Document:

Exhibit 10.1

 

EXECUTION VERSION

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into as of this 23rd day of June, 2010, by and between the Seneca
Gaming Corporation (“Parent”), a
governmental instrumentality of the Seneca Nation of Indians of New York (the “Nation”) and Lee K. Shannon (“Executive”).  This Agreement shall become effective as of
the Commencement Date (as defined in Section 2 below).

 

W I T N E S S E T H:

 

WHEREAS,
Parent desires that Executive serve as the Senior Vice President and General
Counsel of Parent and each of the Seneca Niagara Falls Gaming Corporation, the
Seneca Territory Gaming Corporation, the Seneca Erie Gaming Corporation, and
the Lewiston Golf Course Corporation, each a wholly-owned subsidiary of Parent
and a governmental instrumentality of the Nation, and each of the wholly-owned
subsidiaries of Parent formed or acquired in the future (unless otherwise
determined by the Board of Directors of Parent) (collectively, the “Subsidiaries” and together with Parent, “Employer”); and

 

WHEREAS,
Executive desires to serve as Senior Vice President and General Counsel of
Employer in accordance with the terms and conditions of this Agreement.

 

IT
IS HEREBY AGREED AS FOLLOWS:

 

1.                                       Employment. Upon the Commencement
Date, Employer hereby employs Executive as its Senior Vice President and
General Counsel.  Executive shall report
and be accountable to and work under the authority of the President and Chief
Executive Officer and the Board of Directors of Parent (the “Board”). 
Executive shall perform such duties and have such responsibilities that
are customary for such position, including those set forth on Exhibit A hereto, and those that
may be specified from time to time by the President and Chief Executive Officer
and/or the Board.  Without limiting the
foregoing, such duties shall further include an affirmative obligation to
mentor and train enrolled Seneca Nation members and other Native American
employees of Employer in furtherance of the Nation’s efforts to promote the
development and advancement of Native Americans.

 

2.                                       Term.  The term of this Agreement shall commence on
the date mutually agreed upon by Executive and Employer that is within 30 days
of the date hereof (the “Commencement Date”)
and terminate on the day before the third anniversary of the Commencement Date
(the “Termination Date”), unless
renewed by a subsequent written agreement of the parties.  The parties shall enter into good faith
discussions regarding the renewal/non-renewal of this Agreement no later than
180 days prior to the Termination Date. 
If Employer elects not to renew the Agreement then, beginning on the
first day following the Termination Date, Employer shall: (i) pay
Executive his Base Compensation earned, but unpaid, through the Termination
Date; (ii) continue to pay Executive his Base Compensation in effect as of
the Termination Date for a period following his termination (the “Post-Expiration Period”) of three months;
and (iii) to the extent elected by Executive, pay for the cost of
Executive’s premiums for continuation healthcare coverage under Section 4980B
of the Internal Revenue Code of 1986, as amended 

 

 

(“COBRA”), for the lesser of (1) the
Post-Expiration Period, (2) until Executive is no longer eligible for
COBRA continuation coverage, or (3) until Executive obtains comparable
healthcare benefits from any other employer during the Post-Expiration Period,
whereupon Employer shall have no further liability or obligation to Executive
for healthcare coverage under this Agreement or otherwise.

 

3.                                       Compensation.

 

(a)                                  Executive shall be paid a base salary (“Base Compensation”) at the annual rate of
Four Hundred Thousand Dollars ($400,000.00) for Employer’s fiscal year ending September 30,
2010.  Employer shall review the Base
Compensation on an annual basis (prior to or in connection with the close of
its fiscal year) at which time Employer shall determine in its sole discretion
whether or not the Base Compensation shall be increased and the timing thereof.  The Base Compensation shall be payable in
periodic payments in accordance with Employer’s regular payroll practices, and
shall be prorated for periods less than 12 months in duration.

 

(b)                                 Executive shall be entitled to participate in
such standard employee benefit plans and insurance programs offered by Employer
to other full-time executives of Employer at the same level of Executive, or
which it may adopt from time to time for such executives (such as 401(k) retirement
plans and health and welfare benefit plans), in accordance with the terms and
conditions thereof.

 

(c)                                  Executive shall be provided with three weeks
paid vacation during each fiscal year (limited to five days for the remainder
of the fiscal year ending September 30, 2010).  The vacation days shall accrue, expire and
otherwise be administered in accordance with Employer’s vacation policy, as in
effect from time to time.

 

(d)                                 Executive shall be entitled to reimbursement
of his business expenses, in accordance with Employer’s policies, as in effect
from time to time.

 

(e)                                  Executive shall also be eligible to
participate in any performance or incentive compensation programs that Employer
may adopt in the future for its executives at the same level as Executive.  Said additional performance or incentive
compensation, if any, shall be in addition to and shall not lessen or reduce
the Base Compensation.

 

(f)                                    Should Executive become unable to perform the
duties required under this Agreement as a result of temporary, documented
mental or physical disability (such documentation to be delivered to Employer
promptly), Executive shall be eligible to continue to receive his Base
Compensation for the period during which the documented disability prevents
performance of his duties, provided that such Base Compensation shall only be payable
for a maximum period of up to 180 days following the first day of missed
performance as a result of the disability.

 

(g)                                 The Parent shall pay (or reimburse Executive
if paid by Executive) for (i) Executive’s attorney registration dues, (ii) the
annual dues for membership in attorney bar associations, and (iii) the
reasonable costs and expenses related to fulfilling 

 

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Executive’s continuing legal education
requirements.

 

4.                                       Licensing Issues.  Executive represents and warrants to Employer
that he shall maintain in good standing such licenses as may be required
pursuant to the Nation-State Gaming Compact between the Nation and the State of
New York (the “Compact”) and/or
the Nation’s or Employer’s gaming ordinances as in effect from time to time, as
may be necessary to enable Executive to engage in his employment hereunder.

 

5.                                       Termination.

 

(a)                                  Executive’s employment hereunder may be
terminated by Parent immediately under the following circumstances and such
termination by Parent shall be a termination with respect to Parent and each of
the Subsidiaries:

 

(i)                                     upon revocation or disapproval of the license required pursuant to the
Compact, or upon disapproval by the National Indian Gaming Commission of the
issuance of any license by the Nation pursuant to its own gaming ordinances, if
either such action renders it unlawful for Executive to perform as Senior Vice
President or General Counsel of Parent or any of the Subsidiaries, or if any
event renders it unlawful for the Nation and/or Employer to continue to conduct
casino gaming on Nation Territory.  For
purposes of this Agreement, “Nation Territory”
shall include current or future Nation territory where Employer conducts or
will conduct its gaming operations as of the date Executive’s employment is
terminated.

 

(ii)                                  upon revocation or disapproval of such licenses for Executive as are
required pursuant to the Compact and/or by the Nation’s or Employer’s gaming
ordinances, provided that, in the event Executive appeals the grounds for such
revocation, disapproval or suspension, Employer shall suspend Executive without
compensation during the pendency of such appeal, with reinstatement of
Executive and reimbursement of such compensation by Employer in the event such
appeal is successful;

 

(iii)                               Executive shall commit an act constituting “Cause,” which is defined to mean (A) an act of dishonesty
by Executive intended to result in gain or personal enrichment of Executive or
others at Employer’s expense, (B) the deliberate and intentional refusal
by Executive (except by reason of disability) to perform his duties hereunder, (C) by
acts constituting gross negligence in the performance of such duties, or (D) the
failure to perform any material term or condition of this Agreement after
written notice thereof from Company and the Executive’s failure to cure such
failure within 15 days of the written notice (as determined by Company and
specified in the notice of breach and other than by reason of disability);

 

(iv)                              upon Executive’s death or disability; or

 

(v)                                 if Employer shall for any reason within Employer’s or the Nation’s
control permanently cease to conduct casino gaming on Nation Territory.

 

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(b)                                 If Executive’s employment should be terminated
under Section 5(a) above (or any subsection thereof) then Employer
shall at that time pay Executive (or his estate, as applicable) Base
Compensation earned through the date Executive is terminated, whereupon
Employer shall have no further liability or obligation to Executive under this
Agreement or otherwise, except as contemplated by Section 3(f) if
Executive is terminated by reason of his disability.

 

(c)                                  If Executive’s employment should be terminated
by Parent for any reason other than those specified in Sections 5(a) above
(it being understood that a purported termination for Cause which is contested
by Executive and finally determined not to have been proper shall be treated as
a termination under this Section 5(c)), then Employer shall:

 

(i)                                     pay Executive his Base Compensation earned, but unpaid, through the date
Executive is terminated;

 

(ii)                                  continue to pay Executive his Base Compensation in effect as of the date
of termination for a period following his termination (the “Severance Period”) equal to the lesser of (A) nine
months or (B) the remainder of the period ending on the Termination Date,
provided that in no event shall the Severance Period be less than three months;
and

 

(iii)                               to the extent elected by Executive, pay for the cost of Executive’s
premiums for continuation healthcare coverage under COBRA, for the lesser of (1) the
Severance Period, (2) until Executive is no longer eligible for COBRA
continuation coverage, or (3) until Executive obtains comparable
healthcare benefits from any other employer during the Severance Period,
whereupon Employer shall have no further liability or obligation to Executive
for healthcare coverage under this Agreement or otherwise.

 

Payments
to Executive pursuant to Section 5(c)(ii) above shall commence on the
day following the effective date of Executive’s termination and shall continue
until the Severance Period ends; provided that if Executive has not delivered a
signed general release of claims against Employer related to Executive’s employment
(and termination of employment) with Employer in substantially the form as
attached hereto as Exhibit B (as may be modified by Employer in
good faith to reflect changes in law or its employment practices) within 30
days of the effective date of termination, or any such release is later revoked
by Executive, the Employer shall be relieved of its obligation to make any
payments pursuant to Section 5(c)(ii). 
Further, Executive’s receipt of compensation under this Section 5(c) is
subject to Executive’s duty to mitigate damages as follows: during the
Severance Period, Executive shall endeavor in good faith to mitigate damages by
seeking employment with duties and salary comparable to those provided for
herein (subject to the limitations of the covenant not to compete set forth in Section 6(c) below),
and if he shall obtain such employment, he shall reimburse Employer the amount
of the compensation he has received from such other entity for such period, but
not to exceed the amount of the compensation Employer shall have paid him for
such period.

 

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(d)                                 Executive may terminate his employment for any
reason upon 90 days written notice to Parent. 
If Executive terminates his employment pursuant to this Section 5(d),
Employer shall pay Executive the Base Compensation earned through the date of
termination, whereupon Employer shall have no further liability or obligation
to Executive under this Agreement or otherwise.

 

(e)                                  Executive acknowledges and agrees that the
payments for termination of his employment during the employment term set forth
in this Section 5 or for the election by the Employer not to renew the
Agreement under Section 2 constitute liquidated damages for termination of
his employment during the employment term and such liquidated damages shall be
his only remedy with respect to any claim, including, without limitation,
breach of contract, he may have under this Agreement.  Notwithstanding any other provision of this
Agreement to the contrary, Executive acknowledges and agrees that other than
any claim for the liquidated damages contemplated hereunder, he waives any
rights to be awarded any other damages with respect to any claim he may have
under this Agreement, including, without limitation, compensatory or punitive
damages.

 

6.                                       Restrictive Covenants.

 

(a)                                  Executive acknowledges that:  (i) as a result of Executive’s
employment with Employer, he will obtain secret, proprietary and confidential
information concerning the business of Employer, including, without limitation,
business and marketing plans, strategies, employee lists, patron lists,
operating procedures, business relationships (including persons, corporations
or other entities performing services on behalf of or otherwise engaged in business
transactions with Employer), accounts, financial data, know-how, computer
software and related documentation, trade secrets, processes, policies and/or
personnel, and other information relating to Employer (“Confidential Information”); (ii) the
Confidential Information has been developed and created by Employer at
substantial expense and the Confidential Information constitutes valuable
proprietary assets and Employer will suffer substantial damage and irreparable
harm which will be difficult to compute if, during the Restricted Period (as
defined in Section 6(c) below), Executive should enter a Competitive
Business (as defined herein) in violation of the provisions of this Agreement; (iii) Employer
will suffer substantial damage which will be difficult to compute if, during
the Restricted Period, Executive should solicit or interfere with Employer’s
employees or patrons, or should divulge Confidential Information relating to
the business of Employer; (iv) the provisions of this Section 6 are
reasonable and necessary for the protection of the business of Employer; (v) Employer
would not have hired or employed Executive unless he signed this Agreement; and
(vi) the provisions of this Agreement will not preclude Executive from
other gainful employment.  “Competitive Business” shall mean any
gaming establishment which provides to its patrons games of chance such as slot
machines, card games, roulette, or similar games in the State of New York or
within a 250 mile radius of Nation Territory and any other business in which
the Company is then engaged as of the date of termination of this Agreement.

 

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(b)                                 Executive acknowledges and agrees that the
unauthorized disclosure or misuse of Confidential Information will cause
substantial damage to Employer. 
Therefore, Executive agrees not to, at any time, either during the term
of the Agreement or thereafter, divulge, use, publish or in any other manner
reveal, directly or indirectly, to any person, firm or corporation any
Confidential Information obtained or learned by Executive during the course of
his employment with Employer, with regard to the operational, financial,
business or other affairs and activities of Employer, their officers, directors
or employees and the entities with which they have business relationships,
except (i) as may be necessary to the performance of Executive’s duties
with Employer, (ii) with Parent’s express written consent, (iii) to
the extent that any such information is in the public domain other than as a
result of Executive’s breach of any of obligations hereunder, or (iv) where
required to be disclosed by court order, subpoena or other government process
and, in such event, Executive shall promptly notify Employer of the requirement
and cooperate with Employer in attempting to keep such information
confidential.

 

(c)                                  During Executive’s employment with Employer
and for 12 months after his termination of employment for any reason (the “Restricted Period”), Executive, without
the prior written permission of Parent, shall not, directly or indirectly, (i) enter
into the employ of or render any services to any person, engaged in a
Competitive Business; or (ii) become associated with or interested in any
Competitive Business as an individual, partner, shareholder, member, creditor,
director, officer, principal, agent, employee, trustee, consultant, advisor or
in any other relationship or capacity.  
This Section 6(c) shall not prevent Executive from owning
common stock in a publicly traded corporation which owns or manages a casino
provided Executive does not take an active role in the ownership or management
of such corporation and his ownership interest represents less than 3% of the
voting securities and/or economic value of such corporation.  Furthermore, this Section 6(c) shall
not be interpreted or applied in a manner that would violate Rule 5.6 of
the New York Rules of Professional Conduct.

 

(d)                                 By executing this Agreement, Executive
acknowledges that he understands that Employer’s ability to operate its
business depends upon its ability to attract and retain skilled people and that
Employer has and will continue to invest substantial resources in training such
individuals.  Therefore, during the
Restricted Period, Executive shall not, without the prior written permission of
Parent, directly or indirectly solicit, employ or retain, or have or cause any
other person or entity to solicit, employ or retain, any person who is employed
or is providing personal services to Employer.

 

(e)                                  By executing this Agreement, Employee
acknowledges that Executive understands that Employer’s ability to operate its
business depends upon its ability to attract and retain vendors and
patrons.  Therefore, during the
Restricted Period, Executive shall not, directly or indirectly, solicit,
contact, interfere with, or endeavor to entice away from Employer any of its
current or potential patrons or any such persons or entities that were patrons
of Employer within the one year period immediately prior to Executive’s
termination of employment.  Executive
further agrees that, during the Restricted Period, Executive shall not,
directly or indirectly, endeavor to entice away from Employer any of 

 

6

 

its
current or potential vendors or any such persons or entities that were vendors
of Employer within the one year period immediately prior to Employee’s
termination of employment.

 

(f)                                    Executive acknowledges and agrees during his
employment and for all time thereafter that he will not defame or publicly
criticize the services, business, integrity, veracity or personal or
professional reputation of Employer and its officers, directors, employees,
affiliates, or agents thereof in either a professional or personal manner.  Employer acknowledges and agrees that during
Executive’s employment and for all time thereafter, Employer will not defame or
publicly criticize Executive either in a professional or personal manner,
except as may be necessary to defend Employer from comments made by or on behalf
of Executive.

 

(g)                                 Executive recognizes and agrees that any works
of authorship, databases, discoveries, developments, improvements, computer
programs, or any other intellectual property rights whatsoever that Executive
makes or conceives, or has made or conceived, solely or jointly, during the
period of Executive’s employment with Employer, whether or not patentable or
registerable under copyright, trademark or similar statutes, which either (i) are
related to or useful in the current or anticipated business or activities of
Employer; (ii) fall within Executive’s responsibilities as employed by
Employer; or (iii) are otherwise developed by Executive through the use of
Employer’s Confidential Information, equipment, software or other facilities or
resources or at times during which Executive is or has been an employee (“Works”) constitute “work for hire” under
the United States Copyright Act, as amended. 
If for any reason any portion of the Works shall be deemed not to be a “work
for hire,” then Executive hereby assigns to Employer all rights, title and
interest therein and shall cooperate to establish Employer’s ownership rights,
including the execution of all documents necessary to establish Employer’s
exclusive ownership rights.  Executive
agrees to disclose to Employer his entire right, title and interest in and to
all Works.

 

(h)                                 If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of this Section 6 of the
Agreement, Employer shall have the right and remedy to have the provisions
specifically enforced by any court having jurisdiction, it being acknowledged
and agreed by Executive that the services being rendered hereunder to Employer
are of a special, unique and extraordinary character and that any such breach
or threatened breach will cause irreparable injury to Employer and that money
damages will not provide an adequate remedy to Employer.  Such right and remedy shall be in addition
to, and not in lieu of, any other rights and remedies available to Employer at
law or in equity.  Accordingly, Executive
consents to the issuance of an injunction, whether preliminary or permanent,
consistent with the terms of this Agreement.

 

(i)                                     If, at any time, the provisions of this
Agreement shall be determined to be invalid or unenforceable under any
applicable law, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Agreement shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of activity
as shall be determined to be reasonable and enforceable by the court or other
body having jurisdiction over the matter and Executive and Employer agree that 

 

7

 

this
Agreement as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.

 

7.                                       Compliance with Section 409A.

 

(a)                                  This Agreement shall be interpreted to avoid
any additional tax under Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”).  If any payment or benefit cannot be provided
or made at the time specified herein without incurring sanctions under Section 409A,
then such benefit or payment shall be provided in full at the earliest time
thereafter when such sanctions will not be imposed.

 

(b)                                 Notwithstanding any provision of this
Agreement to the contrary, with respect to in-kind benefits provided or
expenses eligible for reimbursement under this Agreement that are subject to Section 409A,
(i) the benefits provided or the amount of expenses eligible for
reimbursement during any calendar year shall not affect the benefits provided
or expenses eligible for reimbursement in any other calendar year, except as
otherwise provided in U.S. Treasury Regulation §1.409A-3(i)(1)(iv)(B), and (ii) the
reimbursement of an eligible expense shall be made as soon as practicable after
the Executive requests such reimbursement, but not later than the December 31
of the calendar year in which the expense was incurred.

 

8.                                       Miscellaneous.

 

(a)                                  Executive agrees that during the term of this Agreement  unless earlier terminated, he will commit
his full time and energies to the duties imposed hereby; provided, that,
with the prior written approval of the Board, Executive may expend as much of
his personal time on his own ventures or investments, so long as: (i) such
time is not substantial and does not interfere with his ability to perform his
duties hereunder; (ii) such activities do not compete or conflict with the
business of Employer or create a personal conflict of interest to Executive and
(iii) such venture or investment does not transact any business with
Employer without prior disclosure to, and approval by, the Board.

 

(b)                                 Executive represents to Employer that there
are no restrictions or agreements to which he is a party which would be
violated by his execution of this Agreement and his employment hereunder.

 

(c)                                  No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is agreed to
in writing signed by Executive and by a duly authorized officer of Parent, and
such waiver is set forth in writing and signed by the party to be charged.  No waiver by any party hereto at any time of
any breach by the other party hereto of 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 set forth
expressly in this Agreement.  The
respective rights and obligations of the parties hereunder of this 

 

8

 

Agreement
shall survive Executive’s termination of employment and the termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.

 

(d)                                 The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to its conflicts of law principles.

 

(e)                                  Except as provided in Section 6(h) of
this Agreement, any dispute, controversy or claim arising out of or relating to
this Agreement shall be settled by binding arbitration in Niagara Falls, New
York in accordance with the Rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction. 
The parties agree that the only remedies available to Executive under
this Agreement are those that are set forth in Section 5 and the
arbitrator shall have no authority to award any other damages, including,
without limitation, punitive and/or compensatory damages.  The parties further agree that they shall
bear their own attorneys’ fees and related costs arising out of any such
dispute, controversy or claim under this Agreement.

 

(f)                                    For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:

 

If
to Executive:

 

Lee Shannon

P.O. Box 1834

Portland, Oregon 97207

 

If
to Parent:

 

310
Fourth Street

Niagara
Falls, New York (Seneca Nation Territory) 14303

Attn:  Board of Directors and Chief Executive
Officer

 

or
to such other address as any party may have furnished to the others in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

(g)                                 The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.

 

(h)                                 This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

9

 

(i)                                     Except as otherwise provided herein and except
with respect to terms regarding Executive’s relocation assistance, which are
set forth in the Conditional Offer of Employment letter from Parent to
Executive dated April 23, 2010, this Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of such
subject matter.  Except as otherwise
provided herein, any other prior agreement of the parties hereto in respect of
the subject matter contained herein is hereby terminated and cancelled.

 

(j)                                     All payments hereunder shall be subject to any
required withholding of federal, state and local taxes pursuant to any
applicable law or regulation.

 

(k)                                  The section headings in this Agreement are for
convenience of reference only, and they form no part of this Agreement and
shall not affect its interpretation.

 

(l)                                     Executive acknowledges that he has been
afforded an opportunity to consult with his counsel with respect to this Agreement.

 

(m)                               Employer shall have the right at its own
expense to purchase insurance on the life of Executive, in such amounts as it
shall from time to time determine, of which Employer (or its designated
affiliate) shall be the beneficiary. 
Executive shall submit to such physical examinations as may reasonably
be required and shall otherwise cooperate with Employer in obtaining such
insurance.

 

(n)                                 Employer shall indemnify, defend and hold
Executive harmless, including the payment of reasonable attorney’s fees, if the
Employer does not directly provide Executive’s defense, from and against any
and all claims made by anyone, including, but not limited to, a corporate
entity, company, other employee, agent, patron, tribal member, or any other
person, with respect to any claim that asserts as a basis, any acts, omissions,
or other circumstances involving the performance of the Executive of his duties
as an officer of Employer, except for actions of the Executive that are the
basis for termination pursuant to Section 5(a)(iii) of this Agreement
or where indemnification is prohibited by Employer’s Charter or By-laws, as are
in effect on the Commencement Date.

 

(o)                                 Employer shall include Executive in any
directors and officers liability insurance coverage it maintains, including
coverage for legal malpractice.

 

(p)                                 Executive shall become admitted to practice
law in the State of New York promptly following the Commencement Date, and
shall maintain his license to practice law in the State of New York and
maintain his status as a member of the bar in good standing.

 

9.                                       Waiver of Sovereign Immunity.

 

(a)                                  Parent grants a waiver of its sovereign
immunity from suit exclusively to Executive (and his estate in the event of his
death) for the purpose of enforcing this Agreement, or permitting or compelling
arbitration and other remedies as provided 

 

10

 

herein.  This waiver is solely for the benefit of the
aforesaid parties and for no other person or entity.  For this limited purpose, Parent consents to
be sued solely with respect to the enforcement of any decision by an arbitrator
relating to this Agreement as provided in Section 8 of this Agreement in
the United States District Court for the Western District of New York.

 

(b)                                 Parent hereby waives any requirement of
exhaustion of tribal remedies, and agrees that it will not present any
affirmative defense in any dispute based on any alleged failure to exhaust such
remedies.  Without in any way limiting
the generality of the foregoing, Parent expressly authorizes any governmental
authorities who have the right and duty under applicable law to take any action
authorized or ordered by any court, to take such action, including, without
limitation, repossessing any property and equipment subject to a security
interest or otherwise giving effect to any judgment entered; provided, however
that Parent does not hereby waive the defense of sovereign immunity with
respect to any action by third parties.

 

(c)                                  Parent’s waiver of immunity from suit is
irrevocable and specifically limited to the remedies provided in Section 5
of this Agreement regarding liquidated damages. 
Any monetary award related to any such action shall be satisfied solely
from the net income of Parent.

 

(d)                                 Notwithstanding anything in this Agreement to
the contrary, this waiver is to be interpreted in a manner consistent with
Parent’s ability to enter into this Agreement, including, without limitation,
this Section 9, as provided in the Charter of Parent, as it may be amended
from time to time.  Accordingly, the
Nation shall not be liable for the debts or obligations of Parent, and Parent
shall have no power to pledge or encumber the assets of the Nation.  Furthermore, this Section 9 does not
constitute a waiver of any immunity of the Nation or a delegation to Parent of
the power to make any such waiver. This Section 9 shall be strictly
construed with a view toward protecting the Nation’s assets from the reach of
creditors and others.

