive.

(i)            In the event that the
Executive’s employment is terminated for any reason, the Company shall
reimburse the Executive promptly for all business expenses incurred prior to
the Date of Termination upon the presentation by the Executive of an itemized
account of such expenditures, setting forth the date, the purposes for which
incurred and the amounts thereof, together with such receipts showing payments
in conformity with the Company’s established policies.

(j)            The rights of the
Executive under this Section 10 shall not be exclusive of any other rights to
which the Executive may be entitled under any bonus, retirement or employee
benefit plan of the Company.

11.     Assignment.

(a)           This Agreement is
personal to each of the parties hereto. 
No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto, except
that this Agreement shall be binding upon and inure to the benefit of any
successor entity to the Company.

(b)           The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had

 11
 

taken place.  No such assumption shall release the Company
of its obligations hereunder. As used in this Agreement, “Company” shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which assumes this Agreement by operation of law, or
otherwise.

(c)           This Agreement shall
inure to the benefit of and be enforceable by the Executive and his or her
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.

12.           Confidential
Information.  During the Term of this
Agreement and thereafter, the Executive shall not, except as may be required to
perform the Executive’s duties hereunder or as required by applicable law,
disclose to others for use, whether directly or indirectly, any Confidential
Information regarding the Company.  “Confidential Information” shall mean information about the
Company, its subsidiaries and affiliates, and their respective clients and
customers that is not available to the general public and that was learned by
the Executive in the course of the Executive’s employment by the Company,
including (without limitation) any data, formulae, information, proprietary
knowledge, trade secrets and client and customer lists and all papers, resumes,
records and the documents containing such Confidential Information.  The Executive acknowledges that such
Confidential Information is specialized, unique in nature and of great value to
the Company, and that such information gives the Company a competitive
advantage.  Upon the termination of the
Executive’s employment, the Executive will promptly deliver to the Company all
documents (and all copies thereof) containing any Confidential Information.

13.           Non-competition.  The Executive agrees that during his
employment with the Company, the Executive will not, directly or indirectly,
without the prior written consent of the Company, provide consultative service
with or without pay, own, manage, operate, join, control, participate in, or be
connected as a stockholder, partner, or otherwise with any business,
individual, partner, firm, corporation, or other entity which is then in
competition with the Company or any present Affiliate of the Company; provided,
however, that the “beneficial ownership” by the Executive, either
individually or as a member of a “group,” as such terms are used in Rule 13d of
the Exchange Act, of not more than 1% of the voting stock of any publicly held
corporation, and provided further, Executive’s passive investment (i.e., only a
non-management role) as a partner in “Lazy Dog Cafe”, shall not be a violation
of this Agreement.  It is further
expressly agreed that the Company will or would suffer irreparable injury if
the Executive were to compete with the Company or any subsidiary or affiliate
of the Company in violation of this Agreement and that the Company would by
reason of such competition be entitled to injunctive relief in a court of
appropriate jurisdiction, and the Executive further consents and stipulates to
the entry of such injunctive relief in such a court prohibiting the Executive
from competing with the Company or any subsidiary or affiliate of the Company
in violation of this Agreement.

14.           Right to Company Materials.  The Executive agrees that all styles,
designs, recipes, lists, materials, books, files, reports, correspondence,
records, and other documents (“Company Material”)
used, prepared, or made available to the Executive, shall be and shall remain
the property of the Company.  Upon the
termination of the Executive’s employment or the

 12
 

expiration of this
Agreement, all Company Materials shall be returned immediately to the Company,
and Executive shall not make or retain any copies thereof.

15.           Anti-solicitation.  The Executive promises and agrees that during
the Term of this Agreement, and for a period of 24 months thereafter, he will
not solicit or attempt to solicit employees, customers, franchisees, landlords,
or suppliers of the Company or any of its present or future subsidiaries or
affiliates, either directly or indirectly, to divert their business to any
individual, partnership, firm, corporation or other entity then in competition
with the business of the Company, or any subsidiary or affiliate of the
Company.

16.           Notice.  For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
addresses as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address shall be
effective only upon actual receipt:

	
   

  	
  Company:

  	
   

  	
  The Cheesecake Factory Incorporated

  
	
   

  	
   

  	
   

  	
  26901 Malibu Hills Road

  
	
   

  	
   

  	
   

  	
  Calabasas Hills, California 91301

  
	
   

  	
   

  	
   

  	
  Attention: Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  	
  Same address as above

  
	
   

  	
   

  	
   

  	
  Attn: [General Counsel]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Executive:

  	
   

  	
  The Cheesecake Factory Incorporated

  
	
   

  	
   

  	
   

  	
  26901 Malibu Hills Road

  
	
   

  	
   

  	
   

  	
  Calabasas Hills, California 91301

  
	
   

  	
   

  	
   

  	
  Attn: Russell Bendel

  

 

17.           Amendments or
Additions.  No amendment or additions
to this Agreement shall be binding unless in writing and signed by both parties
hereto.