 

[Signature
Page Follows]

 

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EXECUTED,
as of the date first written above.

 

 

	
  SENECA
  GAMING CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  Catherine Walker

  	
   

  
	
  Name:
  Catherine Walker

  	
   

  
	
  Title:
  President and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTIVE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Lee K. Shannon

  	
   

  
	
  Name:
  Lee K. Shannon

  	
   

  

 

 

Exhibit A

 

Description of Duties

 

Seneca Gaming Corporation

JOB DESCRIPTION

FINAL DRAFT

 

	
  POSITION:

  	
   

  	
  Senior
  VP & General Counsel

  
	
  DEPARTMENT:

  	
   

  	
  Executive

  
	
  REPORTS
  TO:

  	
   

  	
  President/CEO
  and Board of Directors

  
	
  GAMING
  LICENSE RANK:

  	
   

  	
  Key

  
	
  PROJECTED
  EMPLOYEES (FTE):

  	
   

  	
  1

  
	
  EFFECTIVE
  DATE:

  	
   

  	
  8/1/04

  
	
  REVISION
  DATE:

  	
   

  	
  5/25/10

  
	
  JOB
  SALARY GRADE:

  	
   

  	
  S-43

  

 

JOB SUMMARY:

 

The
Sr. Vice President & General Counsel of the Seneca Gaming Corporation
oversees and directs all of the legal activities of the Company and its
subsidiaries including coordinating and managing outside legal counsel.  All duties are performed within the
guidelines of Seneca Gaming Corporation’s Policies and Procedures, Internal
Control Standards, and objectives.

 

ESSENTIAL FUNCTIONS AND RESPONSIBILITIES:

 

1.               Develop, mentor and train
enrolled Seneca Nation members for future senior leadership positions with the
legal department.

2.               Direct legal activities of
the Company and its outside legal counsel.

3.               Assist the Nation’s
Department of Justice if needed with issues concerning Federal Agencies,
including the Department of Justice, the National Indian Gaming Commission and
the Department of the Interior and Bureau of Indian Affairs.

4.               Provide counsel and
direction to the Company and its Board of Directors on all legal matters.

5.               Coordinate with the CFO
pertaining to compliance by the Company and its employees with the regulations
of the Securities & Exchange Commission, including Sarbanes-Oxley.

6.               Prepare and review leases
and contracts.  If required, coordinate
outside legal counsel efforts regarding these matters.

7.               Maintain relationship with
Nation’s Council and legal advisors, and provide all requested information to
Council, as requested by it from time to time.

8.               Oversee the risk management
function and all related insurance and claims issues.

9.               Oversee the compliance
department function and all related regulatory issues.

10.         Study, interpret, and apply
appropriate law, court decisions and other appropriate legal alternatives in
the preparation of cases, legal opinions and litigation pleadings as necessary.

11.         Provide advice and guidance
regarding lawsuits filed in Federal and State Courts against or on behalf of
SGC and its subsidiaries.  Prepare
necessary legal pleadings, or coordinate outside legal counsel efforts
regarding these matters.

 

 

12.         Is directly responsible for
the control of outside legal counsel fees, including hours billed, hourly
rates, level of attorney experience, and retainers.

13.         Is responsible for the
achievement of Legal Department’s operating budget.

14.         Maintain positive working
relationship with co-workers, outside legal counsel, and government officials.

15.         Maintain an open
relationship with the Nations Council and provide all necessary information to
the council as requested from time to time.

16.         Oversee the legal department’s
counsel to the SARCS Committee, providing guidance regarding the Company’s
compliance with current termination and suspicious transaction reporting.

17.         Other duties as assigned by
the President/CEO and SGC Board of Directors.

18.         Maintain a current
understanding of all policy and guidelines regarding information security
including the Seneca Gaming Corporation Acceptable Use Policy.  Understand and comply with all information
security policies and procedures at all times.

19.         Provide exceptional customer
service to all patrons and communicate in a pleasant, friendly and professional
manner at all times.  Maintain a
professional work environment with supervisors, managers and staff.

20.         Meet the attendance
guidelines of the job and adhere to regulatory, departmental and company
policies.

21.         Must complete all required
SGC Training programs within nine (9) months from commencement of
employment.

22.         Attend all necessary
meetings.

23.         Duties, responsibilities,
requirements and expectations pertaining to this job are subject to change as
needed.  Hours are determined by a
24-hour schedule.

24.         The department leadership
position requires hours that can extend from 45-50 hours per week, or more, and
be inclusive of work weeks that consist of 6 or 7 days.

 

QUALIFICATIONS/REQUIREMENTS:

 

To perform this job
successfully, the incumbent must be able to perform each of the essential
duties and responsibilities satisfactorily. The requirements listed below are
representative of the knowledge, skill, and/or ability required.

 

Education/Experience:

 

1.               Must be 18 years of age or older upon employment.

2.               A LLD or JD from a
recognized law school.

3.               A minimum of seven (7) to
ten (10) years of relevant experience with a background in Indian/Native
American law.

4.               Excellent oral, written,
analytical, and organizational skills are required.

5.               Successful candidate must be
results oriented, and a hands-on professional.

6.               Have the ability to read,
analyze, and interpret complex documents, and provide legal guidance regarding
such matters.

7.               Must be capable of defining
problems, collection of data, establishing facts, and drawing valid conclusions
and providing solutions.

8.               Must demonstrate leadership
skills.

9.               Admission to New York Bar..

10.         Applicant must be able to
substantiate a safe driving record within the parameters acceptable to our
liability insurance carrier.

 

14

 

Language
Skills and Reasoning Ability:

 

1.               Excellent communication
skills required.

2.               Must be capable to write
clearly about complex issues.

3.               Must be able to interact
with a diverse group of people.

4.               Must be capable of dealing
effectively with people.

 

Physical
Requirements and Work Environment:

 

The
physical demands described here are representative of those that must be met by
an employee to successfully perform the essential functions of this job. The
work environment characteristics described here are representative of those an
employee encounters while performing the essential functions of this job.  Reasonable accommodations may be made to
enable individuals with disabilities to perform the essential functions.  The noise level in the work environment is
usually moderately loud. When on the casino floor, the noise levels increase to
loud.  Must be able to work in an
environment where smoking is permitted.

 

1.               Must be able to stand, walk,
and move through all areas of the casino.

2.               Maintain physical stamina
and proper mental attitude to work under pressure in a fast-paced, casino
environment and effectively deal with customers, management, employees, and
members of the business community in all situations.

 

Other:

 

1.               Must be able to be approved
for and maintain a valid Key license.

2.               Must be able to read, write,
speak and understand English. Must be able to respond to visual and aural cues.

3.               Work nights, weekends and
holidays as required.

4.               Employment is contingent
upon a favorable outcome of a background investigation and drug screening.

5.               Preference in filling
vacancies is given to qualified members of the Seneca Nation of Indians or
qualified Native American candidates in accordance with the Indian Preference
Act (25 USC 472).  The Seneca Nation of
Indians and the Seneca Gaming Corporation are also committed to achieving full
equal opportunity without discrimination based on race, religion, color,
gender, national origin, politics, marital status, physical disability, age or
sexual orientation.

 

15

 

Exhibit B

 

Form of Release

 

See Attached.

 

16

 

RELEASE OF ALL CLAIMS

 

Release of
Claims by Executive.

 

It is understood and agreed
by the Seneca Gaming Corporation (the “Company”), a
governmental instrumentality of the Seneca Nation of Indians of New York, and
                    
(“Executive”), that in consideration of
the mutual promises and covenants contained in this general release of all
claims (the “Release Agreement”), Executive, on
behalf of Executive and Executive’s agents, representatives, administrators,
receivers, trustees, estates, heirs, devisees, assignees, legal
representatives, and attorneys, past or present (as the case may be), hereby
irrevocably and unconditionally releases, discharges, and acquits all the
Released Parties (as defined below) from any and all claims, promises, demands,
liabilities, contracts, debts, losses, damages, attorneys’ fees and causes of
action of every kind and nature, known and unknown, up to and including the Effective
Date (as defined below), provided, however, that any claims arising after the
Effective Date from the then present effect of acts or conduct occurring on or
before the Effective Date shall be deemed released under this agreement,
including but not limited to causes of action, claims or rights arising out of,
or which might be considered to arise out of or to be connected in any way with
(i) Executive’s employment or service with the Company and, to the extent
applicable, a Released Party, or the termination thereof; (ii) the
Employment Agreement dated as of
                    
      , 20     between the
Company and Executive, or the termination thereof; (iii) any treatment of
Executive by any of the Released Parties, which shall include, without limitation,
any treatment or decisions with respect to hiring, placement, promotion,
discipline, work hours, demotion, transfer, termination, compensation,
performance review, or training; (iv) any statements or alleged statements
by the Company or any of the Released Parties regarding Executive, whether oral
or in writing; (v) any damages or injury that Executive may have suffered,
including without limitation, emotional or physical injury, compensatory
damages, or lost wages; (vi) employment discrimination, which shall
include, without limitation, any individual or class claims of discrimination
on the basis of age, disability, sex, race, religion, national origin,
citizenship status, marital status, sexual preference, or any other basis
whatsoever; or (vii) all such other claims that Executive could assert
against any, some, or all of the Released Parties in any forum, whether such
claims are known or unknown, accrued or unaccrued, liquidated or contingent,
direct or indirect.

 

Said release shall be
construed as broadly as possible and shall also extend to release the Released
Parties, without limitation, from any and all claims that Executive has alleged
or could have alleged, whether known or unknown, accrued or unaccrued, against
any Released Party for violation(s) of any of the following, to the extent
applicable: the National Labor Relations Act, as amended; Title VII of the
Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act;
the Civil Rights Act of 1991; Sections 1981-1988 of Title 42 of the United
States Code; the Equal Pay Act; the Employee Retirement Income Security Act of
1974, as amended; the Immigration Reform Control Act, as amended; the Americans
with Disabilities Act of 1990, as amended; the Fair Labor Standards Act, as
amended; the Occupational Safety and Health Act, as amended; the Older Workers
Benefit Protection Act of 1990; the Rehabilitation Act of 1973; the
Consolidated Omnibus Budget Reconciliation Act of 1985; the New York Human
Rights Law; the New York City Human Rights Law; the New York Labor Law; the New
York Whistleblower Protection Law; the New York Wage and Hour Laws; the New
York City

 

 

Administrative Code; any
other tribal, federal, state, or local law or ordinance; any public policy,
whistleblower, contract, tort, or common law; and any demand for costs or
litigation expenses, including but not limited to attorneys’ fees.

 

The term “Released Parties” or “Released Party”
as used herein shall mean and include: the Company and the Company’s parents,
subsidiaries, affiliates, and all of their predecessors and successors
(collectively, the “Released Entities”),
and with respect to each such Released Entity, all of its former, current, and
future officers, directors, agents, representatives, employees, servants,
owners, shareholders, partners, joint venturers, attorneys, insurers,
administrators, and fiduciaries, and any other persons acting by, through,
under, or in concert with any of the persons or entities listed herein.

 

Pursuant to the Older
Workers Benefit Protection Act of 1990, Executive understands and acknowledges
that by executing this Release Agreement and releasing all claims against any
of the Released Parties, Executive has waived any and all rights or claims that
Executive has or could have against any Released Party under the Age
Discrimination in Employment Act, which includes any claim that any Released
Party discriminated against Executive on account of Executive’s age. Executive
also acknowledges the following:

 

(a)                                  The Company, by
this written Release Agreement, has advised Executive to consult with an
attorney prior to executing this Release Agreement;

 

(b)                                 This Release
Agreement does not include claims arising after the Effective Date, provided,
however, that any claims arising after the Effective Date from the then present
effect of acts or conduct occurring on or before the Effective Date shall be
deemed released under this Release Agreement;

 

(c)                                  The Company has
provided Executive the opportunity to review and consider this Release Agreement
for twenty-one (21) days from the date Executive receives this Release
Agreement. At Executive’s option and sole discretion, Executive may waive the
twenty-one (21) day review period and execute this Release Agreement before the
expiration of twenty-one (21) days. If Executive elects to waive the twenty-one
(21) day review period, Executive acknowledges and admits that Executive was
given a reasonable period of time within which to consider this Release
Agreement and Executive’s waiver is made freely and voluntarily, without duress
or any coercion by any other person; and

 

(d)                                 Executive may
revoke this Release Agreement within a period of seven (7) days after
execution of the agreement. Executive agrees that any such revocation is not
effective unless it is made in writing and delivered to the Company, to the
attention of the Chief Executive Officer of the Seneca Gaming Corporation, 310
Fourth Street, Niagara Falls, New York (Seneca Nation Territory) 14303, by the
end of the seventh (7th) calendar day. Under any such valid revocation,
Executive shall not be entitled to any benefits under this Release Agreement
and this Release Agreement shall become null and void. This Release Agreement
becomes effective on the eighth (8th) calendar day after it is executed by both
parties (the 

 

 

“Effective
Date”).

 

Executive confirms that no
claim, charge, or complaint against any of the Released Parties, brought by
Executive, exists before any federal, state, or local court or administrative
agency. Executive hereby waives Executive’s right to accept any relief or
recovery, including costs and attorney’s fees, from any charge or complaint
before any federal, state, or local court or administrative agency against any
of the Released Parties, except as such waiver is prohibited by law.

 

Executive agrees that
Executive will not, unless otherwise prohibited by law, at any time hereafter,
participate in as a party, or permit to be filed by any other person on
Executive’s behalf or as a member of any alleged class of persons, any action
or proceeding of any kind, against the Released Parties or any past, present or
future employee benefit and/or pension plans or funds of the Released Entities
with respect to any act, omission, transaction or occurrence up to and
including the date of the execution of this Release Agreement. Executive
further agrees that Executive will not seek or accept any award or settlement
from any source or proceeding with respect to any claim or right covered by
this paragraph or by the Release Agreement and that this Release Agreement
shall act as a bar to recovery in any such proceedings.

 

Executive agrees that
neither this Release Agreement nor the furnishing of the consideration for the
general release set forth in this Release Agreement shall be deemed or
construed at any time for any purpose as an admission by the Released Parties
of any liability or unlawful conduct of any kind. Executive further
acknowledges and agrees that the consideration provided for herein is adequate
consideration for Executive’s obligations under this Release Agreement.

 

Miscellaneous.

 

This Agreement and all
questions relating to its validity, interpretation, performance and enforcement
shall be governed by and construed in accordance with the laws of the State of
New York without regard to its conflicts of law principles. If any provision of
the Release Agreement other than the general release set forth above, is
declared legally or factually invalid or unenforceable by any court of
competent jurisdiction and if such provision cannot be modified to be
enforceable to any extent or in any application, then such provision
immediately shall become null and void, leaving the remainder of this Release
Agreement in full force and effect. If any portion of the general release set forth
in this Release Agreement is declared to be unenforceable by a court of
competent jurisdiction in any action in which Executive participates or joins,
Executive agrees that all consideration paid to Executive under this Release
Agreement shall be offset against any monies that Executive may receive in
connection with any such action.

 

This Release Agreement sets
forth the entire agreement between Executive and the Released Parties and it
supersedes any and all prior agreements or understandings with respect to the
subject matter hereof, whether written or oral, between the parties, except as
otherwise specified in this Release Agreement. Executive acknowledges that
Executive has not relied on any representations, promises, or agreements of any
kind made to him in connection with Executive’s decision to sign this Release
Agreement, except for those set forth in this Release Agreement.

 

 

This Release Agreement may
not be amended except by a written agreement signed by both parties, which
specifically refers to this Release Agreement.

 

EXECUTIVE ACKNOWLEDGES THAT
EXECUTIVE CAREFULLY HAS READ THIS RELEASE AGREEMENT; THAT EXECUTIVE HAS HAD THE
OPPORTUNITY TO THOROUGHLY DISCUSS ITS TERMS WITH COUNSEL OF EXECUTIVE’S
CHOOSING; THAT EXECUTIVE FULLY UNDERSTANDS ITS TERMS AND ITS FINAL AND BINDING
EFFECT; THAT THE ONLY PROMISES MADE TO SIGN THIS RELEASE AGREEMENT ARE THOSE
STATED AND CONTAINED IN THIS RELEASE AGREEMENT; AND THAT EXECUTIVE IS SIGNING
THIS RELEASE AGREEMENT KNOWINGLY AND VOLUNTARILY. EXECUTIVE STATES THAT
EXECUTIVE IS IN GOOD HEALTH AND IS FULLY COMPETENT TO MANAGE EXECUTIVE’S
BUSINESS AFFAIRS AND UNDERSTANDS THAT EXECUTIVE MAY BE WAIVING SIGNIFICANT
LEGAL RIGHTS BY SIGNING THIS RELEASE AGREEMENT.

 

[Signature
Page Follows]

 

 

IN WITNESS WHEREOF, Executive
has executed this Release Agreement as of the date set forth below.

 

	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sworn to and subscribed
  before me

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  this     day
  of                         ,
  20     .

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Notary
  Public

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACCEPTED AND ACKNOWLEDGED
  BY SENECA GAMING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Date:Exhibit 10.1

 

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of August 2, 2010

among

SUMMER INFANT, INC.,

SUMMER
INFANT (USA), INC.,

KIDDOPOTAMUS &
COMPANY,

as Borrowers,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and L/C Issuer,

RBS CITIZENS, NATIONAL ASSOCIATION,

as Collateral Agent,

and

The Other Lenders Party Hereto

 

 

 

 

 

 

 

TABLE OF
CONTENTS

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
  1.01

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
  Other Interpretive Provisions

  	
   

  	
  23

  
	
  1.03

  	
  Accounting Terms

  	
   

  	
  24

  
	
  1.04

  	
  Rounding

  	
   

  	
  25

  
	
  1.05

  	
  Times of Day

  	
   

  	
  25

  
	
  1.06

  	
  Letter of Credit Amounts

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE II. THE COMMITMENTS
  AND CREDIT EXTENSIONS

  	
   

  	
  25

  
	
  2.01

  	
  Committed Loans

  	
   

  	
  25

  
	
  2.02

  	
  Borrowings, Conversions and
  Continuations of Committed Loans

  	
   

  	
  25

  
	
  2.03

  	
  Letters of Credit

  	
   

  	
  27

  
	
  2.04

  	
  Swing Line Loans

  	
   

  	
  35

  
	
  2.05

  	
  Prepayments

  	
   

  	
  38

  
	
  2.06

  	
  Termination or Reduction of Commitments

  	
   

  	
  40

  
	
  2.07

  	
  Repayment of Principal

  	
   

  	
  41

  
	
  2.08

  	
  Interest

  	
   

  	
  41

  
	
  2.09

  	
  Fees

  	
   

  	
  42

  
	
  2.10

  	
  Computation of Interest and Fees;
  Retroactive Adjustments of Applicable Rate

  	
   

  	
  42

  
	
  2.11

  	
  Evidence of Debt

  	
   

  	
  43

  
	
  2.12

  	
  Payments Generally;
  Administrative Agent’s Clawback

  	
   

  	
  43

  
	
  2.13

  	
  Sharing of Payments

  	
   

  	
  45

  
	
  2.14

  	
  Increase in Commitments

  	
   

  	
  46

  
	
  2.15

  	
  Cash Collateral

  	
   

  	
  47

  
	
  2.16

  	
  Defaulting Lenders

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III. TAXES, YIELD
  PROTECTION AND ILLEGALITY

  	
   

  	
  50

  
	
  3.01

  	
  Taxes

  	
   

  	
  50

  
	
  3.02

  	
  Illegality

  	
   

  	
  53

  
	
  3.03

  	
  Inability to Determine Rates

  	
   

  	
  54

  
	
  3.04

  	
  Increased Costs; Reserves on
  Eurodollar Rate Loans

  	
   

  	
  54

  
	
  3.05

  	
  Compensation for Losses

  	
   

  	
  56

  
	
  3.06

  	
  Mitigation Obligations

  	
   

  	
  56

  
	
  3.07

  	
  Survival

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV. CONDITIONS
  PRECEDENT TO CREDIT EXTENSIONS

  	
   

  	
  57

  
	
  4.01

  	
  Conditions of Initial Credit
  Extension

  	
   

  	
  57

  
	
  4.02

  	
  Conditions to all Credit
  Extensions

  	
   

  	
  60

  
	
  4.03

  	
  Conditions to Credit Extension
  for Acquisition

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V. REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  62

  
	
  5.01

  	
  Existence, Qualification and
  Power

  	
   

  	
  62

  

 

 

	
  5.02

  	
  Authorization; No Contravention

  	
   

  	
  62

  
	
  5.03

  	
  Governmental Authorization; Other
  Consents

  	
   

  	
  63

  
	
  5.04

  	
  Binding Effect

  	
   

  	
  63

  
	
  5.05

  	
  Financial Statements; No Material
  Adverse Effect

  	
   

  	
  63

  
	
  5.06

  	
  Litigation

  	
   

  	
  63

  
	
  5.07

  	
  No Default

  	
   

  	
  64

  
	
  5.08

  	
  Ownership of Property; Liens

  	
   

  	
  64

  
	
  5.09

  	
  Environmental Compliance

  	
   

  	
  64

  
	
  5.10

  	
  Insurance

  	
   

  	
  64

  
	
  5.11

  	
  Taxes

  	
   

  	
  64

  
	
  5.12

  	
  ERISA Compliance

  	
   

  	
  64

  
	
  5.13

  	
  Subsidiaries

  	
   

  	
  65

  
	
  5.14

  	
  Margin Regulations; Investment
  Company Act

  	
   

  	
  65

  
	
  5.15

  	
  Disclosure

  	
   

  	
  66

  
	
  5.16

  	
  Compliance with Laws

  	
   

  	
  66

  
	
  5.17

  	
  Taxpayer Identification Number

  	
   

  	
  66

  
	
  5.18

  	
  Intellectual Property; Licenses,
  Etc.

  	
   

  	
  66

  
	
  5.19

  	
  Rights in Collateral; Priority of
  Liens

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI. AFFIRMATIVE
  COVENANTS

  	
   

  	
  67

  
	
  6.01

  	
  Financial Statements

  	
   

  	
  67

  
	
  6.02

  	
  Certificates; Other Information

  	
   

  	
  68

  
	
  6.03

  	
  Notices

  	
   

  	
  69

  
	
  6.04

  	
  Payment of Obligations

  	
   

  	
  70

  
	
  6.05

  	
  Preservation of Existence, Etc.

  	
   

  	
  70

  
	
  6.06

  	
  Maintenance of Properties

  	
   

  	
  70

  
	
  6.07

  	
  Maintenance of Insurance

  	
   

  	
  70

  
	
  6.08

  	
  Compliance with Laws

  	
   

  	
  71

  
	
  6.09

  	
  Books and Records

  	
   

  	
  71

  
	
  6.10

  	
  Inspection Rights

  	
   

  	
  71

  
	
  6.11

  	
  Use of Proceeds

  	
   

  	
  71

  
	
  6.12

  	
  Financial Covenants

  	
   

  	
  71

  
	
  6.13

  	
  Guarantors

  	
   

  	
  72

  
	
  6.14

  	
  Collateral Records

  	
   

  	
  72

  
	
  6.15

  	
  Security Interests

  	
   

  	
  72

  
	
  6.16

  	
  Agent as Primary Depository

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII. NEGATIVE COVENANTS

  	
   

  	
  73

  
	
  7.01

  	
  Liens

  	
   

  	
  73

  
	
  7.02

  	
  Investments

  	
   

  	
  74

  
	
  7.03

  	
  Indebtedness

  	
   

  	
  74

  
	
  7.04

  	
  Fundamental Changes

  	
   

  	
  75

  
	
  7.05

  	
  Dispositions

  	
   

  	
  75

  
	
  7.06

  	
  Restricted Payments

  	
   

  	
  76

  
	
  7.07

  	
  Change in Nature of Business

  	
   

  	
  76

  
	
  7.08

  	
  Transactions with Affiliates

  	
   

  	
  76

  
	
  7.09

  	
  Burdensome Agreements

  	
   

  	
  77

  
	
  7.10

  	
  Use of Proceeds

  	
   

  	
  77

  

 

ii

 

	
  ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

  	
   

  	
  77

  
	
  8.01

  	
  Events of Default

  	
   

  	
  77

  
	
  8.02

  	
  Remedies Upon Event of Default

  	
   

  	
  79

  
	
  8.03

  	
  Application of Funds

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX. ADMINISTRATIVE AGENT

  	
   

  	
  81

  
	
  9.01

  	
  Appointment and Authorization of
  Administrative Agent

  	
   

  	
  81

  
	
  9.02

  	
  Rights as a Lender

  	
   

  	
  81

  
	
  9.03

  	
  Exculpatory Provisions

  	
   

  	
  82

  
	
  9.04

  	
  Reliance by Administrative Agent

  	
   

  	
  82

  
	
  9.05

  	
  Delegation of Duties

  	
   

  	
  83

  
	
  9.06

  	
  Resignation of Administrative
  Agent

  	
   

  	
  83

  
	
  9.07

  	
  Non-Reliance on Administrative
  Agent and Other Lenders

  	
   

  	
  84

  
	
  9.08

  	
  No Other Duties, Etc.

  	
   

  	
  84

  
	
  9.09

  	
  Administrative Agent
  May File Proofs of Claim

  	
   

  	
  84

  
	
  9.10

  	
  Collateral Matters

  	
   

  	
  85

  
	
  9.11

  	
  Secured Cash Management
  Agreements and Secured Hedge Agreements

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X. MISCELLANEOUS

  	
   

  	
  87

  
	
  10.01

  	
  Amendments

  	
   

  	
  87

  
	
  10.02

  	
  Notices; Effectiveness;
  Electronic Communications

  	
   

  	
  89

  
	
  10.03

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  91

  
	
  10.04

  	
  Expenses; Indemnity; Damage
  Waiver

  	
   

  	
  91

  
	
  10.05

  	
  Payments Set Aside

  	
   

  	
  93

  
	
  10.06

  	
  Successors and Assigns

  	
   

  	
  93

  
	
  10.07

  	
  Treatment of Certain Information;
  Confidentiality

  	
   

  	
  98

  
	
  10.08

  	
  Right of Setoff

  	
   

  	
  98

  
	
  10.09

  	
  Interest Rate Limitation

  	
   

  	
  99

  
	
  10.10

  	
  Counterparts; Integration;
  Effectiveness

  	
   

  	
  99

  
	
  10.11

  	
  Survival of Representations and
  Warranties

  	
   

  	
  99

  
	
  10.12

  	
  Severability

  	
   

  	
  100

  
	
  10.13

  	
  Replacement of Lenders

  	
   

  	
  100

  
	
  10.14

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  	
  101

  
	
  10.15

  	
  Waiver of Jury Trial

  	
   

  	
  101

  
	
  10.16

  	
  No Advisory or Fiduciary
  Responsibility

  	
   

  	
  102

  
	
  10.17

  	
  USA PATRIOT Act Notice

  	
   

  	
  102

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI.
  APPOINTMENT OF THE BORROWER REPRESENTATIVE, JOINT AND SEVERAL LIABILITY OF
  THE BORROWERS

  	
   

  	
  103

  
	
  11.01

  	
  Borrower Representative

  	
   

  	
  103

  
	
  11.02

  	
  Joint and Several Liability of Borrowers

  	
   

  	
  103

  

 

iii

 

	
  SCHEDULES

  	
   

  	
   

  
	
  2.01

  	
  Commitments
  and Applicable Percentages

  	
   

  	
   

  
	
  4.01(a)(iv)

  	
  Landlord
  Waiver Sites

  	
   

  	
   

  
	
  5.09

  	
  Environmental
  Matters

  	
   

  	
   

  
	
  5.12(d)

  	
  ERISA
  Disclosures

  	
   

  	
   

  
	
  5.13

  	
  Subsidiaries
  and Other Equity Investments

  	
   

  	
   

  
	
  7.01

  	
  Existing
  Liens

  	
   

  	
   

  
	
  7.03

  	
  Existing
  Indebtedness

  	
   

  	
   

  
	
  10.02

  	
  Administrative
  Agent’s Office, Certain Addresses for Notices

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
  A

  	
  Committed
  Loan Notice

  	
   

  	
   

  
	
  B

  	
  Swing
  Line Loan Notice

  	
   

  	
   

  
	
  C

  	
  Note

  	
   

  	
   

  
	
  D

  	
  Compliance
  Certificate

  	
   

  	
   

  
	
  E

  	
  Assignment
  and Assumption

  	
   

  	
   

  
					

 

 

AMENDED AND
RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”)
is entered into as of August 2, 2010,  among
SUMMER INFANT, INC., a Delaware
corporation (“SI Holdings”), SUMMER
INFANT (USA), INC., a
Rhode Island corporation (“SI USA”) and KIDDOPOTAMUS & COMPANY, a Delaware corporation (“Kiddopotamus”,
and collectively with SI Holdings and SI USA, the “Borrowers” and each
individually a “Borrower”), each lender from time to
time party hereto (collectively, “Lenders” and each
individually, a “Lender”), BANK OF AMERICA, N.A., a national banking association as
Administrative Agent, Swing Line Lender and L/C Issuer, and RBS CITIZENS, NATIONAL ASSOCIATION, as Collateral Agent.

 

RECITALS:

 

Borrowers,
certain Lenders and Administrative Agent are parties to a certain Credit
Agreement dated as of April 10, 2008, as heretofore amended (as amended,
the “Existing Credit Agreement”), pursuant to which certain Lenders
extended to Borrowers a revolving credit loan in the principal amount of up to
$36,000,000 (the “Existing Revolving Credit Loan”), and an acquisition
credit term loan in the principal amount of $10,000,000 (the “Existing
Acquisition Loan”).

 

Borrowers
have requested that Lenders provide a revolving credit facility to consolidate
and increase the Existing Revolving Credit Loan and the Existing Acquisition Loan
into a single revolving credit facility, and to provide other financial
accommodations, and Lenders are willing to do so on the terms and conditions
set forth herein.

 

In
consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby amend and restated the Existing Credit Agreement in its
entirety (but retaining references to
the foregoing Preamble and Recitals), and hereby covenant and agree, as
follows:

 

ARTICLE I.  DEFINITIONS AND ACCOUNTING TERMS

 

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

 

“Acquisition”,
by any Person, means the acquisition by such Person, in a single transaction or
in a series of related transactions, of all or any substantial portion of the
property and assets of another Person or all or a substantial portion of the
equity securities or capital stock of another Person, in each case whether or
not involving a merger or consolidation with such other Person and whether for
cash, property, services, assumption of Indebtedness, securities or otherwise.

 

“Administrative
Agent” or “Agent” means Bank of America, in its capacity as
administrative agent under this Agreement and any of the other Loan Documents,
or any successor administrative agent.

 

“Administrative
Agent Fee Letter” has the meaning specified in Section 2.09(c).

 

 

“Administrative
Agent Parties” has the meaning specified in Section 10.02(c).

 

“Administrative
Agent’s Office” means Administrative Agent’s address and, as appropriate,
account as set forth on Schedule 10.02, or such other address or account
as Administrative Agent may from time to time notify to Borrowers and Lenders.

 

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

 

“Affiliate”
means, with respect to any 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.

 

“Aggregate
Commitments” means the Commitments of all Lenders.

 

“Agreement”
means this Amended and Restated Credit Agreement, as the same may be amended,
restated, supplemented, extended, replaced or otherwise modified from time to
time.

 

“Applicable
Percentage” means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Commitment at such time, subject to adjustment as
provided in Section 2.16.  If
the commitment of each Lender to make Loans and the obligation of the L/C
Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02
or if the Aggregate Commitments have expired, then the Applicable Percentage of
each Lender shall be determined based on the Applicable Percentage of such
Lender most recently in effect, giving effect to any subsequent
assignments.  The initial Applicable
Percentage of each Lender is set forth opposite the name of such Lender on Schedule
2.01 or in the Assignment and Assumption pursuant to which such Lender
becomes a party hereto, as applicable.

 

“Applicable
Rate” means, from time to time, the following percentages per annum, based
upon the Consolidated Leverage Ratio as set forth in the most recent Compliance
Certificate received by Administrative Agent pursuant to Section 6.02(a):

 

Applicable Rate

 

	
  Pricing

  Level

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  	
  Applicable Rate for

  Eurodollar Loans

  and L/C Fees

  	
   

  	
  Applicable Rate

  For Base Rate

  Loans

  	
   

  
	
  1

  	
   

  	
  <2.50:1.00

  	
   

  	
  2.00

  	
  %

  	
  0.00

  	
  %

  
	
  2

  	
   

  	
  >2.50:1.00

  	
   

  	
  2.50

  	
  %

  	
  0.50

  	
  %

  

 

Any increase or decrease in the Applicable Rate
resulting from a change in the Consolidated Leverage Ratio shall become
effective as of the first Business Day of the month immediately following the
date a Compliance Certificate is delivered pursuant to Section 6.02(a);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then, upon the request of
the Required Lenders, Pricing Level 2 shall apply as of the first Business Day
of the month following the date such Compliance Certificate was required to
have been delivered.  The Applicable Rate
in effect from the Closing Date until the first time the 

 

2

 

Applicable Rate is determined in accordance with the
preceding sentence shall be determined based upon Pricing Level 1.

 

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

 

“Assignee
Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment
and Assumption” means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by Section 10.06(b)),
and accepted by Administrative Agent, in substantially the form of Exhibit E
or any other form approved by Administrative Agent.

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and (b) in
respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.

 

“Audited
Financial Statements” means the audited consolidated and consolidating
balance sheet of Borrowers and their Subsidiaries for the fiscal year ended December 31, 2009, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of Borrowers and their Subsidiaries,
including the notes thereto.

 

“Auto-Reinstatement
Letter of Credit” has the meaning specified in Section 2.03(b)(v).

 

“Availability
Period” means the period from and including the Closing Date to the earliest
of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the
date of termination of the commitment of each Lender to make Loans and of the
obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Bank
of America” means Bank of America, N.A., a national banking association,
and its successors.

 

“Base
Rate” means for any day a fluctuating rate per annum equal to the highest
of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its “prime rate”, and (c) the Eurodollar Rate plus
2.00%.  The “prime rate” is a rate set by
Bank of America based upon various factors including Bank of America’s costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate.  Any change in
such prime rate announced by Bank of America shall take effect at the opening
of business on the day specified in the public announcement of such change.

 

3

 

“Base
Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

 

“Base
Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Basic
Fixed Charge Coverage Ratio” means the ratio, calculated on a consolidated
basis, of (a) the sum of Consolidated EBITDA plus lease expense and
rent expense, minus income tax, unfinanced capital expenditures,
dividends, withdrawals, and other distributions, to (b) the sum of
Consolidated Interest Charges, lease expense, rent expense, the current portion
of long term liabilities and the current portion of capitalized lease
obligations.

 

“Borrower(s)”
has the meaning specified in the introductory paragraph hereto.

 

“Borrower
Materials” has the meaning specified in Section 6.02.

 

“Borrower
Representative” means SI Holdings, in its capacity as agent for and
representative of Borrowers.

 

“Borrowing”
means a Committed Borrowing or a Swing Line Borrowing, as the context may
require.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where Administrative Agent’s Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day that is also a
London Banking Day.

 

“Cash
Collateralize” means to pledge and deposit with or deliver to
Administrative Agent, for the benefit of Administrative Agent, L/C Issuer or
Swing Line Lender (as applicable) and Lenders, as collateral for L/C
Obligations, Obligations in respect of Swing Line Loans, or obligations of
Lenders to fund participations in respect of either thereof (as the context may
require), cash or deposit account balances or, if the L/C Issuer or Swing Line
Lender benefiting from such collateral shall agree in its sole discretion,
other credit support, in each case pursuant to documentation in form and
substance satisfactory to (a) Administrative Agent and (b) L/C Issuer
or Swing Line Lender (as applicable).  “Cash
Collateral” shall have a meaning correlative to the foregoing and shall
include the proceeds of such cash collateral and other credit support.

 

“Cash Equivalents” means any
of the following types of Investments, to the extent owned by a Borrower or any
Subsidiary free and clear of all Liens (other than Liens created under the
Collateral Documents and other Liens
permitted hereunder):

 

(a)           readily marketable obligations issued
or directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof having maturities of not more than 360
days from the date of acquisition thereof; provided that the full faith and credit of the United States of
America is pledged in support thereof;

 

(b)           subject to Section 6.16,
time deposits with, or insured certificates of deposit or bankers’ acceptances
of, any commercial bank that (i) (A) is a Lender or (B) is
organized under the laws of the United States of America, any state thereof or
the District of Columbia or is the principal banking subsidiary of a bank
holding company organized under the laws of the United 

 

4

 

States
of America, any state thereof or the District of Columbia, and is a member of
the Federal Reserve System, (ii) issues (or the parent of which issues)
commercial paper rated as described in clause (c) of this definition and
(iii) has combined capital and surplus of at least $1,000,000,000, in each
case with maturities of not more than 90
days from the date of acquisition thereof;

 

(c)           commercial paper issued by any Person
organized under the laws of any state of the United States of America and rated
at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1”
(or the then equivalent grade) by S&P, in each case with maturities of
not more than 180 days from the date of acquisition thereof; and

 

(d)           Investments, classified in accordance
with GAAP as current assets of any Borrower or any of its Subsidiaries, in
money market investment programs registered under the Investment Company Act of
1940, which are administered by financial institutions that have the highest
rating obtainable from either Moody’s or S&P, and the portfolios of which
are limited solely to Investments of the character, quality and maturity
described in clauses (a), (b) and (c) of this definition.

 

“Cash
Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.

 

“Cash
Management Bank” means Bank of America or any of its Affiliates.

 

“Change
in Law” means the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or
treaty 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.

 

“Change
of Control” means an event or series of events by which:

 

(a)           any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a 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 (such right, an “option right”)), directly or indirectly,
of 25% or more of the equity securities of a Borrower entitled to vote for
members of the board of directors or equivalent governing body of such Borrower
on a fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right);

 

(b)           during any period of
24 consecutive months, a majority of the members of the board of directors or
other equivalent governing body of a Borrower cease to be composed of
individuals (i) who were members of that board or equivalent governing 

 

5

 

body
on the first day of such period, (ii) whose election or nomination to that
board or equivalent governing body was approved by individuals referred to in
clause (i) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body or (iii) whose
election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (i) and (ii) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body (excluding, in the case of both clause (ii) and
clause (iii), any individual whose initial nomination for, or assumption of
office as, a member of that board or equivalent governing body occurs as a
result of an actual or threatened solicitation of proxies or consents for the
election or removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors); or

 

(c)           the passage of
thirty days from the date upon which any Person or two or more Persons acting
in concert shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will result in
its or their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of a Borrower, or control
over the equity securities of a Borrower entitled to vote for members of the
board of directors or equivalent governing body of such Borrower on a
fully-diluted basis (and taking into account all such securities that such
Person or group has the right to acquire pursuant to any option right)
representing 25% or more of the
combined voting power of such securities.

 

“Closing
Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Collateral” means any and all assets and
rights and interests in or to property of each Pledging Borrower and each of
the other Loan Parties, whether real or personal, tangible or intangible, in
which a Lien is granted or purported to be granted to Administrative Agent for
the benefit of the Secured Parties pursuant to the Collateral Documents,
including, without limitation, the Security Agreement and the IP Security
Agreements.

 

“Collateral Agent” means RBS Citizens,
National Association, in its capacity as collateral agent under this Agreement.

 

“Collateral Documents” means all agreements,
instruments and documents now or hereafter executed and delivered in connection
with this Agreement pursuant to which Liens are granted or purported to be
granted to Administrative Agent in Collateral securing all or part of the
Obligations each in form and substance satisfactory to Administrative Agent,
and each as may be amended, restated, extended, replaced or otherwise modified
from time to time.

 

“Commitment”
means, as to each Lender, its obligation to (a) make Committed Loans to
Borrowers pursuant to Section 2.01, (b) purchase
participations in L/C Obligations, and (c) purchase participations in
Swing Line Loans, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender’s name on Schedule
2.01 or 

 

6

 

in
the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.

 

“Committed
Borrowing” means a borrowing consisting of simultaneous Committed Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same
Interest Period made by each of Lenders pursuant to Section 2.01.

 

“Committed
Loan” has the meaning specified in Section 2.01.

 

“Committed
Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a
continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A.

 

“Compliance
Certificate” means a certificate substantially in the form of Exhibit D.

 

“Consolidated
EBITDA” means, for any period, for Borrowers and their Subsidiaries on a
consolidated basis, an amount equal to Consolidated Net Income for such period plus
(a) the following to the extent deducted in calculating such Consolidated
Net Income: (i) Consolidated Interest Charges for such period, (ii) the
provision for Federal, state, local and foreign income taxes payable by the
Borrowers and their Subsidiaries for such period, (iii) depreciation and
amortization expense, and (iv) other non-recurring expenses of Borrowers
and their Subsidiaries reducing such Consolidated Net Income which do not
represent a cash item in such period or any future period and minus (b) the
following to the extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits of Borrowers and their Subsidiaries
for such period and (ii) all non-cash items increasing Consolidated Net
Income for such period.

 

“Consolidated
Funded Indebtedness” means, as of any date of determination, for Borrowers
and their Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations evidenced
by bonds, debentures, notes, loan agreements or other similar instruments, (b) all
purchase money Indebtedness, (c) all direct obligations arising under
letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments, (d) all obligations
in respect of the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business), (e) Attributable
Indebtedness in respect of capital leases and Synthetic Lease Obligations, (f) without
duplication, all Guarantees with respect to outstanding Indebtedness of the
types specified in clauses (a) through (e) above of Persons other
than any Borrower or any Subsidiary, and (g) all Indebtedness of the types
referred to in clauses (a) through (f) above of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which any Borrower or a Subsidiary is a general
partner or joint venturer, unless such Indebtedness is expressly made
non-recourse to such Borrower or such Subsidiary.

 

7

 

“Consolidated
Interest Charges” means, for any period, for Borrowers and their
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of Borrowers and
their Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, and (b) the
portion of rent expense of Borrowers and their Subsidiaries with respect to
such period under capital leases that is treated as interest in accordance with
GAAP.

 

“Consolidated
Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated
Funded Indebtedness as of such date to (b) Consolidated
EBITDA for the period of the four (4) fiscal quarters most recently ended.

 

“Consolidated
Net Income” means, for any period, for Borrowers and their Subsidiaries on
a consolidated basis, the net income of Borrowers and their Subsidiaries
(excluding extraordinary gains and extraordinary losses) for that period.

 

“Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

 

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

 

“Credit
Extension” means each of the following: (a) a Borrowing and (b) an
L/C Credit Extension.

 

“Debtor
Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default”
means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of
Default.

 

“Default
Rate” means (a) when used with respect to Obligations other than L/C
Fees an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 4%
per annum; provided, however, that with respect to a Eurodollar
Rate Loan, the Default Rate shall be an interest rate equal to the interest
rate (including any Applicable Rate) otherwise applicable to such Loan plus 4%
per annum, and (b) when used with respect to L/C Fees, a rate equal to the
Applicable Rate plus 4% per annum.

 

“Defaulting
Lender” means, subject to Section 2.16(b), any Lender that, as
determined by Administrative Agent, (a) has failed to perform any of its
funding obligations hereunder, including in respect of its Loans or
participations in respect of Letters of Credit or Swing Line Loans, within
three (3) Business Days of the date required to be funded by it hereunder,
(b) has 

 

8

 

notified
any Borrower, or Administrative Agent or any Lender that it does not intend to
comply with its funding obligations or has made a public statement to that
effect with respect to its funding obligations hereunder or, except in
connection with a good faith dispute, under other agreements in which it
commits to extend credit, (c) has failed, within three (3) Business
Days after request by Administrative Agent, to confirm in a manner satisfactory
to Administrative Agent that it will comply with its funding obligations, or (d) has,
or has a direct or indirect parent company that has, (i) become the
subject of a proceeding under any Debtor Relief Law, (ii) had a receiver,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or a
custodian appointed for it, or (iii) taken any action in furtherance of,
or indicated its consent to, approval of or acquiescence in any such proceeding
or appointment; provided that a Lender shall not be a Defaulting Lender solely
by virtue of the ownership or acquisition of any equity interest in that Lender
or any direct or indirect parent company thereof by a Governmental Authority.

 

“Disposition”
or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

“Dollar(s)”
and “$” mean lawful money of the United States.

 

“Dollar
Equivalent” means on any particular date, with respect to any amount
denominated in Dollars, such amount in Dollars, and with respect to any amount
denominated in any other currency, the amount (as conclusively ascertained by
Lenders absent manifest error) of Dollars which could be purchased by Lenders
(in accordance with its normal banking practices) in the London foreign
currency deposit markets with such amount of such currency at the spot rate of
exchange prevailing at or about 11:00 a.m. (London time) on such date.

 

“Domestic
Subsidiary” means any Subsidiary that is organized under the laws of any
political subdivision of the United States.

 

“Eligible
Assignee” means any Approved Fund or any other Person that meets the
requirements to be an assignee under Section 10.06(b)(iii), (v) and
(vi) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

“Environmental
Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of Borrowers, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure

 

9

 

to
any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Equity
Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the
warrants, options or other rights for the purchase or acquisition from such Person
of shares of capital stock of (or other ownership or profit interests in) such
Person, all of the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are outstanding on any date of
determination.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) under
common control with a Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

 

“ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) the withdrawal of any Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which such
entity was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by any Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA; (e) the institution by the PBGC of proceedings to
terminate a Pension Plan; (f) any event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (g) the
determination that any Pension Plan is considered an at-risk plan or a plan in
endangered or critical status within the meaning of Sections 430, 431 and 432
of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition
of any liability under Title IV of ERISA, other than for PBGC premiums due but
not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA
Affiliate.

 

“Eurodollar
Rate” means:

 

(a)           for any Interest Period with respect to a Eurodollar Rate
Loan, the rate per annum equal to (i) the British Bankers Association
LIBOR Rate (“BBA LIBOR”), as published by Reuters (or such other
commercially available source providing quotations of BBA LIBOR as may be
designated by Administrative Agent from time to time) at approximately 11:00 a.m.,
London time, two London Banking Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period or, (ii) if such
rate is not available at such time for any reason, the rate per annum
determined by Administrative Agent to be the rate at which deposits in Dollars
for 

 

10

 

delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being
made, continued or converted and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the
London interbank eurodollar market at their request at approximately 11:00 a.m.
(London time) two London Banking Days prior to the commencement of such
Interest Period; and

 

(b)           for any interest calculation with respect to a Base Rate
Loan on any date, the rate per annum equal to (i) BBA LIBOR, at
approximately 11:00 a.m., London time determined two London Banking Days
prior to such date for Dollar deposits being delivered in the London interbank
market for a term of one month commencing that day or (ii) if such
published rate is not available at such time for any reason, the rate per annum
determined by Administrative Agent to be the rate at which deposits in Dollars
for delivery on the date of determination in same day funds in the approximate
amount of the Base Rate Loan being made or maintained and with a term equal to
one month would be offered by Bank of America’s London Branch to major banks in
the London interbank Eurodollar market at their request at the date and time of
determination.

 

“Eurodollar
Rate Loan” means a Committed Loan that bears interest at a rate based on
clause (a) of the definition of “Eurodollar Rate.”

 

“Event
of Default” has the meaning specified in Section 8.01.

 

“Excluded
Taxes” means, with respect to Administrative Agent, any Lender, L/C Issuer
or any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable Lending Office is located, (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other
jurisdiction in which any Borrower is located, (c) any backup withholding
tax that is required by the Code to be withheld from amounts payable to a
Lender that has failed to comply with clause (A) of Section 3.01(e)(ii),
and (d) in the case of a Foreign Lender (other than an assignee pursuant
to a request by Borrowers under Section 10.13), any United States  withholding tax that (i) is required to be imposed on
amounts payable to such Foreign Lender pursuant to the Laws in force at the
time such Foreign Lender becomes a party hereto (or designates a new Lending
Office) or (ii) is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law) to comply with clause (B) of
Section 3.01(e)(ii), except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a new
Lending Office (or assignment), to receive additional amounts from Borrowers
with respect to such withholding tax pursuant to Section 3.01(a)(ii) or
(c).

 

“Existing
Acquisition Loan” has the meaning given to such term in the Recitals.

 

“Existing
Credit Agreement” has the meaning given to such term in the Recitals.

 

“Existing
Letters of Credit” means any Letter of Credit issued by L/C Issuer pursuant
to the Existing Credit Agreement and which is outstanding on the Closing Date.

 

11

 

“Existing
Revolving Credit Loan” has the meaning given to such term in the Recitals.

 

“Extraordinary
Receipt” means any cash received by or paid to or for the account of
any Person as proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for
lost earnings) or condemnation awards (and payments in lieu thereof).

 

“FASB
ASC” means the Accounting Standards Codification of the Financial
Accounting Standards Board.

 

“Federal
Funds Rate” means, for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by
Administrative Agent.

 

“Foreign
Lender” means any Lender that is organized under the Laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes (including
such a Lender when acting in the capacity of the L/C Issuer).  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

 

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

 

“Fronting
Exposure” means, at any time there is a Defaulting Lender, (a) with
respect to L/C Issuer, such Defaulting Lender’s Applicable Percentage of the
outstanding L/C Obligations other than L/C Obligations as to which such
Defaulting Lender’s participation obligation has been reallocated to other
Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with
respect to Swing Line Lender, such Defaulting Lender’s Applicable Percentage of
Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s
participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof.