18.           Section Headings.  The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.

19.           Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

20.           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but both of
which together will constitute one and the same instrument.

21.           Alternative Dispute
Resolution.  The Company and
Executive agree that any dispute that arises out of or relates to Executive’s
employment with the Company, including any dispute that he may have with any
present or former officer, director, employee, agent, attorney or insurer of

 13
 

the Company, shall be
submitted exclusively to binding arbitration for a final decision.  The arbitration shall be conducted by one
arbitrator in Los Angeles, California. 
The parties shall meet and confer in good faith to select an arbitrator,
who shall be a retired judge of the Superior Court of the state of California
or any federal district court located within the state of California, and shall
have at least ten (10) years of experience as a judge of said court(s).  The arbitrator shall determine in his or her
discretion which arbitration rules and procedures shall apply throughout the
arbitration, provided that such rules comply with applicable law.  The Company shall pay the fees and costs of
arbitration to the extent required under California law.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. 
Notwithstanding the foregoing, such arbitration shall be conducted in
accordance with the following procedures:

(a)           Procedures:  The arbitrator shall allow such discovery as
authorized by the California Code of Civil Procedure or Federal Rules of Civil
Procedure, as determined by the arbitrator. 
The arbitrator shall resolve the dispute as expeditiously as
practicable, and shall give the parties written notice of the decision, with
the reasons therefor set out, and shall have thirty (30) days thereafter to
reconsider and modify such decision if any party so requests within thirty (30)
days after the decision.

(b)           Authority:  The arbitrator shall have authority to award
relief under legal or equitable principals, including interim or preliminary
relief.  The prevailing party shall be
awarded its reasonable attorneys fees and costs.

(c)           Entry of Judgment:  Judgment upon the award rendered by the
arbitrator may be entered in any court having in person and subject matter
jurisdiction.  Company and Executive
hereby submit of the federal and state courts in Los Angeles, California, for
the purpose of confirming any such award and entering judgment thereon.

22.           Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board or the Compensation Committee.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.  No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. 
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without
regard to its conflicts of law principles. 
All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law.  In
the event that the Company shall not pay when due any amounts required to be
paid to the Executive, such unpaid amounts shall accrue interest from the due
date at the lesser of the prime commercial lending rate announced by Bank of
America N.A. in effect from time to time during the period of nonpayment or the
maximum rate allowed by law.

 14
 

23.           Deferred
Compensation.  The parties agree that
all provisions of this Agreement are intended to meet, and to operate in
accordance with, in all material respects, the requirements of paragraphs (2),
(3), and (4) of Section 409A(a) of the Code, and any guidance from the
Department of Treasury or Internal Revenue Service thereunder, including any
and all specifically referenced Regulation Sections contained in the
Agreement.  Where ambiguity or
uncertainty exists, this Agreement shall be interpreted in a manner which would
qualify any compensation payable hereunder to satisfy the requirements for
exception to or exclusion from 409A and the taxes imposed thereunder.

In the event either party
reasonably determines that any item payable by the Company to the Executive
pursuant to this Agreement that is not subject to a substantial risk of
forfeiture would not meet, or is reasonably likely not to meet, the
requirements of paragraphs (2), (3) and (4) of Section 409A, or to qualify as
exempt from Section 409A, such party shall notify the other in writing.  Any such notice shall specify in reasonable
detail the basis and reasons for such party’s determination.  The parties agree to negotiate in good faith
the terms and conditions of an amendment to this Agreement to avoid the
inclusion of such item in a tax year before the Executive’s actual receipt of
such item of income.  Provided, however,
nothing in this Section 24 shall be construed or interpreted to require the
Company to increase any amounts payable to the Executive pursuant to this Agreement
or to consent to any amendment that would materially and adversely change the
Company’s financial accounting or tax treatment of the payments to the
Executive under this Agreement.  Any item
payable under this Agreement that the Company reasonably determines is subject
to Section 409A(a)(2)(B)(i) of the Code, shall not be paid or commence payment
before the later of (a) six months after the date of the Executive’s Separation
from Service and (b) the payment date or commencement date specified in this
Agreement for such item.

24.           Survival. The
provisions of this Agreement that may be reasonably interpreted as surviving
expiration or termination of this Agreement, including Sections 7, 10, 12, 14,
15 and 21 shall continue in effect after expiration or termination of this
Agreement. No termination of this Agreement by either party shall result in a
termination of any vested stock options, except in accordance with the terms
and conditions of the applicable stock option agreement.

IN WITNESS WHEREOF, each
of the parties hereto has executed this Agreement on the date first indicated
above.

	
  

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE CHEESECAKE FACTORY INCORPORATED,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  David Overton, President and Chief Executive

  
	
   

  	
   

  	
   

  	
  Officer

  

 

 15
 

 

	
  

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Russell Bendel

  
	
   

  	
   

  	
   

  	
  Title: President and Chief Operating Officer, The

  
	
   

  	
   

  	
   

  	
  Cheesecake Factory Restaurants, Inc.

  

 

 16

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