 

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

 

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

12

 

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

 

“Guarantee”
means, as to any Person, any (a) obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such
Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such Person securing any Indebtedness or other obligation
of any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien). 
The amount of any Guarantee shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantor”
means each Domestic Subsidiary (other than Borrowers) of each Borrower, whether
now existing or hereafter formed or organized.

 

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

 

“Hedge
Bank” means any Person that, at the time it enters into a Swap Contract
permitted under this Agreement is a Lender or an Affiliate of a Lender, in its
capacity as a party to such Swap Contract.

 

“Honor
Date” has the meaning specified in Section 2.03(c)(i).

 

“ICC”
has the meaning specified in Section 2.03(h).

 

13

 

“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

 

(a)           all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;

 

(b)           all direct or contingent obligations
of such Person arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments;

 

(c)           net obligations of such Person under
any Swap Contract;

 

(d)           all obligations of such Person to pay
the deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and, in each case, not past due for
more than 60 days after the date
on which such trade account payable was created);

 

(e)           indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse;

 

(f)            capital leases and Synthetic Lease
Obligations;

 

(g)           all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest in such Person or any other Person, valued, in the case of
a redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and

 

(h)           all Guarantees of such Person in
respect of any of the foregoing.

 

For
all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person.  The
amount of any net obligation under any Swap Contract on any date shall be
deemed to be the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitees”
has the meaning specified in Section 10.04(b).

 

“Information”
has the meaning specified in Section 10.07.

 

“Intercompany
Notes” has the meaning specified in the Security Agreement.

 

14

 

“Interest
Payment Date” means:

 

(a)           as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan),
the last Business Day of each March, June, September and December and the
Maturity Date.

 

“Interest
Period” means, as to each Eurodollar Rate Loan, the period commencing on
the date such Eurodollar Rate Loan is disbursed or converted to or continued as
a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by Borrowers in their Committed Loan Notice, or such
other period that is twelve months or less requested by the Borrowers and
consented to by all the Lenders; provided that:

 

(i)            any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;

 

(ii)           any Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

 

(iii)          no Interest Period shall extend beyond
the Maturity Date.

 

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the investor Guarantees
Indebtedness of such other Person, or (c) the purchase or other acquisition (in
one transaction or a series of transactions) of assets of another Person that
constitute a business unit.  For purposes
of covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment.

 

“IP
Security Agreements” has the meaning specified in the Security Agreement.

 

“IRS”
means the United States Internal Revenue Service.

 

“ISP”
means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the time
of issuance).

 

15

 

“Issuer
Documents” means with respect to any Letter of Credit, the L/C Application,
and any other document, agreement and instrument entered into by the L/C Issuer
and a Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating
to such Letter of Credit.

 

“Kiddopotamus”
has the meaning set forth in the Preamble hereto.

 

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“L/C
Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Applicable
Percentage.

 

“L/C
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

“L/C
Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Committed Borrowing.

 

“L/C
Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

 

“L/C
Expiration Date” means the day that is thirty (30) days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).

 

“L/C
Fee” has the meaning specified in Section 2.03(h).

 

“L/C
Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/C
Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the
aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For
purposes of computing the amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06.  For all
purposes of this Agreement, if on any date of determination a Letter of Credit
has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed
to be “outstanding” in the amount so remaining available to be drawn.

 

“L/C
Sublimit” means an amount equal to $5,000,000.  The L/C Sublimit is part of, and not in addition
to, the Aggregate Commitments.

 

16

 

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes Swing Line Lender.

 

“Lending
Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify Borrowers and
Administrative Agent.

 

“Letter
of Credit” means any standby
letter of credit and any commercial letter of credit issued hereunder, and
shall include the Existing Letter(s) of Credit.

 

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the
same economic effect as any of the foregoing).

 

“Loan”
means an extension of credit by a Lender to Borrowers under Article II
in the form of a Committed Loan or a Swing Line Loan.

 

“Loan
Documents” means this Agreement, each Note, each Issuer Document, any
agreement creating or perfecting rights in Cash Collateral pursuant to the
provisions of Section 2.15 of this Agreement, Administrative Agent Fee
Letter, each Collateral Document,
and any other documents which any Loan Party have executed and may execute to
evidence, secure or guarantee the Obligations, as each may be amended from time
to time.

 

“Loan
Parties” means, collectively, Borrowers, each Guarantor and each Person (other
than Administrative Agent, L/C Issuer, Swing Line Lender, or any Lender)
executing a Loan Document or Collateral
Document.

 

“London
Banking Day” means any day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank eurodollar market.

 

“Material
Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of Borrowers or
Borrowers and their Subsidiaries taken as a whole; (b) a material impairment of
the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party; provided, however, that
none of the following shall be deemed to constitute a Material Adverse Effect:
any adverse change, event, development or effect arising from (i) general
economic conditions, including in the United Kingdom or Canada;
(ii) conditions relating to the manufacturing, distribution or sale of
infant and child supplies, equipment or goods; (iii) regional, national or
international political or social conditions, including the engagement by the
United States of America in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military
or terrorist attack upon the United States of America, or any of its
territories, possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States of America 

 

17

 

or
any other national or international hostilities, acts of terror or acts of war;
(iv) financial, banking or securities markets (including any disruption
thereof and any decline in the price of any security or any market index);
(v) changes in GAAP; or (vi) changes in applicable Law.

 

“Maturity
Date” means June 30, 2012;  provided, however,
that if such date is not a Business Day, the Maturity Date shall be the next
preceding Business Day.

 

“Multiemployer
Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

 

“Multiple
Employer Plan” means a Plan which has two or more contributing sponsors
(including the Borrower or any ERISA Affiliate) at least two of whom are not
under common control, as such a plan is described in Section 4064 of
ERISA.

 

“Net
Cash Proceeds” means:

 

(a)           with respect to any Disposition by a Borrower or any Subsidiary, or any
Extraordinary Receipt received or paid to the account of a Borrower  or
any Subsidiary, the excess, if any, of (i) the sum of cash and Cash Equivalents
received in connection with such transaction (including any cash or Cash
Equivalents received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) over (ii)
the sum of (A) the principal amount of any Indebtedness that is secured by the
applicable asset and that is required to be repaid in connection with such
transaction (other than Indebtedness under the Loan Documents), (B) the
reasonable out-of-pocket expenses incurred by Holdings or such Subsidiary in connection with such transaction
and (C) income taxes reasonably estimated to be actually payable within two
years of the date of the relevant transaction as a result of any gain
recognized in connection therewith; provided that, if the amount of any
estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually
required to be paid in cash in respect of such Disposition, the aggregate
amount of such excess shall constitute Net Cash Proceeds; and

 

(b)           with respect to the sale or issuance
of any Equity Interest by a Borrower
or a Subsidiary, or the incurrence or issuance of any Indebtedness by Borrower or a Subsidiary, the excess
of (i) the sum of the cash and Cash Equivalents received in connection with
such transaction over (ii) the underwriting discounts and commissions, and
other reasonable out-of-pocket expenses, incurred by such Borrower or Subsidiary in connection
therewith.

 

“Non-Reinstatement
Deadline” has the meaning specified in Section 2.03(b)(v).

 

“Note(s)”
means one or more promissory notes made by Borrowers in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit C,
each as may be amended, restated, extended, replaced or otherwise modified from
time to time.

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or otherwise with
respect to any Loan, Letter of Credit, Secured Cash Management Agreement or
Secured Hedge Agreement, 

 

18

 

whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

 

“Organization
Documents” means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect thereto
filed in connection with its formation or organization with the applicable
Governmental Authority in the jurisdiction of its formation or organization
and, if applicable, any certificate or articles of formation or organization of
such entity.

 

“Other
Taxes” means all present or future stamp, intangible 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.

 

“Outstanding
Amount” means (i) with respect to Committed Loans and Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving
effect to any borrowings and prepayments or repayments of Committed Loans and
Swing Line Loans, as the case may be, occurring on such date; and (ii) with
respect to any L/C Obligations on any date, the amount of such L/C Obligations
on such date after giving effect to any L/C Credit Extension occurring on such
date and any other changes in the aggregate amount of the L/C Obligations as of
such date, including as a result of any reimbursements by Borrowers of
Unreimbursed Amounts.

 

“Participant”
has the meaning specified in Section 10.06(d).

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

“Pension
Act” means the Pension Protection Act of 2006.

 

“Pension
Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the
effective date of the Pension Act, Section 412 of the Code and Section 302 of
ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412,
430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension
Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by the Borrower and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of
the Code.

 

19

 

“Permitted
Acquisitions” means Investments consisting of an Acquisition or series of
Acquisitions by Borrowers during the term of this Agreement which is or are
consented to in writing (x) by Administrative Agent in its sole discretion if
the aggregate cash consideration agreed to be paid for any individual
Acquisition or in the aggregate for all Acquisitions during the term of this Agreement is equal to or less than
$10,000,000, or (y) by Required Lenders in their sole discretion if the
aggregate cash consideration agreed to be paid for any individual Acquisition
or in the aggregate for all Acquisitions during the term of this Agreement is greater than $10,000,000,
provided in all cases that (i) the property and assets acquired (or
the property and assets of the Person acquired) in such Acquisition is identical,
similar, complementary or ancillary to the line of business as the Borrowers
and their Subsidiaries were engaged in on the Closing Date,
(ii) Administrative Agent shall have received all items in respect of the
Equity Interests or property acquired in such Acquisition required to be
delivered by the terms of the Collateral Documents, (iii) in the case of
an Acquisition of the Equity Interests of another Person, the board of
directors (or other comparable governing body) of such other Person shall have
duly approved such Acquisition, (iv) the Borrower Representative shall
have delivered to Administrative Agent a pro  forma Compliance
Certificate demonstrating that, upon giving effect to such Acquisition on a pro
forma basis, Borrowers would be in compliance with the financial
covenants set forth in Section 6.12 as of the most recent fiscal
quarter for which Borrowers have delivered financial statements pursuant to Section 6.01(a)
or Section 6.01(b), as applicable, and no other Default has
occurred and is continuing or would be caused by such Acquisition, and
(v) the representations and warranties made by Borrowers in each Loan
Document shall be true and correct in all material respects at and as if made
as of the date of such Acquisition (after giving effect thereto) except to the
extent such representations and warranties expressly relate to an earlier date.

 

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

 

“Plan”
means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of the Borrower or
any ERISA Affiliate or any such Plan to which any Borrower or any ERISA Affiliate
is required to contribute on behalf of any of its employees.

 

“Platform”
has the meaning specified in Section 6.02.

 

“Pledging
Borrowers” means, collectively, SI Holdings, SI USA, Kiddopotamus and any
future Borrower or Guarantor that pledges Collateral for the Obligations
pursuant to (except as otherwise consented to by Administrative Agent) a
first-priority perfected security interest.

 

“Public
Lender” has the meaning specified in Section 6.02.

 

“Reduction
Amount” has the meaning specified in Section 2.05(b)(v).

 

“Register”
has the meaning specified in Section 10.06(c).

 

“Related
Parties” means, 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.

 

20

 

“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

 

“Request
for Credit Extension” means (a) with respect to a Borrowing, conversion or
continuation of Committed Loans, a Committed Loan Notice, (b) with respect to
an L/C Credit Extension, an L/C Application, and (c) with respect to a Swing
Line Loan, a Swing Line Loan Notice.

 

“Required Lenders”
means, as of any date of determination, Lenders having Aggregate Commitments
or, if the commitment of each Lender to make Loans and the obligation of the
L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section
8.02, Lenders holding in the aggregate more than 662/3% of the Total Outstandings (with the aggregate
amount of each Lender’s risk participation and funded participation in L/C
Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition); provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders.

 

“Responsible
Officer” means the chief executive officer, president, chief financial
officer, treasurer, assistant
treasurer or controller of a Loan Party and, solely for purposes of notices
given pursuant to Article II, any other officer or employee of the
applicable Loan Party so designated by any of the foregoing officers in a
notice to Administrative Agent, and solely for purposes of the delivery of
incumbency certificates pursuant to Section 4.01, the secretary or any
assistant secretary of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such capital stock or other Equity Interest or on account
of any return of capital to a Borrower’s stockholders, partners or members (or
the equivalent Person thereof).

 

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

“Secured
Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between any Loan Party and any Cash Management Bank.

 

“Secured
Hedge Agreement” means any Swap Contract permitted under this Agreement
that is entered into by and between any Loan Party and any Hedge Bank.

 

“Secured
Parties” means, collectively, Administrative Agent, the Lenders, the L/C
Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent
appointed by Administrative Agent from time to time pursuant to Section 9.05,
and the other Persons the 

 

21

 

Obligations
owing to which are or are purported to be secured by the Collateral under the
terms of the Collateral Documents.

 

“Security
Agreement” means that certain Guaranty and Security Agreement of even date
herewith, by and between the Pledging Borrowers, as debtors, and Administrative
Agent, as Agent for the benefit of the Secured Parties, as amended from time to
time.

 

“SI
Holdings” and “SI USA” each have the respective meaning set forth in
the Preamble hereto.

 

“Subordinated
Liabilities” means liabilities subordinated to the Obligations in a manner
acceptable to Administrative Agent in its sole discretion.

 

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

 

“Swap
Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master
Agreement.

 

“Swap
Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the
date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

 

22

 

“Swing
Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section
2.04.

 

“Swing
Line Lender” means Bank of America in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

 

“Swing
Line Loan” has the meaning specified in Section 2.04(a).

 

“Swing
Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section
2.04(b), which, if in writing, shall be substantially in the form of Exhibit
B.

 

“Swing
Line Sublimit” means an amount equal to the lesser of (a) $5,000,000 and (b) the Aggregate
Commitments.  The Swing Line Sublimit is
part of (although uncommitted), and not in addition to, the Aggregate
Commitments.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under (a) a so-called
synthetic, off-balance sheet or tax retention lease, or (b) an agreement for
the use or possession of property creating obligations that do not appear on
the balance sheet of such Person but which, upon the insolvency or bankruptcy
of such Person, would be characterized as the indebtedness of such Person
(without regard to accounting treatment).

 

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

 

“Threshold
Amount” means One Million Dollars ($1,000,000).

 

“Total
Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Type”
means, with respect to a Committed Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“UCC”
means the Uniform Commercial Code as the same may be in effect from time to
time in the State of Rhode Island.

 

“United
States” and “U.S.” mean the United States of America.

 

“Unreimbursed
Amount” has the meaning specified in Section 2.03(c)(i).

 

1.02        Other
Interpretive Provisions.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)           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

 

23

 

requires
otherwise, (i) any definition of or reference to any agreement, instrument or
other document (including any Organization Document) 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 or in any other
Loan Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) 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.

 

(b)           In the computation of periods of time
from a specified date to a later specified date, the word “from” means “from
and including;” the words “to” and “until” each mean “to
but excluding;” and the word “through” means “to and including.”

 

(c)           Section headings herein and in the
other Loan Documents are included for convenience of reference only and shall
not affect the interpretation of this Agreement or any other Loan Document.

 

1.03        Accounting
Terms. (a) Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.  Notwithstanding the foregoing,
for purposes of determining compliance with any covenant (including the
computation of any financial covenant) contained herein, Indebtedness of the
Borrower and its Subsidiaries shall be deemed to be carried at 100% of the
outstanding principal amount thereof, and the effects of FASB ASC 825  on financial liabilities shall be disregarded.

 

(b)           Changes in GAAP.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and either Borrowers or the Required Lenders shall so request,
Administrative Agent, Lenders and Borrowers shall negotiate in good faith to
amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided  that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) Borrowers shall provide to Administrative Agent and
Lenders financial statements and other documents required under this Agreement
or as reasonably requested hereunder setting forth a reconciliation between 

 

24

 

calculations
of such ratio or requirement made before and after giving effect to such change
in GAAP.

 

1.04        Rounding.  Any financial ratios required
to be maintained by Borrowers pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

 

1.05        Times of Day.  Unless otherwise specified, all
references herein to times of day shall be references to Eastern  time
(daylight or standard, as applicable).

 

1.06        Letter of
Credit Amounts.  Unless
otherwise specified herein the amount of a Letter of Credit at any time shall
be deemed to be the stated amount of such Letter of Credit in effect at such
time; provided, however, that with respect to any Letter of
Credit that, by its terms or the terms of any Issuer Document related thereto,
provides for one or more automatic increases in the stated amount thereof, the
amount of such Letter of Credit shall be deemed to be the maximum stated amount
of such Letter of Credit after giving effect to all such increases, whether or
not such maximum stated amount is in effect at such time.

 

ARTICLE
II.  THE COMMITMENTS AND CREDIT
EXTENSIONS

 

2.01        Committed
Loans.  Subject to the terms and conditions set forth
herein, each Lender severally agrees to make revolving credit loans (each such
loan, a “Committed Loan”) to Borrowers from time to time, on any
Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of such Lender’s Commitment; provided,
however, that after giving effect to any Committed Borrowing, (i) the
Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the
aggregate Outstanding Amount of the Committed Loans of any Lender, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment.  Within the limits of each Lender’s
Commitment, and subject to the other terms and conditions hereof, Borrowers may
borrow under this Section 2.01(a), prepay under Section 2.05, and
reborrow under this Section 2.01(a). 
Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as
further provided herein; provided, however, that Committed Loans
made on the Closing Date shall be Base Rate Loans.

 

2.02        Borrowings,
Conversions and Continuations of Committed Loans.  (a) Each Committed Borrowing, each
conversion of Committed Loans from one Type to the other, and each continuation
of Eurodollar Rate Loans shall be made upon Borrowers’ irrevocable notice to
Administrative Agent, which may be given by telephone.  Each such notice must be received by
Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to
the requested date of any Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Committed Loans, and (ii) on the requested date of any Borrowing of Base
Rate Committed Loans; provided, however, that if Borrowers wish
to request Eurodollar Loans having an Interest Period other than one, two,
three or six months in duration as provided in the definition of “Interest
Period,” the applicable notice must 

 

25

 

be
received by Administrative Agent not later than 11:00 a.m. four Business Days
prior to the requested date of such Borrowing, conversion or continuation,
whereupon Administrative Agent shall give prompt notice to the Lenders of such
request and determine whether the requested Interest Period is acceptable to
all of them.  Not later than 11:00 a.m.,
three Business Days before the requested date of such Borrowing, conversion or
continuation, Administrative Agent shall notify the Borrower (which notice may
be by telephone) whether or not the requested Interest Period has been
consented to by all the Lenders.  Each
telephonic notice by Borrowers pursuant to this Section 2.02(a) must be
confirmed promptly by delivery to Administrative Agent of a written Committed
Loan Notice, appropriately completed and signed by a Responsible Officer of
Borrowers.  Each Borrowing of, conversion
to or continuation of Eurodollar Rate Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof.  Except as provided in Sections 2.03(c)
and 2.04(c), each Borrowing of or conversion to Base Rate Committed
Loans shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof.  Each
Committed Loan Notice (whether telephonic or written) shall specify (i) whether
Borrowers are requesting a Committed Borrowing, a conversion of Committed Loans
from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii)
the requested date of the Borrowing, conversion or continuation, as the case
may be (which shall be a Business Day), (iii) the principal amount of Committed
Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans
to be borrowed or to which existing Committed Loans are to be converted, and
(v) if applicable, the duration of the Interest Period with respect
thereto.  If Borrowers fail to specify a
Type of Committed Loan in a Committed Loan Notice or if Borrowers fail to give
a timely notice requesting a conversion or continuation, then the applicable
Committed Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans.  If Borrowers request a Borrowing of,
conversion to, or continuation of Eurodollar Rate Loans in any such Committed
Loan Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

 

(b)           Following receipt of a Committed Loan
Notice, Administrative Agent shall promptly notify each Lender (in the case of
a request for a Committed Loan) of the amount of its Applicable Percentage of
the applicable Committed Loans, and if no timely notice of a conversion or
continuation is provided by Borrowers, Administrative Agent shall notify each
Lender of the details of any automatic conversion to Base Rate Loans described
in the preceding subsection.  In the case
of a Committed Borrowing, each Lender shall make the amount of its Committed
Loan available to Administrative Agent in immediately available funds at
Administrative Agent’s Office not later than 1:00 p.m. on the Business Day
specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), Administrative Agent shall make
all funds so received available to Borrowers in like funds as received by
Administrative Agent either by (i) crediting the account of Borrowers on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) Administrative Agent by Borrowers; provided, however,
that if, on the date the Committed Loan Notice with respect to such Borrowing
is given by Borrowers, there are L/C Borrowings outstanding, then the proceeds
of such Borrowing first, shall be applied, to the payment in full of any
such L/C Borrowings, and second, shall be made available to Borrowers as
provided above.

 

26

 

(c)           Except as otherwise provided herein,
a Eurodollar Rate Loan may be continued or converted only on the last day of an
Interest Period for such Eurodollar Rate Loan. 
During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the
Required Lenders, and the Required Lenders may demand that any or all of the
then outstanding Eurodollar Rate Loans be converted immediately to Base Rate
Committed Loans and Borrowers agree to jointly and severally pay all amounts
due under Section 3.05 in accordance with the terms thereof due to any
such conversion.

 

(d)           Administrative Agent shall promptly
notify Borrowers and Lenders of the interest rate applicable to any Interest
Period for Eurodollar Rate Loans upon determination of such interest rate.

 

(e)           After
giving effect to all Committed Borrowings, all conversions of Committed Loans
from one Type to the other, and all continuations of Committed Loans as the
same Type, there shall not be more than seven (7) Interest Periods in effect with
respect to Committed Loans.

 

2.03        Letters of
Credit.  (a) The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditions
set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of
the other Lenders set forth in this Section 2.03, (1) from time to time
on any Business Day during the period from the Closing Date until the L/C
Expiration Date, to issue Letters of Credit for the account of Borrowers or
their Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection
(b) below, and (2) to honor drawings under the Letters of Credit; and (B)
Lenders severally agree to participate in Letters of Credit issued for the
account of Borrowers and any drawings thereunder; provided that after
giving effect to any L/C Credit Extension with respect to any Letter of Credit,
(x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) the
aggregate Outstanding Amount of the Committed Loans of any Lender, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and
(z) the Outstanding Amount of the L/C Obligations shall not exceed the L/C
Sublimit.  Each request by Borrowers for
the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by Borrowers that the L/C Credit Extension so requested complies
with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, Borrowers’ ability to obtain Letters of Credit
shall be fully revolving, and accordingly Borrowers may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed. 
All Existing Letters of Credit shall be deemed to have been issued
pursuant hereto, and from and after the Closing Date shall be subject to and
governed by the terms and conditions hereof.

 

(ii)           The L/C Issuer shall not issue any
Letter of Credit, if:

 

(A)          subject to Section 2.03(b)(iv),
the expiry date of the requested Letter of Credit would occur more than twelve
(12) months after the date of issuance or
last extension, unless the Required Lenders have approved such expiry
date; or

 

27

 

(B)          the expiry date of
the requested Letter of Credit would occur after the L/C Expiration Date,
unless all Lenders have approved such expiry date.

 

(iii)          The L/C Issuer shall be under no
obligation to issue any Letter of Credit if:

 

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

 

(B)          the issuance of the
Letter of Credit would violate one or more policies of the L/C Issuer
applicable to letters of credit generally;

 

(C)          except as otherwise
agreed by Administrative Agent and the L/C Issuer, the Letter of Credit is in
an initial stated 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;

 

(D)          the Letter of Credit
is to be denominated in a currency other than Dollars;

 

(E)           any Lender is
at that time a Defaulting Lender, unless the L/C Issuer has entered into
arrangements, including the delivery of Cash Collateral, satisfactory to the
L/C Issuer (in its sole discretion) with Borrowers or such Lender to eliminate
the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section
2.16(a)(iv)) with respect to the Defaulting Lender arising from either the
Letter of Credit then proposed to be issued or that Letter of Credit and all
other L/C Obligations as to which the L/C Issuer has actual or potential Fronting
Exposure, as it may elect in its sole discretion; or

 

(F)           unless specifically
provided for in this Agreement, the Letter of Credit contains any provisions
for automatic reinstatement of the stated amount after any drawing thereunder.

 

(iv)          The L/C Issuer shall not amend any
Letter of Credit if the L/C Issuer would not be permitted at such time to issue
the Letter of Credit in its amended form under the terms hereof.

 

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

 

28

 

(vi)          The L/C Issuer shall act on behalf of
Lenders with respect to any Letters of Credit issued by it and the documents
associated therewith, and the L/C Issuer shall have all of the benefits and
immunities (A) provided to Administrative Agent in Article IX with
respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and Issuer
Documents pertaining to such Letters of Credit as fully as if the term “Administrative
Agent” or “Agent” as used in Article IX included the L/C Issuer with
respect to such acts or omissions, and (B) as additionally provided herein with
respect to the L/C Issuer.

 

(b)           Procedures for Issuance and Amendment of Letters of Credit;
Auto-Extension Letters of Credit.

 

(i)            Each Letter of Credit shall be
issued or amended, as the case may be, upon the request of Borrowers delivered
to the L/C Issuer (with a copy to Administrative Agent) in the form of a L/C
Application, appropriately completed and signed by a Responsible Officer of
Borrowers.  Such L/C Application must be
received by the L/C Issuer and Administrative Agent not later than 11:00 a.m.
at least two Business Days (or such later date and time as Administrative Agent
and the L/C Issuer may agree in a particular instance in their sole discretion)
prior to the proposed issuance date or date of amendment, as the case may
be.  In the case of a request for an
initial issuance of a Letter of Credit, such L/C Application shall specify in
form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date
of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; (G) the
purpose and nature of the requested Letter of Credit; and (H) such other
matters as the L/C Issuer may require. 
In the case of a request for an amendment of any outstanding Letter of
Credit, such L/C Application shall specify in form and detail satisfactory to
the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of
amendment thereof (which shall be a Business Day); (C) the nature of the
proposed amendment; and (D) such other matters as the L/C Issuer may
require.  Additionally, Borrowers shall
furnish to the L/C Issuer and Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the L/C Issuer or Administrative
Agent may require.

 

(ii)           Promptly after receipt of any L/C
Application at the address set forth on Schedule 10.02 for receiving L/C
Applications and related correspondence, the L/C Issuer will confirm with
Administrative Agent (by telephone or in writing) that Administrative Agent has
received a copy of such L/C Application from Borrowers and, if not, the L/C
Issuer will provide Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written
notice from any Lender, Administrative Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions in Article
IV shall not then be satisfied, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of Borrowers (or the applicable Subsidiary) or enter into the
applicable amendment, as the case may be, in each case in accordance with the
L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk 

 

29

 

participation
in such Letter of Credit in an amount equal to the product of such Lender’s
Applicable Percentage times the amount of such Letter of Credit.

 

(iii)          Promptly after its delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank
with respect thereto or to the beneficiary thereof, the L/C Issuer will also
deliver to Borrowers and Administrative Agent a true and complete copy of such
Letter of Credit or amendment.

 

(iv)          If
Borrowers so request in any applicable L/C Application, the L/C Issuer may, in
its sole and absolute discretion, agree to issue a Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit the L/C
Issuer to prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior
notice to the beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed upon at the
time such Letter of Credit is issued. 
Unless otherwise directed by the L/C Issuer, Borrowers shall not be
required to make a specific request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, Lenders shall be deemed to have authorized (but may not require)
the L/C Issuer to permit the extension of such Letter of Credit at any time to
an expiry date not later than the L/C Expiration Date; provided, however, that
the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has
determined that it would not be permitted, or would have no obligation, at such
time to issue such Letter of Credit in its revised form (as extended) under the
terms hereof (by reason of the provisions of clause (ii) or (iii) of Section
2.03(a) or otherwise), or (B) it has received notice (which may be by
telephone or in writing) on or before the day that is five Business Days before
the Non-Extension Notice Date (1) from Administrative Agent that the Required
Lenders have elected not to permit such extension or (2) from Administrative
Agent, any Lender or Borrowers that one or more of the applicable conditions
specified in Section 4.02 is not then satisfied, and in each such case
directing the L/C Issuer not to permit such extension.

 

(v)           If
Borrowers so request in any applicable Letter of Credit Application, the L/C
Issuer may, in its sole and absolute discretion, agree to issue a Letter of
Credit that permits the automatic reinstatement of all or a portion of the
stated amount thereof after any drawing thereunder (each, an “Auto-Reinstatement
Letter of Credit”).  Unless otherwise
directed by the L/C Issuer, Borrowers shall not be required to make a specific
request to the L/C Issuer to permit such reinstatement.  Once an Auto-Reinstatement Letter of Credit
has been issued, except as provided in the following sentence, Lenders shall be
deemed to have authorized (but may not require) the L/C Issuer to reinstate all
or a portion of the stated amount thereof in accordance with the provisions of
such Letter of Credit.  Notwithstanding
the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C
Issuer to decline to reinstate all or any portion of the stated amount thereof
after a drawing thereunder by giving notice of such non-reinstatement within a
specified number of days after such drawing (the “Non-Reinstatement Deadline”),
the L/C Issuer shall not permit such reinstatement if it has received a notice
(which may be by telephone or in writing) on or before the day that is seven
Business Days before the Non-Reinstatement Deadline (A) from Administrative
Agent that the Required Lenders have elected not to permit such reinstatement
or (B) from Administrative Agent, any Lender or Borrowers that one or more of the
applicable conditions specified in Section 4.02 is not then satisfied 

 

30

 

(treating such reinstatement as an L/C Credit
Extension for purposes of this clause) and, in each case, directing the L/C
Issuer not to permit such reinstatement.

 

(c)           Drawings and Reimbursements;
Funding of Participations.

 

(i)            Upon receipt from the beneficiary of
any Letter of Credit of any notice of a drawing under such Letter of Credit,
the L/C Issuer shall notify Borrowers and Administrative Agent thereof.  Not later than 11:00 a.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), Borrowers shall reimburse the L/C Issuer through Administrative
Agent in an amount equal to the amount of such drawing.  If Borrowers fail to so reimburse the L/C
Issuer by such time, Administrative Agent shall promptly notify each Lender of
the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Applicable Percentage
thereof.  In such event, Borrowers shall
be deemed to have requested a Committed Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without
regard to the minimum and multiples specified in Section 2.02 for the
principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and Aggregate Commitments and
the conditions set forth in Section 4.02 (other than the delivery of a
Committed Loan Notice).  Any notice given
by the L/C Issuer or Administrative Agent pursuant to this Section
2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

 

(ii)           Each Lender shall upon any notice
pursuant to Section 2.03(c)(i) make funds available (and Administrative
Agent may apply Cash Collateral provided for this purpose) for the account of
the L/C Issuer at the Administrative Agent’s Office in an amount equal to its
Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on
the Business Day specified in such notice by Administrative Agent, whereupon,
subject to the provisions of Section 2.03(c)(iii), each Lender that so
makes funds available shall be deemed to have made a Base Rate Committed Loan
to Borrowers in such amount. 
Administrative Agent shall remit the funds so received to the L/C
Issuer.

 

(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans
because the conditions set forth in Section 4.02 cannot be satisfied or
for any other reason, Borrowers shall be deemed to have incurred from the L/C
Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment to
Administrative Agent for the account of the L/C Issuer pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such
L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 2.03.

 

(iv)          Until each Lender funds its Committed
Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the
L/C Issuer for any amount drawn under any Letter of Credit, interest in respect
of such Lender’s Applicable Percentage of such amount shall be solely for the
account of the L/C Issuer.

 

31

 

(v)           Each Lender’s obligation to make
Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn
under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against the L/C Issuer, Borrowers or any other
Person for any reason whatsoever; (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing; provided, however, that each
Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 4.02 (other than delivery
by Borrowers of a Committed Loan Notice). 
No such making of an L/C Advance shall relieve or otherwise impair the
obligation of Borrowers to reimburse the L/C Issuer for the amount of any
payment made by the L/C Issuer under any Letter of Credit, together with
interest as provided herein.

 

(vi)          If any Lender fails to make available
to Administrative Agent for the account of the L/C Issuer any amount required
to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by
the time specified in Section 2.03(c)(ii), then, without limiting
the other provisions of this Agreement, the L/C Issuer shall be entitled to
recover from such Lender (acting through Administrative Agent), on demand, such
amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the L/C
Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a
rate determined by the L/C Issuer in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar
fees customarily charged by the L/C Issuer in connection with the
foregoing.  If such Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case
may be.  A certificate of the L/C Issuer
submitted to any Lender (through Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest
error.

 

(d)           Repayment of Participations.

 

(i)            At any time after the L/C Issuer has
made a payment under any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c),
if Administrative Agent receives for the account of the L/C Issuer any payment
in respect of the related Unreimbursed Amount or interest thereon (whether
directly from Borrowers or otherwise, including proceeds of Cash Collateral
applied thereto by Administrative Agent), Administrative Agent will distribute
to such Lender its Applicable Percentage thereof in the same funds as those
received by Administrative Agent.

 

(ii)           If any payment received by
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to Administrative Agent for the account of
the L/C Issuer its Applicable Percentage thereof on demand of Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect. 
The obligations of Lenders under 

 

32

 

this
clause shall survive the payment in full of the Obligations and the termination
of this Agreement.

 

(e)           Obligations Absolute.  The
obligation of Borrowers to reimburse the L/C Issuer for each drawing under each
Letter of Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including the following:

 

(i)            any lack of
validity or enforceability of such Letter of Credit, this Agreement, or any
other Loan Document;

 

(ii)           the existence of
any claim, counterclaim, setoff, defense or other right that Borrowers or any
Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

 

(iii)          any draft, demand,
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;

 

(iv)          any payment by the
L/C Issuer under such Letter of Credit against presentation of a draft or
certificate that does not comply with the terms of such Letter of Credit; or
any payment made by the L/C Issuer under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for
the benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief
Law; or

 

(v)           any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Borrowers or any Subsidiary.

 

Borrowers
shall promptly examine a copy of each Letter of Credit and each amendment
thereto that is delivered to it and, in the event of any claim of noncompliance
with Borrowers’ instructions or other irregularity, Borrowers will immediately
notify the L/C Issuer.  Borrowers shall
be conclusively deemed to have waived any such claim against the L/C Issuer and
its correspondents unless such notice is given as aforesaid.

 

(f)            Role of L/C Issuer.  Each
Lender and Borrowers agree that, in paying any drawing under a Letter of
Credit, the L/C Issuer shall not have any responsibility to obtain any document
(other than any sight draft, certificates and documents expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy
of any such document or the authority of the Person executing or delivering any
such document.  None of the L/C Issuer,
Administrative Agent, any of their respective Related Parties nor any
correspondent, participant 

 

33

 

or
assignee of the L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document.  Borrowers hereby assume
all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude Borrowers’
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuer, Administrative Agent, any of their respective
Related Parties nor any correspondent, participant or assignee of the L/C
Issuer, shall be liable or responsible for any of the matters described in
clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding,
Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to Borrowers, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by Borrowers which Borrowers
prove were caused by the L/C Issuer’s willful misconduct or gross negligence or
the L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s) complying
with the terms and conditions of a Letter of Credit.   In furtherance and not
in limitation of the foregoing, the L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

(g)           Applicability of ISP and UCP.  Unless
otherwise expressly agreed by the L/C Issuer and Borrowers when a Letter of
Credit is issued, (i) the rules of the ISP shall apply to each
standby Letter of Credit, and (ii) the rules of the Uniform Customs
and Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce (the “ICC”) at the time of issuance
shall apply to each commercial Letter of Credit.

 

(h)           L/C Fees.  Borrowers shall pay to Administrative Agent
for the account of each Lender in accordance with its Applicable Percentage, a
L/C fee (the “L/C Fee”) (i) for each commercial Letter of Credit
equal to the Applicable Rate times the daily amount available to be
drawn under such Letter of Credit, and (ii) for each standby Letter of
Credit equal to the Applicable Rate times the daily amount available to
be drawn under such Letter of Credit; provided, however, any L/C
Fees otherwise payable for the account of a Defaulting Lender with respect to
any Letter of Credit as to which such Defaulting Lender has not provided Cash
Collateral satisfactory to the L/C Issuer pursuant to this Section 2.03
shall be payable, to the maximum extent permitted by applicable Law, to the
other Lenders in accordance with the upward adjustments in their respective
Applicable Percentages allocable to such Letter of Credit pursuant to Section 2.16(a)(iv),
with the balance of such fee, if any, payable to the L/C Issuer for its own
account.  For purposes of computing the
daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.06.  L/C Fees shall be (i) due and payable on
the first Business Day after the end of each March, June, September and December, commencing with the
first such date to occur after the issuance of such Letter of Credit, on the
L/C Expiration Date and thereafter on demand and 

 

34

 

(ii) computed
on a quarterly basis in arrears.  If
there is any change in the Applicable Rate during any quarter, the daily amount
available to be drawn under each standby Letter of Credit and commercial Letter
of Credit shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in
effect.  Notwithstanding anything to the
contrary contained herein, upon the request of the Required Lenders, while any
Event of Default exists, all L/C Fees shall accrue at the Default Rate.

 

(i)            Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer.  Borrowers shall pay directly to
the L/C Issuer for its own account a fronting fee (i) with respect to each commercial Letter of Credit, at the rate
specified in the Administrative Agent Fee Letter, computed on the amount of
such Letter of Credit, and payable upon the issuance thereof, (ii) with
respect to any amendment of a commercial Letter of Credit increasing the amount
of such Letter of Credit, at a rate separately agreed between the Borrowers and
the L/C Issuer, computed on the amount of such increase, and payable upon the
effectiveness of such amendment, and (iii) with respect to each standby Letter of Credit, at the rate
per annum specified in the
Administrative Agent Fee Letter, computed on the daily amount available
to be drawn under such Letter of Credit on a quarterly basis in arrears.  Such fronting fee shall be due and payable on
the tenth Business Day after the end of each  March, June, September and December,
in respect of the most recently-ended quarterly period (or portion thereof, in
the case of the first payment), commencing with the first such date to occur
after the issuance of such Letter of Credit, on the L/C Expiration Date and
thereafter on demand.  For purposes of
computing the daily amount available to be drawn under any Letter of Credit,
the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, Borrowers shall pay directly to
the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect.  Such individual customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

 

(j)            Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Documents, the terms hereof shall
control.

 

(k)           Letters of Credit Issued for
Subsidiaries.  Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, Borrowers shall be
jointly and severally obligated to reimburse the L/C Issuer hereunder for any
and all drawings under such Letter of Credit. 
Each Borrower hereby acknowledges that the issuance of Letters of Credit
for the account of Subsidiaries inures to the benefit of Borrowers, and that Borrowers’
business derives substantial benefits from the businesses of such Subsidiaries.

 

2.04        Swing Line
Loans.  (a) The Swing Line.  Subject to the terms and conditions set forth
herein, Swing Line Lender agrees, in reliance upon the agreements of the other
Lenders set forth in this Section 2.04, may in its sole discretion
make loans (each such loan, a “Swing Line Loan”) to Borrowers from time
to time on any Business Day during the Availability Period in an aggregate
amount not to exceed at any time outstanding the amount of the Swing Line
Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated
with the Applicable Percentage of the Outstanding Amount of Committed Loans and
L/C Obligations of the Lender acting as Swing Line Lender, may exceed the
amount of such Lender’s Commitment; provided, 

 

35

 

however, that after
giving effect to any Swing Line Loan, (i) the Total Outstandings shall not
exceed the Aggregate Commitments, and (ii) the aggregate Outstanding
Amount of the Committed Loans of any Lender, plus such Lender’s
Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment; and provided  further,
that Borrowers shall not use the proceeds of any Swing Line Loan to refinance
any outstanding Swing Line Loan.  The
Swing Line is a discretionary, uncommitted facility and Swing Line Lender may
terminate or suspend the Swing Line at any time in its sole discretion upon
notice to Borrowers which notice may be given by Swing Line Lender before or
after Borrowers request a Swing Line Loan hereunder.  Within the foregoing limits, and subject to
the other terms and conditions hereof, Borrowers may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall be a Base Rate
Loan.  Immediately upon the making of a
Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from Swing Line Lender a risk participation
in such Swing Line Loan in an amount equal to the product of such Lender’s
Applicable Percentage times the amount of such Swing Line Loan.

 

(b)           Borrowing Procedures.  Unless the Swing Line has been terminated or
suspended by the Swing Line Lender as provided in subsection (a) above,
each Swing Line Borrowing shall be made upon Borrowers’ irrevocable notice to
Swing Line Lender and Administrative Agent, which may be given by telephone.
Each such notice must be received by Swing Line Lender and Administrative Agent
not later than 1:00 p.m. on the requested borrowing date, and shall
specify (i) the amount to be borrowed, which shall be a minimum of
$100,000, and (ii) the requested borrowing date, which shall be a Business
Day.  Each such telephonic notice must be
confirmed promptly by delivery to Swing Line Lender and Administrative Agent of
a written Swing Line Loan Notice, appropriately completed and signed by a
Responsible Officer of Borrowers. 
Promptly after receipt by Swing Line Lender of any telephonic Swing Line
Loan Notice, Swing Line Lender will confirm with Administrative Agent (by
telephone or in writing) that Administrative Agent has also received such Swing
Line Loan Notice and, if not, Swing Line Lender will notify Administrative
Agent (by telephone or in writing) of the contents thereof.  Unless (x) the Swing Line has been
terminated or suspended by the Swing Line Lender as provided in subsection (a) above,
or (y) the Swing Line Lender has received notice (by telephone or in
writing) from Administrative Agent (including at the request of any Lender)
prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing
Swing Line Lender not to make such Swing Line Loan as a result of the
limitations set forth in the proviso to the first sentence of Section 2.04(a),
or (B) that one or more of the applicable conditions specified in Article IV
is not then satisfied, then, subject to the terms and conditions hereof, Swing
Line Lender will, not later than 3:00 p.m. on the borrowing date specified
in such Swing Line Loan Notice, make the amount of its Swing Line Loan
available to Borrowers at its office by
crediting the account of Borrowers on the books of Swing Line Lender in
immediately available funds. 
Lenders agree that Swing Line Lender may agree to modify the borrowing
procedures used in connection with the Swing Line in its discretion and without
affecting any of the obligations of Lenders hereunder other than notifying
Administrative Agent of a Swing Line Loan Notice.

 

36

 

(c)           Refinancing of Swing Line Loans.

 

(i)            Swing Line Lender at any time in its
sole and absolute discretion may request, on behalf of Borrowers (which hereby
irrevocably authorizes Swing Line Lender to so request on its behalf), that
each Lender make a Base Rate Committed Loan in an amount equal to such Lender’s
Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which
written request shall be deemed to be a Committed Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section 4.02.  Swing Line Lender shall furnish Borrowers
with a copy of the applicable Committed Loan Notice promptly after delivering
such notice to Administrative Agent. 
Each Lender shall make an amount equal to its Applicable Percentage of
the amount specified in such Committed Loan Notice available to Administrative
Agent in immediately available funds (and Administrative Agent may apply Cash
Collateral available with respect to the applicable Swing Line Loan) for the
account of Swing Line Lender at Administrative Agent’s Office not later than
1:00 p.m. on the day specified in such Committed Loan Notice, whereupon,
subject to Section 2.04(c)(ii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan to Borrowers
in such amount.  Administrative Agent
shall remit the funds so received to Swing Line Lender.

 

(ii)           If for any reason any Swing Line Loan
cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i),
the request for Base Rate Committed Loans submitted by Swing Line Lender as set
forth herein shall be deemed to be a request by Swing Line Lender that each of
the Lenders fund its risk participation in the relevant Swing Line Loan and
each Lender’s payment to Administrative Agent for the account of Swing Line
Lender pursuant to Section 2.04(c)(i) shall be deemed payment
in respect of such participation.

 

(iii)          If any Lender fails to make available
to Administrative Agent for the account of Swing Line Lender any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.04(c) by the time specified in Section 2.04(c)(i),
Swing Line Lender shall be entitled to recover from such Lender (acting through
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to Swing Line Lender at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by Swing Line Lender in
accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by Swing
Line Lender in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Committed Loan included in
the relevant Committed Borrowing or funded participation in the relevant Swing
Line Loan, as the case may be.  A
certificate of Swing Line Lender submitted to any Lender (through
Administrative Agent) with respect to any amounts owing under this clause (iii) shall
be conclusive absent manifest error.

 

(iv)          Each Lender’s obligation to make
Committed Loans or to purchase and fund risk participations in Swing Line Loans
pursuant to this Section 2.04(c) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may
have against Swing 

 

37

 

Line
Lender, Borrowers or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event
or condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is
subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall
relieve or otherwise impair the obligation of Borrowers to repay Swing Line
Loans, together with interest as provided herein.

 

(d)           Repayment of Participations.

 

(i)            At any time after any Lender has
purchased and funded a risk participation in a Swing Line Loan, if Swing Line
Lender receives any payment on account of such Swing Line Loan, Swing Line
Lender will distribute to such Lender its Applicable Percentage thereof in the
same funds as those received by Swing Line Lender.

 

(ii)           If any payment received by Swing Line
Lender in respect of principal or interest on any Swing Line Loan is required
to be returned by Swing Line Lender under any of the circumstances described in
Section 10.05 (including pursuant to any settlement entered into by
Swing Line Lender in its discretion), each Lender shall pay to Swing Line
Lender its Applicable Percentage thereof on demand of Administrative Agent,
plus interest thereon from the date of such demand to the date such amount is
returned, at a rate per annum equal to the Federal Funds Rate.  Administrative Agent will make such demand
upon the request of Swing Line Lender. 
The obligations of Lenders under this clause shall survive the payment
in full of the Obligations and the termination of this Agreement.

 

(e)           Interest for Account of Swing Line
Lender.  Swing Line Lender shall be
responsible for invoicing Borrowers for interest on the Swing Line Loans.  Until each Lender funds its Base Rate
Committed Loan or risk participation pursuant to this Section 2.04
to refinance such Lender’s Applicable Percentage of any Swing Line Loan,
interest in respect of such Applicable Percentage shall be solely for the
account of Swing Line Lender.

 

(f)            Payments Directly to Swing Line
Lender.  Borrowers shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to Swing Line Lender.

 

2.05        Prepayments.  (a) Optional.  (i) Borrowers may, upon notice to
Administrative Agent, at any time or from time to time voluntarily prepay
Committed Loans in whole or in part without premium or penalty; provided
that (A) such notice must be received by Administrative Agent not later
than 11:00 a.m. (1) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (2) on the date of prepayment of
Base Rate Committed Loans; (B) any prepayment of Eurodollar Rate Loans
shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof; and (C) any prepayment of Base Rate Committed Loans shall
be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid,
the Interest Period(s) of such Loans. 
Administrative Agent will promptly notify each Lender of its receipt of
each such notice, and of the amount of such Lender’s Applicable Percentage of
such prepayment.  If such notice is given
by Borrowers, Borrowers shall make such prepayment and the payment amount 

 

38

 

specified
in such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05.  Subject to Section 2.15, each
such prepayment shall be applied to the Committed Loans of Lenders in
accordance with their respective Applicable Percentages.

 

(ii)           Borrowers may, upon notice to Swing
Line Lender (with a copy to Administrative Agent), at any time or from time to
time, voluntarily prepay Swing Line Loans in whole or in part without premium
or penalty; provided that (A) such notice must be received by Swing
Line Lender and Administrative Agent not later than 1:00 p.m. on the date
of the prepayment, and (B) any such prepayment shall be in a minimum
principal amount of $100,000.  Each such
notice shall specify the date and amount of such prepayment.  If such notice is given by Borrowers,
Borrowers shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.

 

(b)           Mandatory.  (i)  If for any reason the Total
Outstandings at any time exceed the Aggregate Commitments then in effect,
Borrowers shall immediately prepay Loans and/or Cash Collateralize the L/C
Obligations in an aggregate amount equal to such excess; provided, however,
that Borrowers shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.05(b)(i) unless after the
prepayment in full of the Committed Loans and Swing Line Loans the Total
Outstandings exceed the Aggregate Commitments then in effect.

 

(ii)           If any Borrower or any Subsidiary Disposes of any property (other
than any Disposition of any property permitted by Section 7.05(b), (c),
(d) or (e)) which results in the realization by any such
Person of Net Cash Proceeds, the Borrowers shall prepay an aggregate principal
amount of Loans equal to 100% of such Net Cash Proceeds immediately upon
receipt thereof by such Person (such prepayments to be applied as set forth in
clause (v) below).

 

(iii)          Upon the incurrence or issuance by any Borrower or any Subsidiary of any
Indebtedness (other than Indebtedness expressly permitted to be incurred or
issued pursuant to Section 7.03(a)-(e)), Borrowers shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by any such Person (such prepayments to be applied as set forth in
clause (v) below).

 

(iv)          Upon any Extraordinary Receipt
received by or paid to or for the account of any Borrower or any Subsidiary, Borrowers shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by any such Person (such prepayments to be applied as set forth in
clause (viii) below);  provided, however, that with
respect to any proceeds of insurance or condemnation awards (or payments in
lieu thereof) or indemnity payments, at the election of Borrowers (as notified
by Borrowers to Administrative Agent on or prior to the date of receipt of such
insurance proceeds, condemnation awards or indemnity payments), and so long as
no Default shall have occurred and be continuing, such Person may apply within
180 days after the receipt of such cash proceeds to replace or repair the
equipment, fixed assets or real property in respect of which such cash proceeds
were received; and provided, further, however, that any
cash proceeds not so applied shall be immediately applied to the prepayment of
the Loans as set forth in Section 2.05(b)(v).

 

39

 

(v)           Prepayments of the Loans made pursuant to Section 2.05(b)(ii) through
(iv), first, shall be applied ratably to the L/C Borrowings, second,
shall be applied ratably to the outstanding Loans, third, shall be used
to Cash Collateralize the remaining L/C Obligations; and the amount remaining,
if any, after the prepayment in full of all L/C Borrowings and Loans
outstanding at such time and the Cash Collateralization of the remaining L/C
Obligations in full (the sum of such prepayment amounts, cash collateralization
amounts and remaining amount being, collectively, the “Reduction Amount”) may be
retained by Borrowers for use in the ordinary course of their business, and the
Aggregate Commitments shall be automatically and permanently reduced by the
Reduction Amount as set forth in Section 2.06(b)(ii).  Upon the drawing of any Letter of Credit that
has been Cash Collateralized, the funds held as Cash Collateral shall be
applied (without any further action by or notice to or from the Borrower or any
other Loan Party) to reimburse the L/C Issuer or the Lenders, as applicable.

 

2.06        Termination or
Reduction of Commitments. 
(a) Optional.  Borrowers
may, upon notice to Administrative Agent, terminate the Aggregate Commitments,
or from time to time permanently reduce the Aggregate Commitments; provided
that (i) any such notice shall be received by Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination
or reduction, (ii) any such partial reduction shall be in an aggregate
amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrowers
shall not terminate or reduce the Aggregate Commitments if, after giving effect
thereto and to any concurrent prepayments hereunder, the Total Outstandings
would exceed the Aggregate Commitments, and (iv) Borrowers shall not
terminate or reduce the Aggregate Commitments if, after giving effect to any
reduction of the Aggregate Commitments, the L/C Sublimit or the Swing Line
Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall
be automatically reduced by the amount of such excess.  Administrative Agent will promptly notify the
Lenders of any such notice of termination or reduction of the Aggregate
Commitments.  Any reduction of the
Aggregate Commitments shall be applied to the Commitment of each applicable
Lender according to its Applicable Percentage.

 

(b)           Mandatory.  (i) The Aggregate Commitments shall be
automatically and permanently reduced on each date on which the prepayment of
Loans outstanding thereunder is required to be made (A) pursuant to Section 2.05(b)(ii),
to the extent that the aggregate amount of all proceeds received in respect of
Dispositions occurring after the Closing Date exceeds $2,500,000, and (B) pursuant
to Section 2.05(b)(iii) or (iv) by an amount equal
to the applicable Reduction Amount.

 

(ii)           If after giving effect to any
reduction or termination of the Commitments under this Section 2.06,
the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the
Commitments at such time, the Letter of Credit Sublimit or the Swing Line
Sublimit, as the case may be, shall be automatically reduced by the amount of
such excess.

 

(c)           Application of Commitment Reductions; Payment of Fees.  Administrative
Agent will promptly notify Lenders of any termination or reduction of the
Letter of Credit Sublimit, the Swing Line Sublimit or any Aggregate Commitments
under this Section 2.06. 
Upon any reduction of the Aggregate Commitments, the Commitment of each
Lender shall be reduced by such Lender’s Applicable Percentage of such
reduction amount.  All fees in respect of
the 

 

40

 

Commitments
accrued until the effective date of any termination of any portion of the
Commitments shall be paid on the effective date of such termination.

 

2.07        Repayment of
Principal.  (a) Borrowers
shall jointly and severally repay to Lenders on the Maturity Date the aggregate
principal amount of Committed Loans outstanding on such date.

 

(b)           Borrowers shall jointly and severally
repay to Swing Line Lender each Swing Line Loan on the earlier to occur of
(i) the date which is ten (10) Business Days after such Swing Line
Loan is made, and (ii) the Maturity Date.

 

2.08        Interest.  (a) Subject to the
provisions of subsection (b) below, (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; (ii) each Base Rate
Committed Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on
the outstanding principal amount thereof from the applicable borrowing date at
a rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)           (i)  If any amount of principal
of any Loan is not paid when due (without regard to any applicable grace
periods), whether at stated maturity, by acceleration or otherwise, such amount
shall thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If any amount (other than principal
of any Loan) payable by Borrowers under any Loan Document is not paid when due
(without regard to any applicable grace periods), whether at stated maturity,
by acceleration or otherwise, then upon the request of the Required Lenders,
such amount shall thereafter bear interest at a fluctuating interest rate per
annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

 

(iii)          Upon the request of the Required
Lenders, while any Event of Default exists, Borrowers shall pay interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.

 

(iv)          Accrued and unpaid interest on past
due amounts (including interest on past due interest) shall be due and payable
upon demand.

 

(c)           Interest on each Loan shall be due
and payable in arrears on each Interest Payment Date applicable thereto and at
such other times as may be specified herein. 
Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

41

 

2.09        Fees.  In addition to certain fees
described in subsections (h) and (i) of Section 2.03:

 

(a)           Unused Line Fee.  Borrowers
shall jointly and severally pay to Administrative Agent for the account of each
Lender in accordance with its Applicable Percentage, an unused line fee equal
to one-quarter of one percent (0.25%) of the actual daily amount by which the
Aggregate Commitments exceed the sum of (i) the Outstanding Amount of
Committed Loans and (ii) the Outstanding Amount of L/C Obligations,
subject to adjustment as provided in Section 2.16.  The unused line fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article IV is not met, and shall be due and
payable quarterly in arrears on the last Business Day of each March, June, September and
December, with the first such date to occur after the Closing Date, and on the
last day of the Availability Period.  For
purposes of computing the unused line fee, Swing Line Loans shall not be
counted towards or considered usage of the Aggregate Commitments.

 

(b)           Commitment Fee.  Borrowers shall on the Closing Date pay to
Administrative Agent for the account of Lenders to be allocated in accordance
with their respective Applicable Percentages, a commitment fee in the amount of
$90,000.

 

(c)           Administrative Agent’s Fees.  Borrowers
shall jointly and severally pay to Administrative Agent for Administrative
Agent’s own account, fees in the amounts and at the times specified in the
letter agreement of even date herewith (the “Administrative Agent Fee Letter”),
between Borrowers and Administrative Agent. 
Such fees shall be fully earned when paid and shall be nonrefundable for
any reason whatsoever.

 

2.10        Computation
of Interest and Fees; Retroactive Adjustments of Applicable Rate.  (a) All
computations of interest for Base Rate Loans (including Base Rate Loans
determined by reference to the Eurodollar Rate) shall be made on the basis of a
year of 360 days and actual days elapsed. 
All other computations of fees and interest shall be made on the basis
of a 360-day year and actual days elapsed (which results in more fees or
interest, as applicable, being paid than if computed on the basis of a 365-day
year).  Interest shall accrue on each
Loan for the day on which the Loan is made, and shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.12(a), bear interest for one day.  Each determination by Administrative Agent of
an interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent manifest error.

 

(b)           If,
as a result of any restatement of or other adjustment to the financial statements
of Borrowers or for any other reason, Borrowers or the Lenders determine that
(i) the Consolidated Leverage Ratio used in the definition of “Applicable
Rate” as calculated by Borrowers as of any applicable date was inaccurate
and (ii) a proper calculation of such Consolidated Leverage Ratio would
have resulted in higher pricing for such period, Borrowers shall immediately
and retroactively be obligated to pay to Administrative Agent for the account
of the applicable Lenders or the L/C Issuer, promptly on demand by
Administrative Agent (or, after the occurrence of an actual or deemed entry of
an order for relief with respect to Borrowers under the Bankruptcy Code of the
United States, automatically and without further action by Administrative Agent,
any Lender or the L/C Issuer), an amount equal to the excess of the 

 

42

 

amount of interest and fees that should have been
paid for such period over the amount of interest and fees actually paid for such
period.  This paragraph shall not limit
the rights of Administrative Agent, any Lender or the L/C Issuer, as the case
may be, under Section 2.03(c)(iii), 2.03(i) or 2.08(b) or
under Article VIII. 
Borrowers’ obligations under this paragraph shall survive the
termination of the Aggregate Commitments and the repayment of all other
Obligations hereunder.

 

2.11        Evidence of
Debt.  (a) The Credit Extensions made by each
Lender shall be evidenced by one or more accounts or records maintained by such
Lender and by Administrative Agent in the ordinary course of business.  The accounts or records maintained by
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by Lenders to Borrowers and the interest
and payments thereon.  Any failure to so
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of Borrowers hereunder to pay any amount owing with respect to
the Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of Administrative Agent in respect of such matters, the
accounts and records of Administrative Agent shall control in the absence of
manifest error.  Upon the request of any
Lender made through Administrative Agent, Borrowers shall execute and deliver
to such Lender (through Administrative Agent) a Note, which shall evidence such
Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note
and endorse thereon the date, Type (if applicable), amount and maturity of its
Loans and payments with respect thereto.

 

(b)           In addition to the accounts and
records referred to in subsection (a), each Lender and Administrative Agent
shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters
of Credit and Swing Line Loans.  In the
event of any conflict between the accounts and records maintained by
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of Administrative Agent shall control in
the absence of manifest error.

 

2.12        Payments
Generally; Administrative Agent’s Clawback.  (a) General.  All payments to be made by Borrowers shall be
made without condition or deduction for any counterclaim, defense, recoupment
or setoff.  Except as otherwise expressly
provided herein, all payments by Borrowers hereunder shall be made to
Administrative Agent, for the account of the respective Lenders to which such
payment is owed, at the Administrative Agent’s Office in Dollars and in
immediately available funds not later than 12:00 noon on the date specified
herein.  Administrative Agent will
promptly distribute to each Lender its Applicable Percentage (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office.  All payments received by Administrative Agent
after 12:00 noon shall be deemed received on the next succeeding Business Day
and any applicable interest or fee shall continue to accrue.  If any payment to be made by Borrowers shall
come due on a day other than a Business Day, payment shall be made on the next
following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.

 

(b)           (i)  Funding by Lenders;
Presumption by Administrative Agent. 
Unless Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Committed Borrowing of Eurodollar Loans (or,
in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon
on the date of such Committed Borrowing) that such Lender will 

 

43

 

not
make available to Administrative Agent such Lender’s share of such Committed
Borrowing, Administrative Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.02 (or, in the
case of a Committed Borrowing of Base Rate Loans, that such Lender has made
such share available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to Borrowers a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Committed Borrowing
available to Administrative Agent, then the applicable Lender and Borrowers
severally agree to pay to Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to Borrowers
to but excluding the date of payment to Administrative Agent, at (A) in
the case of a payment to be made by such Lender, the greater of the Federal
Funds Rate and a rate determined by Administrative Agent in accordance with
banking industry rules on interbank compensation, plus any administrative,
processing or similar fees customarily charged by Administrative Agent in
connection with the foregoing and (B) in the case of a payment to be made
by Borrowers, the interest rate applicable to Base Rate Loans.  If Borrowers and such Lender shall pay such
interest to Administrative Agent for the same or an overlapping period, Administrative
Agent shall promptly remit to Borrowers the amount of such interest paid by
Borrowers for such period.  If such
Lender pays its share of the applicable Committed Borrowing to Administrative
Agent, then the amount so paid shall constitute such Lender’s Committed Loan included
in such Committed Borrowing.  Any payment
by Borrowers shall be without prejudice to any claim Borrowers may have against
a Lender that shall have failed to make such payment to Administrative Agent.

 

(ii)           Payments by Borrowers;
Presumptions by Administrative Agent. 
Unless Administrative Agent shall have received notice from Borrowers
prior to the date on which any payment is due to Administrative Agent for the
account of the Lenders or L/C Issuer hereunder that Borrowers will not make
such payment, Administrative Agent may assume that Borrowers have made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to Lenders or L/C Issuer, as the case may be, the amount
due.  In such event, if Borrowers have
not in fact made such payment, then each of Lenders or the L/C Issuer, as the
case may be, severally agrees to repay to Administrative Agent forthwith on
demand the amount so distributed to such Lender or L/C Issuer, in immediately
available funds 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
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by Administrative Agent in accordance with banking industry rules on
interbank compensation.  A notice of
Administrative Agent to any Lender or Borrowers with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest
error.

 

(c)           Failure to Satisfy Conditions Precedent.  If any Lender makes available to
Administrative Agent funds for any Loan to be made by such Lender as provided
in the foregoing provisions of this Article II, and such funds are
not made available to Borrowers by Administrative Agent because the conditions
to the applicable Credit Extension set forth in Article IV are not
satisfied or waived in accordance with the terms hereof, Administrative Agent
shall return such funds (in like funds as received from such Lender) to such
Lender, without interest.

 

44

 

(d)           Obligations of Lenders Several.  The obligations of Lenders hereunder to make
Committed Loans, to fund participations in Letters of Credit and Swing Line
Loans and to make payments under Section 10.04(c) are several
and not joint.  The failure of any Lender
to make any Committed Loan, to fund any such participation or to make any
payment under Section 10.04(c) on any date required hereunder
shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other
Lender to so make its Committed Loan, purchase its participation or to make its
payment under Section 10.04(c).

 

(e)           Funding Source.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.

 

2.13        Sharing of
Payments.  If any
Lender shall, by exercising any right of setoff or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of the
Committed Loans made by it, or the participations in L/C Obligations or in
Swing Line Loans held by it resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of such Committed Loans or participations
and accrued interest thereon greater than its pro  rata share
thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify Administrative Agent of such fact, and (b) purchase
(for cash at face value) participations in the Committed Loans and
subparticipations in L/C Obligations and Swing Line Loans of the other Lenders,
or make such other adjustments as shall be equitable, so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Committed Loans and other amounts owing them, provided that:

 

(i)            if any such
participations or subparticipations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest; and

 

(ii)           the provisions of
this Section shall not be construed to apply to (x) any payment made
by or on behalf of Borrowers pursuant to and in accordance with the express
terms of this Agreement (including the application of funds arising from the
existence of a Defaulting lender), or (y) the application of Cash
Collateral provided for in Section 2.15, or (z) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Committed Loans or subparticipations in L/C
Obligations or Swing Line Loans to any assignee or participant, other than an
assignment to Borrowers or any Subsidiary thereof (as to which the provisions
of this Section shall apply).

 

Each
Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against 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.

 

45

 

2.14        Increase in Commitments.

 

(a)           Request
for Increase.  Provided there exists
no Default, upon notice to Administrative Agent (which shall promptly notify
Lenders), Borrowers may on a one-time basis exercised after March 31,
2011, request an increase in the Aggregate Commitments by an amount not
exceeding $10,000,000.  At the time of
sending such notice, Borrowers (in consultation with Administrative Agent)
shall specify the time period within which each Lender is requested to respond
(which shall in no event be less than ten (10) Business Days from the date
of delivery of such notice to Lenders).

 

(b)           Lender
Elections to Increase.  Each Lender
shall notify Administrative Agent within such time period whether or not it
agrees to increase its Commitment and, if so, whether by an amount equal to,
greater than, or less than its Applicable Percentage of such requested
increase.  Any Lender not responding
within such time period shall be deemed to have declined to increase its
Commitment.

 

(c)           Notification
by Administrative Agent; Additional Lenders.  Administrative Agent shall notify Borrowers
and each Lender of Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested
increase and subject to the approval of Administrative Agent, L/C Issuer and
Swing Line Lender (which approvals shall not be unreasonably withheld),
Borrowers may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to
Administrative Agent and its counsel.

 

(d)           Effective
Date and Allocations.  If the Aggregate
Commitments are increased in accordance with this Section, Administrative Agent
and Borrowers shall determine the effective date (the “Increase Effective
Date”) and the final allocation of such increase.  Administrative Agent shall promptly notify
Borrowers and Lenders of the final allocation of such increase and the Increase
Effective Date.

 

(e)           Conditions
to Effectiveness of Increase.  As a
condition precedent to such increase, (i) Borrowers shall deliver to
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (x) certifying and attaching the resolutions
adopted by such Loan Party approving or consenting to such increase, and (y) in
the case of each Borrower, certifying that, before and after giving effect to
such increase, (A) the representations and warranties contained in Article V
and the other Loan Documents are true and correct on and as of the Increase
Effective Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Section 2.16,
the representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01,
and (B) no Default has occurred and is continuing, (ii) Borrowers
shall on the Increase Effective Date pay to Administrative Agent for the
benefit of Lenders participating in the increase a closing fee equal to
one-quarter of one percent (0.25%) of the amount of the increase, and
(iii) Borrowers shall execute and deliver new Notes to Lenders who are
participating in the increase.  Borrowers
shall prepay any Committed Loans outstanding on the Increase Effective Date
(and pay any additional amounts required pursuant to Section 3.05)
to the extent necessary to keep the outstanding 

 

46

 

Committed
Loans ratable with any revised Applicable Percentages arising from any
nonratable increase in the Commitments under this Section.

 

(f)            Conflicting
Provisions.  This Section shall
supersede any provisions in Section 2.13 or 10.01 to the
contrary.

 

2.15        Cash Collateral.

 

(a)           Certain
Credit Support Events.  Upon the
request of Administrative Agent or L/C Issuer (i) if L/C Issuer has
honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of
Credit Expiration Date, any L/C Obligation for any reason remains outstanding,
Borrowers shall, in each case, immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations. 
At any time that there shall exist a Defaulting Lender, immediately upon
the request of Administrative Agent, L/C Issuer or Swing Line Lender, Borrowers
shall deliver to Administrative Agent Cash Collateral in an amount sufficient
to cover all Fronting Exposure (after giving effect to Section 2.16(a)(iv) and
any Cash Collateral provided by the Defaulting Lender).

 

(b)           Grant
of Security Interest.  All Cash
Collateral (other than credit support not constituting funds subject to
deposit) shall be maintained in blocked, non-interest bearing deposit accounts
at Bank of America.  Borrowers, and to
the extent provided by any Lender, such Lender, hereby grant to (and subjects
to the control of) Administrative Agent, for the benefit of Administrative
Agent, L/C Issuer and Lenders (including Swing Line Lender), and agree to
maintain, a first priority security interest in all such cash, deposit accounts
and all balances therein, and all other property so provided as collateral
pursuant hereto, and in all proceeds of the foregoing, all as security for the
obligations to which such Cash Collateral may be applied pursuant to Section 2.15(c).  If at any time Administrative Agent
determines that Cash Collateral is subject to any right or claim of any Person
other than Administrative Agent as herein provided, or that the total amount of
such Cash Collateral is less than the applicable Fronting Exposure and other
obligations secured thereby, Borrowers or the relevant Defaulting Lender will,
promptly upon demand by Administrative Agent, pay or provide to Administrative
Agent additional Cash Collateral in an amount sufficient to eliminate such
deficiency.

 

(c)           Application.  Notwithstanding
anything to the contrary contained in this Agreement, Cash Collateral provided
under any of this Section 2.15 or Sections 2.04, 2.05,
2.06, 2.16 or 8.02 in respect of Letters of Credit or
Swing Line Loans shall be held and applied to the satisfaction of the specific
L/C Obligations, Swing Line Loans, obligations to fund participations therein
(including, as to Cash Collateral provided by a Defaulting Lender, any interest
accrued on such obligation) and other obligations for which the Cash Collateral
was so provided, prior to any other application of such property as may be provided
for herein.

 

(d)           Release.  Cash Collateral (or the appropriate portion
thereof) provided to reduce Fronting Exposure or other obligations shall be
released promptly following (i) the elimination of the applicable Fronting
Exposure or other obligations giving rise thereto (including by the termination
of Defaulting Lender status of the applicable Lender (or, as appropriate, its
assignee following compliance with Section 10.06(b)(vi))) or (ii) Administrative
Agent’s good faith 

 

47

 

determination
that there exists excess Cash Collateral; provided, however, (x) that
Cash Collateral furnished by or on behalf of a Loan Party shall not be released
during the continuance of a Default or Event of Default (and following
application as provided in this Section 2.15 may be otherwise
applied in accordance with Section 8.03), and (y) the Person
providing Cash Collateral and the L/C Issuer or Swing Line Lender, as
applicable, may agree that Cash Collateral shall not be released but instead
held to support future anticipated Fronting Exposure or other obligations.

 

2.16        Defaulting Lenders.  Adjustments.  (a) Notwithstanding anything to the
contrary contained in this Agreement, if any Lender becomes a Defaulting
Lender, then, until such time as that Lender is no longer a Defaulting Lender,
to the extent permitted by applicable Law:

 

(i)            Waivers and Amendments.  That Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement
shall be restricted as set forth in Section 10.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or
other amounts received by Administrative Agent for the account of that
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII
or otherwise, and including any amounts made available to Administrative Agent
by that Defaulting Lender pursuant to Section 10.08), shall be
applied at such time or times as may be determined by Administrative Agent as
follows: first, to the payment of any amounts
owing by that Defaulting Lender to Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts
owing by that Defaulting Lender to the L/C Issuer or Swing Line Lender
hereunder; third, if so determined by
Administrative Agent or requested by the L/C Issuer or Swing Line Lender, to be
held as Cash Collateral for future funding obligations of that Defaulting
Lender of any participation in any Swing Line Loan or Letter of Credit; fourth, as the Borrower may request (so long as no Default
or Event of Default exists), to the funding of any Loan in respect of which
that Defaulting Lender has failed to fund its portion thereof as required by
this Agreement, as determined by Administrative Agent; fifth,
if so determined by Administrative Agent and the Borrower, to be held in a
non-interest bearing deposit account and released in order to satisfy
obligations of that Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders,
the L/C Issuer or Swing Line Lender as a result of any judgment of a court of
competent jurisdiction obtained by any Lender, the L/C Issuer or Swing Line
Lender against that Defaulting Lender as a result of that Defaulting Lender’s
breach of its obligations under this Agreement; seventh,
so long as no Default or Event of Default exists, to the payment of any amounts
owing to the Borrower as a result of any judgment of a court of competent
jurisdiction obtained by the Borrower against that Defaulting Lender as a
result of that Defaulting Lender’s breach of its obligations under this
Agreement; and eighth, to that Defaulting Lender
or as otherwise directed by a court of competent jurisdiction; provided
that if (x) such payment is a payment of the principal amount of any Loans
or L/C Borrowings in respect of which that Defaulting Lender has not fully
funded its appropriate share and (y) such Loans or L/C Borrowings were
made at a time when the conditions set forth in Section 4.02 were
satisfied or waived, such payment shall be applied solely to pay the Loans of,
and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis
prior to being applied 

 

48

 

to the payment of any Loans of, or L/C Borrowings
owed to, that Defaulting Lender.  Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to
post Cash Collateral pursuant to this Section 2.16(a)(ii) shall
be deemed paid to and redirected by that Defaulting Lender, and each Lender
irrevocably consents hereto.

 

(iii)          Certain Fees. 
That Defaulting Lender (x) shall  not
be entitled to receive any unused line fee pursuant to Section 2.09(a) for
any period during which that Lender is a Defaulting Lender (and Borrowers shall
not be required to pay any such fee that otherwise would have been required to
have been paid to that Defaulting Lender)  and (y) shall
be limited in its right to receive Letter of Credit Fees as provided in Section 2.03(h).

 

(iv)          Reallocation of Applicable Percentages to Reduce
Fronting Exposure.  During any period
in which there is a Defaulting Lender, for purposes of computing the amount of
the obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit or Swing Line Loans pursuant to Sections
2.03 and 2.04, the “Applicable Percentage” of each non-Defaulting
Lender shall be computed without giving effect to the Commitment of that
Defaulting Lender; provided, that, (i) each such reallocation shall
be given effect only if, at the date the applicable Lender becomes a Defaulting
Lender, no Default or Event of Default exists; and (ii) the aggregate
obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit and Swing Line Loans shall not exceed the
positive difference, if any, of (1) the Commitment of that non-Defaulting
Lender minus (2) the aggregate Outstanding Amount of the Committed
Loans of that Lender.

 

(b)           Defaulting Lender Cure.  If Borrowers, Administrative Agent, Swing
Line Lender and the L/C Issuer agree in writing in their sole discretion that a
Defaulting Lender should no longer be deemed to be a Defaulting Lender,
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase that portion of
outstanding Loans of the other Lenders or take such other actions as
Administrative Agent may determine to be necessary to cause the Committed Loans
and funded and unfunded participations in Letters of Credit and Swing Line
Loans to be held on a pro rata basis by Lenders in accordance with their
Applicable Percentages (without giving effect to Section 2.16(a)(iv)),
whereupon that Lender will cease to be a Defaulting Lender; provided
that no adjustments will be made retroactively with respect to fees accrued or
payments made by or on behalf of Borrower while that Lender was a Defaulting
Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

49

 

ARTICLE III.  TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01        Taxes.

 

(a)           Payments
Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.  Any and all payments by or on account of any
obligation of Borrowers hereunder or under any other Loan Document shall to the
extent permitted by applicable Laws be made free and clear of and without
reduction or withholding for any Taxes. 
If, however, applicable Laws require Borrowers or Administrative Agent
to withhold or deduct any Tax, such Tax shall be withheld or deducted in
accordance with such Laws as determined by Borrowers or Administrative Agent,
as the case may be, upon the basis of the information and documentation to be
delivered pursuant to subsection (e) below.

 

(i)            If Borrowers or Administrative Agent shall be required by
the Code to withhold or  deduct any
Taxes, including both United States Federal backup withholding and withholding
taxes, from any payment, then (A) Administrative Agent shall withhold or
make such deductions as are determined by Administrative Agent to be required
based upon the information and documentation it has received pursuant to
subsection (e) below, (B) Administrative Agent shall timely pay the
full amount withheld or deducted to the relevant Governmental Authority in
accordance with the Code, and (C) to the extent that the withholding or
deduction is made on account of Indemnified Taxes or Other Taxes, the sum
payable by Borrowers shall be increased as necessary so that after any required
withholding or the making of all required deductions (including deductions
applicable to additional sums payable under this Section) Administrative Agent,
each Lender or L/C Issuer, as the case may be, receives an amount equal to the
sum it would have received had no such withholding or deduction been made.

 

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

 

(c)           Tax
Indemnifications.  (i) Without
limiting the provisions of subsection (a) or (b) above, Borrowers
shall, and do hereby, indemnify Administrative Agent, each Lender and L/C
Issuer, and shall make payment in respect thereof 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) withheld or deducted by
Borrowers or Administrative Agent or paid by Administrative Agent, such Lender
or L/C Issuer, 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. 
Borrowers shall also, and do hereby, indemnify Administrative Agent, and
shall make payment in respect thereof within 10 days after demand therefor, for
any amount which a Lender or L/C Issuer for any reason fails to pay
indefeasibly to Administrative Agent as required by clause (ii) of this
subsection.  A certificate as to the
amount of any such payment or liability delivered to Borrowers by a Lender or
L/C Issuer (with a copy to Administrative Agent), or by 

 

50

 

Administrative
Agent on its own behalf or on behalf of a Lender or L/C Issuer, shall be
conclusive absent manifest error.

 

(ii)           Without limiting the provisions of subsection (a) or (b) above,
each Lender and L/C Issuer shall, and do hereby, indemnify Borrowers and
Administrative Agents, and shall make payment in respect thereof within 10 days
after demand therefor, against any and all Taxes and any and all related
losses, claims, liabilities, penalties, interest and expenses (including the fees,
charges and disbursements of any counsel for Borrowers or  Administrative
Agent) incurred by or asserted against any Borrower or Administrative Agent by
any Governmental Authority as a result of the failure by such Lender or L/C
Issuer, as the case may be, to deliver, or as a result of the inaccuracy,
inadequacy or deficiency of, any documentation required to be delivered by such
Lender or L/C Issuer, as the case may be, to any Borrower or Administrative
Agent pursuant to subsection (e).  Each
Lender and L/C Issuer hereby authorizes Administrative Agent to set off and
apply any and all amounts at any time owing to such Lender or L/C Issuer, as
the case may be, under this Agreement or any other Loan Document against any
amount due to Administrative Agent under this clause (ii).  The agreements in this clause (ii) shall
survive the resignation and/or replacement of Administrative Agent, any
assignment of rights by, or the replacement of, a Lender or L/C Issuer, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all other Obligations.

 

(d)           Evidence
of Payments.  Upon
request by Borrowers or Administrative Agent, as the case may be, after any
payment of Taxes by Borrowers or by Administrative Agent to a Governmental
Authority as provided in this Section 3.01, Borrowers shall deliver
to Administrative Agent or Administrative Agent shall deliver to Borrowers, as
the case may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required
by Laws to report such payment or other evidence of such payment reasonably
satisfactory to Borrowers or Administrative Agent, as the case may be.

 

(e)           Status
of Lenders; Tax Documentation.  (i) Each
Lender shall deliver to Borrower and to Administrative Agent, at the time or
times prescribed by applicable Laws or when reasonably requested by Borrowers
or Administrative Agent, such properly completed and executed documentation
prescribed by applicable Laws or by the taxing authorities of any jurisdiction
and such other reasonably requested information as will permit Borrowers or
Administrative Agent, as the case may be, to determine (A) whether or not
payments made hereunder or under any other Loan Document are subject to Taxes, (B) if
applicable, the required rate of withholding or deduction, and (C) such
Lender’s entitlement to any available exemption from, or reduction of,
applicable Taxes in respect of all payments to be made to such Lender by
Borrower pursuant to this Agreement or otherwise to establish such Lender’s
status for withholding tax purposes in the applicable jurisdiction.

 

(ii)           Without limiting the generality of the foregoing, if any
Borrower is resident for tax purposes in the United States,

 

51

 

(A)          any Lender that is a “United States person” within the
meaning of Section 7701(a)(30) of the Code shall deliver to such Borrower
and Administrative Agent executed originals of Internal Revenue Service Form W-9
or such other documentation or information prescribed by applicable Laws or
reasonably requested by such Borrower or Administrative Agent as will enable
such Borrower or Administrative Agent, as the case may be, to determine whether
or not such Lender is subject to backup withholding or information reporting
requirements; and

 

(B)          each Foreign Lender that is entitled under the Code or any
applicable treaty to an exemption from or reduction of withholding tax with
respect to payments hereunder or under any other Loan Document shall deliver to
Borrowers and Administrative Agent (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 Borrowers or Administrative Agent, but only if such Foreign
Lender is legally entitled to do so), whichever of the following is applicable:

 

(I)            executed
originals of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States is a party,

 

(II)          executed
originals of Internal Revenue Service Form W-8ECI,

 

(III)        executed
originals of Internal Revenue Service Form W-8IMY and all required
supporting documentation,

 

(IV)         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 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 the 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) executed originals of  Internal Revenue Service Form W-8BEN, or

 

(V)          executed
originals of any other form prescribed by applicable Laws as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
together with such supplementary documentation as may be prescribed by
applicable Laws to permit Borrowers or Administrative Agent to determine the
withholding or deduction required to be made.

 

(iii)          Each Lender shall promptly (A) notify Borrowers and
Administrative Agent of any change in circumstances which would modify or
render invalid any claimed exemption or reduction, and (B) take such steps
as shall not be materially 

 

52

 

disadvantageous to it, in
the reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement
of applicable Laws of any jurisdiction that Borrowers or Administrative Agent
make any withholding or deduction for taxes from amounts payable to such
Lender.

 

(f)            Treatment
of Certain Refunds.  Unless required
by applicable Laws, at no time shall Administrative Agent have any obligation
to file for or otherwise pursue on behalf of a Lender or L/C Issuer, or have
any obligation to pay to any Lender or L/C Issuer, any refund of Taxes withheld
or deducted from funds paid for the account of such Lender or L/C Issuer, as
the case may be.  If Administrative
Agent, any Lender or L/C Issuer determines, in its sole discretion, that it has
received a refund of any 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 Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses incurred by Administrative Agent, such Lender or L/C
Issuer, 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 Administrative Agent, such Lender or L/C
Issuer, agrees to repay the amount paid over to Borrowers (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
Administrative Agent, such Lender or L/C Issuer in the event Administrative
Agent, such Lender or the L/C Issuer is required to repay such refund to such
Governmental Authority.  This subsection
shall not be construed to require Administrative Agent, any Lender or L/C
Issuer to make available its tax returns (or any other information relating to
its taxes that it deems confidential) to Borrowers or any other Person.

 

3.02        Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Loans whose interest is determined by reference to the Eurodollar Rate, or
to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to Borrowers through
Administrative Agent, (i) any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Committed Loans shall be suspended, and (ii) if such
notice asserts the illegality of such Lender making or maintaining Base Rate
Loans the interest rate on which is determined by reference to the Eurodollar
Rate component of the Base Rate, the interest rate on which Base Rate Loans of
such Lender shall, if necessary to avoid such illegality, be determined by
Administrative Agent without reference to the Eurodollar Rate component of the
Base Rate, in each case until such Lender notifies Administrative Agent and
Borrowers that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice, (x) Borrowers
shall, upon demand from such Lender (with a copy to Administrative Agent),
prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to
Base Rate Loans (the interest rate on which Base Rate Loans of such Lender
shall, if necessary to avoid such illegality, be determined by Administrative
Agent without reference to the Eurodollar Rate component of the Base Rate),
either on the last day of the Interest Period therefor, if such Lender may
lawfully 

 

53

 

continue
to maintain such Eurodollar Rate Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) if
such notice asserts the illegality of such Lender determining or charging
interest rates based upon the Eurodollar Rate, Administrative Agent shall
during the period of such suspension compute the Base Rate applicable to such
Lender without reference to the Eurodollar Rate component thereof until
Administrative Agent is advised in writing by such Lender that it is no longer
illegal  for such Lender to determine or
charge interest rates based upon the Eurodollar Rate.  Upon any such prepayment or conversion, Borrowers
shall also pay accrued interest on the amount so prepaid or converted.

 

3.03        Inability to
Determine Rates.  If Administrative Agent or Required Lenders
determine in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not
being offered to banks in the London interbank eurodollar market for the
applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate
and reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Committed
Loan or in connection with an existing or proposed Base Rate Loan, or (c) the
Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar
Rate Committed Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, Administrative Agent will promptly so notify
Borrowers and each Lender.  Thereafter, (x) the
obligation of Lenders to make or maintain Eurodollar Rate Loans shall be
suspended, and (y) in the event of a determination described in the
preceding sentence with respect to the Eurodollar Rate component of the Base
Rate, the utilization of the Eurodollar Rate component in determining the Base
Rate shall be suspended, in each case until Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, Borrowers may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Committed Borrowing of Base Rate Loans in the
amount specified therein.

 

3.04        Increased
Costs; Reserves on Eurodollar Rate Loans.  (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
contemplated by Section 3.04(e)) or the L/C Issuer;

 

(ii)           subject any Lender or the L/C Issuer
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 Rate Loan
made by it, or change the basis of taxation of payments to such Lender or the
L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 3.01 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or

 

(iii)          impose on any Lender or the L/C Issuer
or the London interbank market any other condition, cost or expense affecting
this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of
Credit or participation therein;

 

54

 

and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Loan the interest on which is determined by
reference to the Eurodollar Rate (or of maintaining its obligation to make any
such Loan), or to increase the cost to such Lender or the L/C Issuer 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
L/C Issuer hereunder (whether of principal, interest or any other amount) then,
upon request of such Lender or the L/C Issuer, Borrowers will pay to such
Lender or the L/C Issuer, as the case may be, such additional amount or amounts
as will compensate such Lender or the L/C Issuer, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender’s or the L/C Issuer’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 L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time
Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer
or such Lender’s or the L/C Issuer’s holding company for any such reduction
suffered.

 

(c)           Certificates for Reimbursement.  A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the
L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to Borrowers
shall be conclusive absent manifest error. 
Borrowers shall pay such Lender or the L/C Issuer, as the case may be,
the amount shown as due on any such certificate within 10 days after receipt
thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or
the L/C Issuer to demand compensation pursuant to the foregoing provisions of
this Section shall not constitute a waiver of such Lender’s or the L/C
Issuer’s right to demand such compensation, provided that Borrowers
shall not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender or
the L/C Issuer, as the case may be, notifies Borrowers of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
L/C Issuer’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).

 

(e)           Reserves on Eurodollar Rate Loans.  Borrowers shall pay to each Lender, as long
as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency 

 

55

 

liabilities”),
additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall
be conclusive), which shall be due and payable on each date on which interest is
payable on such Loan, provided Borrowers shall have received at least 10
days’ prior notice (with a copy to Administrative Agent) of such additional
interest from such Lender.  If a Lender
fails to give notice 10 days prior to the relevant Interest Payment Date, such
additional interest shall be due and payable 10 days from receipt of such
notice.

 

3.05        Compensation
for Losses.  Upon demand of any Lender (with a copy to
Administrative Agent) from time to time, Borrowers shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a)           any continuation, conversion, payment
or prepayment of any Loan other than a Base Rate Loan on a day other than the
last day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise); or

 

(b)           any failure by Borrowers (for a
reason other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by Borrowers; or

 

(c)           any assignment of a Eurodollar Rate
Loan on a day other than the last day of the Interest Period therefor as a
result of a request by Borrowers pursuant to Section 10.13;

 

including
any loss of anticipated profits and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained.  Borrowers shall also pay any
customary administrative fees charged by such Lender in connection with the
foregoing.

 

For
purposes of calculating amounts payable by Borrowers to Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurodollar Rate Committed Loan
made by it at the Eurodollar Rate for such Loan by a matching deposit or other
borrowing in the London interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such Eurodollar Rate Loan was in fact
so funded.

 

3.06        Mitigation
Obligations; Replacement of Lenders.

 

(a)           Designation of a Different Lending
Office.  If any Lender requests
compensation under Section 3.04, or Borrowers are required to pay
any additional amount to any Lender, the L/C Issuer or any Governmental
Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01,
or if any Lender gives a notice pursuant to Section 3.02, then such
Lender or the L/C Issuer shall, as applicable, 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 3.01
or 3.04, as the case may be, in the future, or eliminate the need for
the notice pursuant to Section 3.02, as applicable, and (ii) in
each case, would not subject such Lender or the L/C Issuer to any unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender 

 

56

 

or
the L/C Issuer.  Borrowers hereby agree
to pay all reasonable costs and expenses incurred by any Lender in connection
with any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
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 3.01,
Borrowers may replace such Lender in accordance with Section 10.13.

 

3.07        Survival.  All of Borrowers’ obligations
under this Article III shall survive termination of the Aggregate
Commitments, repayment of all other Obligations hereunder and resignation of
Administrative Agent.

 

ARTICLE IV.  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01        Conditions
of Initial Credit Extension.  The obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

 

(a)           Administrative
Agent’s receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each
dated the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and
substance satisfactory to Administrative Agent and each of the Lenders:

 

(i)            executed
counterparts of this Agreement, sufficient in number for distribution to
Administrative Agent, each Lender and Borrower Representative;

 

(ii)           a Note executed by
Borrowers in favor of each Lender requesting a Note;

 

(iii)          the Security Agreement, duly executed by each Loan Party,
together with:

 

(A)          certificates representing the Pledged Equity referred to
therein accompanied by undated stock powers executed in blank and instruments
evidencing any Intercompany Notes indorsed in blank,

 

(B)          acknowledgment copies or stamped receipt copies of proper
financing statements, duly filed on or before the day of the initial Credit
Extension under the Uniform Commercial Code of all jurisdictions that
Administrative Agent may deem necessary or desirable in order to perfect the
Liens created under the Security Agreement, covering the Collateral described
in the Security Agreement,

 

(C)          completed requests for information, dated on or before the
date of the initial Credit Extension, listing
all effective financing statements filed in the jurisdictions referred
to in clause (B) above that name any Loan Party as debtor, together
with copies of such other financing statements,

 

57

 

(D)          evidence of the completion of all other actions, recordings
and filings of or with respect to the Security Agreement that Administrative
Agent may deem necessary or desirable in order to perfect the Liens created
thereby,

 

(E)           the Account Control Agreements, in each case as referred
to in the and Security Agreement and duly executed by the appropriate parties,

 

(F)           evidence that all other action that Administrative Agent
may deem necessary or desirable in order to perfect the Liens created under the
Security Agreement has been taken (including receipt of duly executed payoff
letters, UCC-3 termination statements and landlords’ and bailees’ waiver and
consent agreements); and

 

(G)          executed counterparts of any other Collateral Documents;

 

(iv)          a Landlord Waiver with respect to each location set forth
on Schedule 4.01(a)(iv);

 

(v)           the IP Security Agreements, duly executed by each
applicable Loan Party, together with evidence that all action that
Administrative Agent may deem necessary or desirable in order to perfect the
Liens created under the IP Security Agreements has been taken;

 

(vi)          executed counterparts of any other Loan Documents;

 

(vii)         such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party as Administrative Agent may require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;

 

(viii)        such documents and certifications as
Administrative Agent may reasonably require to evidence that each Loan Party is
duly organized or formed, and that each Loan Party is validly existing, in good
standing and qualified to engage in business in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect;

 

(ix)          a favorable opinion of counsel to the Loan Parties
acceptable to Administrative Agent addressed to Administrative Agent and each
Lender, as to the matters set forth concerning the Loan Parties and the Loan
Documents in form and substance satisfactory to Administrative Agent;

 

(x)           a certificate of a Responsible Officer of each Loan Party
either (A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by such
Loan Party and the validity against such Loan Party of the Loan Documents to
which it is a party, and such consents, licenses and 

 

58

 

approvals shall be in full force and effect, or (B) stating
that no such consents, licenses or approvals are so required;

 

(xi)          a certificate signed by a Responsible Officer of Borrowers
certifying (A) that the conditions specified in Sections 4.02(a) and
(b) have been satisfied, and (B) that there has been no event
or circumstance since the date of the Audited Financial Statements that has had
or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect;

 

(xii)         a copy of the earnings forecasts for the Borrowers and their
Subsidiaries on a consolidated basis, prepared by management of SI Holdings, of
consolidated balance sheets and statements of income or operations and cash
flows of the Borrowers and their
Subsidiaries on a monthly basis for the first year following the Closing Date
and on a quarterly basis for each year thereafter through 2012 (the Borrowers
agreeing hereby to provide to Administrative Agent not later than December 31,
2010, with extended forecasts through 2013);

 

(xiii)        certificates attesting to the Solvency
of each Loan Party before and after giving effect to the transactions
contemplated hereby, from its chief financial officer;

 

(xiv)        evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect, together
with the certificates of insurance, naming Administrative Agent, on behalf of
the Lenders, as an additional insured or loss payee, as the case may be, under
all insurance policies maintained with respect to the assets and properties of
the Loan Parties that constitutes Collateral;

 

(xv)         a duly completed Compliance Certificate as of the last day
of the fiscal quarter of Borrowers most recently ended prior to the Closing
Date, signed by a Responsible Officer of Borrowers; and

 

(xvi)        such other assurances, certificates, documents, consents or
opinions as Administrative Agent, the L/C Issuer, Swing Line Lender or the
Required Lenders reasonably may require.

 

(b)           Any fees required to be paid to
Administrative Agent or Lenders on or before the Closing Date shall have been
paid.

 

(c)           Unless waived by Administrative
Agent, Borrowers shall have paid all fees, charges and disbursements of counsel
to Administrative Agent (directly to such counsel if requested by
Administrative Agent) to the extent invoiced prior to or on the Closing Date,
plus such additional amounts of such fees, charges and disbursements as shall
constitute its reasonable estimate of such fees, charges and disbursements
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude a final settling of accounts
between Borrowers and Administrative Agent).

 

(d)           The Closing Date shall have occurred
on or before August 31, 2010.

 

59

 

Without
limiting the generality of the provisions of the last sentence of Section 9.03(d),
for purposes of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless Administrative Agent shall have received notice
from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

4.02        Conditions
to all Credit Extensions.  The obligation of each Lender to honor any
Request for Credit Extension is subject to the following conditions precedent:

 

(a)           The representations and warranties of
Borrowers and each other Loan Party contained in Article V or any
other Loan Document, or which are contained in any document furnished at any
time under or in connection herewith or therewith, shall be true and correct on
and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date, and except that for purposes of this Section 4.02, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

 

(b)           No Default shall exist, or would
result from such proposed Credit Extension or from the application of the
proceeds thereof.

 

(c)           Administrative Agent and, if
applicable, the L/C Issuer or Swing Line Lender shall have received a Request
for Credit Extension in accordance with the requirements hereof.

 

(d)           Administrative Agent shall have
received, in form and substance satisfactory to it, such other assurances,
certificates, documents or consents related to the foregoing as Administrative
Agent or the Required Lenders reasonably may require.

 

Each Request for Credit Extension submitted by Borrowers shall be
deemed to be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date
of the applicable Credit Extension.

 

4.03        Conditions
to Credit Extension for Acquisition.  The obligation of Lenders to make any Loan in
connection with any Acquisition by a Borrower is subject to the satisfaction of
the following conditions on the closing date of the acquisition (unless
otherwise waived by Administrative Agent and Required Lenders):

 

(a)           All conditions set forth in Section 4.01
(to the extent not previously satisfied with respect to the Acquisition) and Section 4.02
shall have been satisfied.

 

(b)           Borrowers or the appropriate Loan
Party shall have executed and delivered to Administrative Agent (or shall have
caused to be executed and delivered to Administrative Agent by the appropriate
Persons) the following (each of which shall be in form and substance
satisfactory to Administrative Agent):

 

60

 

(i)            To the extent not
previously delivered, true and correct copies of all material consents,
contracts, licenses, instruments and other documents assumed or acquired in the
Acquisition;

 

(ii)           Certificates of
insurance evidencing all insurance coverage and policy provisions required in
this Agreement and Collateral Documents;

 

(iii)          A pay-off letter
(including therein provisions reasonably acceptable to Administrative Agent for
the delivery or filing of appropriate UCC termination statements and mortgage and
lien releases) from all lenders and creditors of the Person or assets which are
the subject of the Acquisition;

 

(iv)          A properly completed
Request for Credit Extension in accordance with the requirements of this
Agreement;

 

(v)           An
Officer’s Certificate of Borrower Representative stating that the Acquisition
will be consummated immediately upon funding of the Loan requested in
connection therewith; and

 

(vi)          Such other
supporting documents and certificates as Administrative Agent may reasonably
request.

 

(c)           All legal matters incident to the
transactions hereby contemplated shall be reasonably satisfactory to special
counsel for Administrative Agent and Required Lenders.

 

(d)           Required
Lenders shall have consented to such Acquisition in their sole discretion as
constituting a Permitted Acquisition.

 

(e)           Neither an
Event of Default nor a Default shall have occurred and be then continuing, or
shall result after taking into consideration the effect of the requested
Acquisition and requested Loan.

 

(f)            Borrowers shall have paid to
Administrative Agent all reasonable fees required to be paid on the closing
date of the Acquisition pursuant to this Agreement.

 

(g)           In addition to the foregoing
requirements:

 

(i)            The Acquisition
shall be consummated contemporaneously with such Loan substantially in
accordance with the terms of the purchase agreement approved by Required
Lenders and, in any event, in a manner reasonably satisfactory to
Administrative Agent, including, without limitation, the satisfaction in full
(simultaneously with, and from the proceeds of, the Loan or otherwise) of all
Indebtedness of the target of such acquisition secured by the assets and
properties transferred to the Loan Parties which is not being assumed by the
Loan Parties.

 

(ii)           Administrative Agent
shall have received reasonable evidence of Borrowers’ ability to consummate
receipt at closing of all permits, approvals and 

 

61

 

consents,
if any, required with respect to the Acquisition and any other related
transaction contemplated by this Agreement.

 

(iii)          Administrative
Agent shall have received copies of any legal opinions delivered to Borrowers
in connection with the Acquisition.

 

(iv)          There shall not have
occurred, in Administrative Agent’s reasonable opinion, any change in the
financial condition, management or business operations, or the assets or
business of, the Person or assets which are the subject of such Acquisition
that could reasonably be expected to have a Material Adverse Effect.

 

(v)           At the time of
consummation of the Acquisition, Borrowers shall update all Schedules to this
Agreement to reflect changes thereto since the Closing Date, after giving
effect to the Acquisition.

 

(h)           Administrative Agent shall have
completed a due diligence investigation of the assets and business subject to
such Acquisition in scope, and with results, reasonably satisfactory to
Administrative Agent and Required Lenders, and shall have been given such
access to the management, records, books of account, contracts and properties
of such target and shall have received such financial, business and other
information regarding each of the foregoing Persons and businesses as it shall
have reasonably requested, and such other due diligence reports, audits, and
certifications as it may reasonably request.

 

(i)            Unless the Required Lenders
otherwise consent in writing, the aggregate amount of all Loans made to fund
Permitted Acquisitions during the term of this Agreement shall not exceed
$10,000,000.

 

ARTICLE V.  REPRESENTATIONS AND WARRANTIES

 

Borrowers
represent and warrant to Administrative Agent and the Lenders that:

 

5.01        Existence,
Qualification and Power.  Each Loan Party and each Subsidiary thereof (a) is
duly organized or formed, validly existing and, as applicable, in good standing
under the Laws of the jurisdiction of its incorporation or organization, (b) has
all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own or lease its assets and
carry on its business and (ii) execute, deliver and perform its
obligations under the Loan Documents to which it is a party, and (c) is
duly qualified and is licensed and, as applicable, in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license; except
in each case referred to in clause (b)(i), or (c), to the extent that failure
to do so could not reasonably be expected to have a Material Adverse Effect.

 

5.02        Authorization;
No Contravention.  The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is party, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (i) any Contractual Obligation to which such Person is a
party or affecting such 

 

62

 

Person
or the properties of such Person or any of its Subsidiaries or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any
Law.

 

5.03        Governmental
Authorization; Other Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental
Authority or any other Person is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Loan Party
of this Agreement or any other Loan Document.

 

5.04        Binding
Effect.  This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. 
This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms.

 

5.05        Financial
Statements; No Material Adverse Effect.  (a) The Audited Financial Statements
(i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and
(ii) fairly present the financial condition of Borrowers and their
Subsidiaries as of the date thereof and their results of operations for the period
covered thereby in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein.

 

(b)           The unaudited consolidated and consolidating balance sheets of
Borrowers and their Subsidiaries dated March 31, 2010, and the related
consolidated and consolidating
statements of income or operations, shareholders’ equity and cash flows for the
fiscal quarter ended on that date (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present the financial
condition of Borrowers and their Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end
audit adjustments.

 

(c)           Since the date of the Audited
Financial Statements, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

 

(d)           The consolidated and consolidating forecasted balance sheet and
statements of income and cash flows of Borrowers and their Subsidiaries
delivered pursuant to Section 6.01(b) were prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
fair in light of the conditions existing at the time of delivery of such
forecasts, and represented, at the time of delivery, Borrowers’ best estimate
of its future financial condition and performance.

 

5.06        Litigation.   Except as listed in the Borrowers’ filings
with the SEC made prior to the Closing Date, there are no actions, suits,
proceedings, investigations, claims or disputes pending or, to the knowledge of
Borrowers after due and diligent investigation, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or 

 

63

 

against
Borrowers or any of their Subsidiaries or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby, or (b) either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect.

 

5.07        No Default.  Neither any Loan Party nor any
Subsidiary thereof is in default under or with respect to any Contractual
Obligation that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
No Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Loan Document.

 

5.08        Ownership of
Property; Liens.  Each Borrower and each Subsidiary has good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  The property of Borrowers and their
Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01.

 

5.09        Environmental
Compliance.  Except as specifically disclosed in Schedule
5.09, there are, to Borrowers’ knowledge, no claims alleging potential
liability or responsibility for the violation of any Environmental Law on
Borrowers’ businesses, operations and properties which could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

5.10        Insurance.  The properties of Borrowers and
their Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of Borrowers, in such amounts (after giving effect to
any self-insurance compatible with the following standards), with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
a Borrower or the applicable Subsidiary operates.

 

5.11        Taxes. 
Borrowers and their Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees
and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against
any Borrower or any Subsidiary that would, if made, have a Material Adverse
Effect.

 

5.12        ERISA
Compliance.  (a) Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal or state laws.  Each Pension Plan
that is intended to be a qualified plan under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service to the effect that the form of such Plan is qualified under Section 401(a) of
the Code and the trust related thereto has been determined by the Internal
Revenue Service to be exempt from federal income tax under Section 501(a) of
the Code, or an application for such a letter is currently being processed by
the Internal Revenue 

 

64

 

Service.  To the best knowledge of the Borrower,
nothing has occurred that would prevent or cause the loss of such tax-qualified
status.

 

(b)           There are no pending or, to the best
knowledge of Borrowers, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could be reasonably
be expected to have a Material Adverse Effect. 
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

 

(c)           (i) No ERISA Event has occurred,
and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or
circumstance that could reasonably be expected to constitute or result in an
ERISA Event with respect to any Pension Plan; (ii) the Borrower and each
ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in
respect of each Pension Plan, and no waiver of the minimum funding standards
under the Pension Funding Rules has been applied for or obtained; (iii) as
of the most recent valuation date for any Pension Plan, the funding target
attainment percentage (as defined in Section 430(d)(2) of the Code)
is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any
facts or circumstances that could reasonably be expected to cause the funding
target attainment percentage for any such plan to drop below 60% as of the most
recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate
has incurred any liability to the PBGC other than for the payment of premiums,
and there are no premium payments which have become due that are unpaid; (v) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no
Pension Plan has been terminated by the plan administrator thereof nor by the PBGC,
and no event or circumstance has occurred or exists that could reasonably be
expected to cause the PBGC to institute proceedings under Title IV of ERISA to
terminate any Pension Plan.

 

(d)           Neither Borrower or any ERISA
Affiliate maintains or contributes to, or has any unsatisfied obligation to
contribute to, or liability under, any active or terminated Pension Plan other
than (A) on the Closing Date, those listed on Schedule 5.12(d) hereto
and (B) thereafter, Pension Plans not otherwise prohibited by this
Agreement.

 

5.13        Subsidiaries.  As of the Closing Date, no
Borrower has any Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13, and all of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by a Loan Party in the amounts specified on Part (a) of Schedule
5.13 free and clear of all Liens.  No
Borrower has equity investments in any other corporation or entity other than
those specifically disclosed in Part(b) of Schedule 5.13.  All of the outstanding Equity Interests in
each Borrower have been validly issued and are fully paid and nonassessable.

 

5.14        Margin
Regulations; Investment Company Act.  (a) No Borrower is engaged or will
engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock.  Following the application of the proceeds of each Borrowing or drawing
under each Letter of Credit, not more than 25% of the value of the assets
(either of a Borrower only or of a Borrower and its Subsidiaries on a
consolidated basis) subject to the provisions of Section 7.01 or Section 7.05
or subject to any 

 

65

 

restriction contained in any agreement or instrument
between Borrowers and any Lender or any Affiliate of any Lender relating to
Indebtedness that is within the scope of Section 8.01(e) will
be margin stock.

 

(b)           No Borrower, Person Controlling
Borrower, or Subsidiary is, or is required to be registered as, an “investment
company” under the Investment Company Act of 1940.

 

5.15        Disclosure.  Borrowers have disclosed to
Administrative Agent and Lenders all agreements, instruments and corporate or
other restrictions to which it or any of its Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, Borrowers represent only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

 

5.16      Compliance
with Laws.  Each Loan Party and each Subsidiary thereof
is in compliance in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its
properties, except in such instances in which (a) such requirement of Law
or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

5.17        Taxpayer
Identification Number. 
Borrowers’ true and correct U.S. taxpayer identification numbers are set
forth on Schedule 10.02.

 

5.18        Intellectual
Property; Licenses, Etc.  Borrowers and their Subsidiaries own, or
possess the right to use, all of the trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights that are reasonably necessary for the operation of their
respective businesses and, to Borrowers’ knowledge, without conflict with the
rights of any other Person.  To the best
knowledge of Borrowers, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by Borrowers or any Subsidiary infringes upon any
rights held by any other Person.  No
claim or litigation regarding any of the foregoing is pending or, to the best
knowledge of Borrowers, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.19        Rights in
Collateral; Priority of Liens.  Borrowers
and each other Loan Party own the property granted by it as Collateral under
the Collateral Documents, free and clear of any and all Liens in favor of third
parties.  Upon the proper filing of UCC
financing statements, and the taking of the other actions contemplated by the
Loan Documents or required by the 

 

66

 

Required Lenders, the Liens granted pursuant to the
Collateral Documents will constitute valid and enforceable first, prior and
perfected Liens on the Collateral in favor of Administrative Agent, for the
ratable benefit of the Secured Parties.

 

ARTICLE VI.  AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, Borrowers shall, and shall (except in the case
of the covenants set forth in Sections 6.01, 6.02 and 6.03)
cause each Subsidiary to:

 

6.01        Financial
Statements.  Deliver to Administrative Agent a sufficient
number of copies for delivery by Administrative Agent to each Lender, in form
and detail satisfactory to Administrative Agent and the Required Lenders:

 

(a)           as soon as available, but in any
event within one hundred twenty (120) days of the end of each fiscal year of SI
Holdings (or, if earlier, fifteen (15) days after the date required to be filed
with the SEC), audited balance sheets and statements of profit and loss and
cash flows, retained earnings, reconciliation of net worth and source and
application of funds for such fiscal year for SI Holdings and its Subsidiaries,
each prepared in accordance with GAAP consistently applied, on a consolidated
and consolidating basis, in reasonable detail by independent certified public
accountants selected by the Borrowers and acceptable to Administrative Agent,
showing SI Holdings’ and its Subsidiaries’ consolidated and consolidating
financial condition at the close of such fiscal year and the results of
operations during such year, together with a certificate signed by an officer
of the Borrowers, certifying Borrowers’ compliance, or lack thereof, with the
financial covenants described in Section 6.12 hereof, and a
schedule showing the calculations used to determine such compliance (or lack
thereof).

 

(b)           as soon as available, but in any
event within forty-five (45) days after the end of each fiscal quarter in each
fiscal year of SI Holdings (or, if earlier, five (5) days after the date
required to be filed with the SEC), consolidated balance sheets and statements
of profit and loss and cash flows, retained earnings, reconciliation of net
worth and source and application of funds for such fiscal year, each prepared
in reasonable detail in accordance with GAAP, on a consolidated and
consolidating basis, consistently applied, and consistent in format with the
financial statements furnished to Administrative Agent in connection with the
Borrowers’ loan application, certified by the President or Chief Financial
Officer of SI Holdings as fairly representing the financial position of the
Borrowers and their Subsidiaries, such balance sheets to be as of the close of
such quarter and such other statements to be for the period from the beginning
of the then current fiscal year to the end of such quarter in each case subject
to normal audit and year-end adjustments.

 

(c)           within thirty (30) days after the
beginning of each fiscal year, a management prepared budget for the then fiscal
year in form and substance reasonably satisfactory to Administrative Agent,
prepared on a consolidated and consolidating basis, which budget shall include,
without limitation, projected covenant compliance, projected profit and loss
and cash flow statements, balance sheets and a capital expenditure budget.

 

67

 

6.02        Certificates;
Other Information.  Deliver to Administrative Agent a sufficient
number of copies for delivery by Administrative Agent to each Lender, in form
and detail satisfactory to Administrative Agent and the Required Lenders:

 

(a)           concurrently with the delivery of the
financial statements referred to in Section 6.01(a) and (b),
a duly completed Compliance Certificate signed by the chief executive officer,
chief financial officer, treasurer or controller of Borrowers (which delivery
may, unless Administrative Agent, or a Lender requests executed originals, be
by electronic communication including fax or email and shall be deemed to be an
original authentic counterpart thereof for all purposes);

 

(b)           promptly after any request by
Administrative Agent or any Lender, copies of any detailed audit reports or
management letters submitted to the board of directors (or the audit committee
of the board of directors) of Borrowers by independent accountants in
connection with the accounts or books of Borrowers or any Subsidiary, or any
audit of any of them;

 

(c)           promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of Borrowers, and copies of
all annual, regular, periodic and special reports and registration statements
which Borrowers may file or be required to file with the SEC under Section 13
or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to
be delivered to Administrative Agent pursuant hereto;

 

(d)           promptly after the furnishing
thereof, copies of any statement or report furnished to any holder of debt
securities of any Loan Party or any Subsidiary thereof pursuant to the terms of
any indenture, loan or credit or similar agreement and not otherwise required
to be furnished to the Lenders pursuant to Section 6.01 or any other
clause of this Section 6.02;

 

(e)           promptly, and in any event within
five (5) Business Days after receipt thereof by any Loan Party or any
Subsidiary thereof, copies of each notice or other correspondence received from
the SEC (or comparable agency in any applicable non-U.S. jurisdiction)
concerning any investigation or possible investigation or other inquiry by such
agency regarding financial or other operational results of any Loan Party or
any Subsidiary thereof;

 

(f)            promptly, such additional
information regarding the business, financial or corporate affairs of Borrowers
or any Subsidiary, or compliance with the terms of the Loan Documents, as
Administrative Agent or any Lender may from time to time reasonably request;

 

(g)           at the request of Administrative
Agent, a field exam prepared by a third party reasonably acceptable to
Administrative Agent, which shall be paid for by Borrowers once in each
calendar year or more frequently if an Event of Default has occurred; and

 

(h)           not later than December 31, 2010, the
forecasts through 2013 contemplated by Section 4.01(a)(xii).

 

Documents
required to be delivered pursuant to Section 6.01(a), (b) or (c)
or Section 6.02(d) (to the extent any such documents are included in
materials otherwise filed with the SEC) to the extent any such documents are
not otherwise publicly available to Administrative Agent or 

 

68

 

Lenders
or at a Lenders’ request therefor, may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
Borrowers post such documents, or provide a link thereto on Borrowers’ website
on the Internet at the website address listed on Schedule 10.02; or (ii)
on which such documents are posted on Borrowers’ behalf on an Internet or
intranet website, if any, to which each Lender and Administrative Agent have
access (whether a commercial, third-party website or whether sponsored by
Administrative Agent); provided that: (i) Borrowers shall deliver paper
copies of such documents to Administrative Agent or any Lender upon its request
to Borrowers to deliver such paper copies until a written request to cease
delivering paper copies is given by Administrative Agent or such Lender and
(ii) Borrowers shall notify Administrative Agent and each Lender (by telecopier
or electronic mail) of the posting of any such documents and provide to
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents.  Administrative Agent
shall have no obligation to request the delivery of or to maintain paper copies
of the documents referred to above, and in any event shall have no
responsibility to monitor compliance by Borrowers with any such request by a
Lender for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.

 

Borrowers
hereby acknowledge that (a) Administrative Agent will make available to Lenders
and the L/C Issuer materials and/or information provided by or on behalf of
Borrowers hereunder (collectively, “Borrower Materials”) by posting
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Lenders (each,
a “Public Lender”) may have personnel who do not wish to receive
material non-public information with respect to Borrowers or their Affiliates
or the respective securities of any of the foregoing, and who may be engaged in
investment and other market-related activities with respect to such Persons’
securities.  Borrowers hereby agree that so long as a Borrower is the issuer of any
outstanding debt or equity securities that are registered or issued pursuant to
a private offering or is actively contemplating issuing any such securities
(w) all Borrower Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC,” Borrowers shall be deemed to have
authorized Administrative Agent, the L/C Issuer and the Lenders to treat such
Borrower Materials as not containing any material non-public information with
respect to Borrowers or its securities for purposes of United States Federal
and state securities laws (provided, however, that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in Section
10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made
available through a portion of the Platform designated “Public Investor;” and
(z) Administrative Agent shall be entitled to treat any Borrower Materials that
are not marked “PUBLIC” as being suitable only for posting on a portion of the
Platform not designated “Public Investor.”

 

6.03        Notices.  Promptly notify Administrative Agent and each
Lender:

 

(a)           of the occurrence of any Default;

 

(b)           of any matter that has resulted or
could reasonably be expected to result in a Material Adverse Effect, including
(i) breach or non-performance of, or any default under, a Contractual
Obligation of Borrowers or any Subsidiary; (ii) any dispute, litigation,
investigation, proceeding or suspension between Borrowers or any Subsidiary and
any Governmental 

 

69

 

Authority;
or (iii) the commencement of, or any material development in, any litigation or
proceeding affecting Borrowers or any Subsidiary, including pursuant to any
applicable Environmental Laws;

 

(c)           of the occurrence of any ERISA Event;
and

 

(d)           of any material change in accounting
policies or financial reporting practices by Borrowers or any Subsidiary
including any determination by Borrowers referred to in Section 2.10(b).

 

Each
notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrowers setting forth details of the occurrence
referred to therein and stating what action Borrowers has taken and proposes to
take with respect thereto.  Each notice
pursuant to Section 6.03(a) shall describe with particularity any and
all provisions of this Agreement and any other Loan Document that have been
breached.

 

6.04        Payment of
Obligations.  Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by Borrowers or such Subsidiary; (b)
all lawful claims which, if unpaid, would by law become a Lien upon its
property; and (c) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.

 

6.05        Preservation
of Existence, Etc. 
(a) Preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05;
(b) take all reasonable action to maintain all rights, privileges, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) preserve or renew all of
its registered patents, trademarks, trade names and service marks, the non-preservation
of which could reasonably be expected to have a Material Adverse Effect.

 

6.06        Maintenance
of Properties.  (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted; (b) make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (c) use the standard of care typical in the industry in the
operation and maintenance of its facilities.

 

6.07        Maintenance
of Insurance.  Maintain with financially sound and reputable
insurance companies not Affiliates of Borrowers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and
in such amounts (after giving effect to any self-insurance compatible with the
following standards) as are customarily carried under similar 

 

70

 

circumstances
by such other Persons and providing for not less than 30 days’ prior notice to
Administrative Agent of termination, lapse or cancellation of such insurance.

 

6.08        Compliance
with Laws.  Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, write, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted;
or (b) the failure to comply therewith could not reasonably be expected to have
a Material Adverse Effect.

 

6.09        Books and
Records.  (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of Borrowers or such Subsidiary, as the case
may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority
having regulatory jurisdiction over Borrowers or such Subsidiary, as the case
may be.  Borrowers shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as Administrative Agent or any Lender
shall reasonably require.

 

6.10        Inspection
Rights.  Permit representatives and independent
contractors of Administrative Agent and each Lender to visit and inspect any of
its properties, to examine its corporate, financial and operating records, and
make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, all at the expense of Borrowers and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to Borrowers; provided, however, that
when an Event of Default exists Administrative Agent or any Lender (or any of
their respective representatives or independent contractors) may do any of the
foregoing at the expense of Borrowers at any time during normal business hours
and without advance notice.

 

6.11        Use of
Proceeds.  Use the proceeds of the Credit Extensions to
refinance and consolidate the Existing Revolving Credit Loan and the Existing
Acquisition Term Loan, for working capital and other corporate purposes not in
contravention of any Law or of any Loan Document; provided, however,
that, unless the Required Lenders otherwise consent thereto in writing, not
more than an aggregate amount of $10,000,000 in Loan proceeds may be used to
finance Permitted Acquisitions.

 

6.12        Financial
Covenants.

 

(a)           Consolidated EBITDA.  Maintain and earn on a consolidated basis as
of the last day of each fiscal quarter, Consolidated EBITDA for the
twelve-month period ending on each such date equal to or greater than the
following:

 

	
  For
  Each Fiscal

  Quarter Ending on:

  	
   

  	
  Consolidated EBITDA to be

  not less than:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each of September 30, 2010, December 31, 2010,
  March 31, 2011 and June 30, 2011

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  Each of September 30, 2011 and December 31, 2011

  	
   

  	
  $

  	
  16,000,000

  	
   

  
	
  Each of March 31, 2012 and June 30, 2012

  	
   

  	
  $

  	
  17,000,000

  	
   

  

 

71

 

(b)           Consolidated Leverage Ratio.  Maintain a Consolidated Leverage Ratio not
exceeding 3.25:1.00.  This ratio will be
calculated as of the last day of each fiscal quarter for which this Agreement
requires Borrowers to deliver financial statements, using the results of the
twelve-month period ending on the last day of such fiscal quarter.

 

(c)           Basic Fixed Charge Coverage Ratio.  Maintain a Basic Fixed Charge Coverage Ratio
of at least 1.50:1.00.  This ratio will
be calculated as of the last day of each fiscal quarter for which this
Agreement requires Borrowers to deliver financial statements, using the results
of the twelve-month period ending on the last day of such fiscal quarter.  The current portion of long-term liabilities
will be measured as of the date twelve
(12) months prior to the current financial statement.

 

6.13        Guarantors.  Notify Administrative Agent at
the time that any Person becomes a Subsidiary, and promptly thereafter (and in
any event within 30 days), cause such Person (if it is a Domestic Subsidiary)
to (a) become a Guarantor by executing and delivering to Administrative Agent a
Guaranty or such other document as Administrative Agent shall deem appropriate
for such purpose, which Guaranty shall be secured by a security interest in all
assets of such Guarantor, and (b) deliver to Administrative Agent documents of
the types referred to in clauses (iii) and (iv) of Section 4.01(a) and
favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to in clause (a)), all in form, content and scope
reasonably satisfactory to Administrative Agent.

 

6.14        Collateral
Records.  To execute and deliver promptly,
and to cause each other Loan Party to execute and deliver promptly, to
Administrative Agent, from time to time, solely for Administrative Agent’s
convenience in maintaining a record of the Collateral, such written statements
and schedules as Administrative Agent may reasonably require designating,
identifying or describing the Collateral. 
The failure by Borrowers or any other Loan Party, however, to promptly
give Administrative Agent such statements or schedules shall not affect,
diminish, modify or otherwise limit the Liens on the Collateral granted
pursuant to the Collateral Documents.

 

6.15        Security
Interests.  (a)  Defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest
therein, (b) comply with the requirements of all state and federal laws in
order to grant to Administrative Agent and Lenders valid and perfected first
priority security interests in the Collateral, with perfection, in the case of
any investment property, deposit account or letter of credit, being effected by
giving Administrative Agent control of such investment property or deposit
account or letter of credit, rather than by the filing of a financing statement
with respect to such investment property, and 

 

72

 

(c) do whatever Administrative Agent may reasonably
request, from time to time, to effect the purposes of this Agreement and the
other Loan Documents, including filing notices of liens, UCC financing
statements, fixture filings and amendments, renewals and continuations thereof;
cooperating with Administrative Agent’s representatives; keeping stock records;
obtaining waivers from landlords and mortgagees and from warehousemen and their
landlords and mortgages; and, paying claims which might, if unpaid, become a
Lien on the Collateral.  Administrative
Agent is hereby authorized by Borrowers to file any UCC financing statements
covering the Collateral whether or not Borrowers’ signatures appear thereon.

 

6.16        Agent as
Primary Depository.  Maintain Bank of America as its primary
depository bank, including for the maintenance of business, cash management,
main operating and administrative deposit accounts.

 

ARTICLE
VII.  NEGATIVE COVENANTS

 

So
long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, Borrowers shall not, nor shall it permit any
Subsidiary to, directly or indirectly:

 

7.01        Liens.  Create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

(b)           Liens existing on the date hereof and
listed on Schedule 7.01 and any renewals or extensions thereof, provided
that (i) the property covered thereby is not changed, (ii) the amount secured
or benefited thereby is not increased except as contemplated by Section
7.03(b), (iii) the direct or any contingent obligor with respect thereto is
not changed, and (iv) and any renewal or extension of the obligations secured
or benefited thereby is permitted by Section 7.03(b);

 

(c)           Liens for taxes not yet due or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

 

(d)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person;

 

(e)           pledges or deposits in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other social security legislation, other than any Lien imposed by
ERISA;

 

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

 

73

 

(g)           easements, rights-of-way,
restrictions and other similar encumbrances affecting real property which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;

 

(h)           Liens securing judgments for the
payment of money not constituting an Event of Default under Section 8.01(h);
and

 

(i)            Liens securing Indebtedness
permitted under Section 7.03(e); provided that (i) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost
or fair market value, whichever is lower, of the property being acquired on the
date of acquisition.

 

7.02        Investments.  Make any Investments, except:

 

(a)           Investments held by Borrowers or such
Subsidiary in the form of cash equivalents or short-term marketable debt
securities;

 

(b)           advances to officers, directors and
employees of Borrowers and Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding, for
business travel, business entertainment, relocation and analogous ordinary
business purposes;

 

(c)           Investments consisting of Permitted
Acquisitions;

 

(d)           Investments of Borrowers in any
wholly-owned Subsidiary which exists on the Closing Date or which constitute
Permitted Acquisitions, and Investments of any wholly-owned Subsidiary in
Borrowers or in another wholly-owned Subsidiary which exist on the Closing Date
or are acquired as Permitted Acquisition;

 

(e)           Investments consisting of extensions
of credit in the nature of accounts receivable or notes receivable arising from
the grant of trade credit in the ordinary course of business, and Investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss; and

 

(f)            Guarantees permitted by Section
7.03.

 

7.03        Indebtedness.  Create, incur, assume or suffer
to exist any Indebtedness, except:

 

(a)           Indebtedness under the Loan
Documents;

 

(b)           Indebtedness outstanding on the date
hereof and listed on Schedule 7.03 and any refinancings, refundings,
renewals or extensions thereof; provided that (i) the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing
commitments unutilized thereunder and (ii) the terms relating to principal
amount, amortization, maturity, collateral (if any) and subordination (if any),
and other material terms taken as a whole, of any such refinancing, refunding,
renewing or extending Indebtedness, 

 

74

 

and
of any agreement entered into and of any instrument issued in connection
therewith, are no less favorable in any material respect to the Loan Parties or
Lenders than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;

 

(c)           Guarantees of Borrowers or any
Subsidiary in respect of Indebtedness otherwise permitted hereunder of
Borrowers or any wholly-owned Subsidiary;

 

(d)           obligations (contingent or otherwise)
of Borrowers or any Subsidiary existing or arising under any Swap Contract, provided
that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person, or changes in the value of securities
issued by such Person, and not for purposes of speculation or taking a “market
view;” and (ii) such Swap Contract does not contain any provision exonerating
the non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party; and

 

(e)           Indebtedness in respect of capital
leases, Synthetic Lease Obligations and purchase money obligations for fixed or
capital assets within the limitations set forth in Section 7.01(i); provided,
however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $2,500,000.

 

7.04        Fundamental
Changes.  Merge, dissolve, liquidate, consolidate with
or into another Person, or Dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except that, so long
as no Default exists or would result therefrom:

 

(a)           any Subsidiary may merge with (i) a
Borrower, provided that such Borrower shall be the continuing or
surviving Person, or (ii) any one or more other Subsidiaries, provided
that when any wholly-owned Subsidiary is merging with another Subsidiary, the
wholly-owned Subsidiary shall be the continuing or surviving Person, and, provided further that if a
Guarantor is merging with another Subsidiary, the Guarantor shall be the
surviving Person;

 

(b)           any Subsidiary may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to a
Borrower or to another Subsidiary; provided that if the transferor in
such a transaction is a wholly-owned Subsidiary, then the transferee must
either be a Borrower or a wholly-owned Subsidiary and, provided further that if the transferor of such assets is a
Guarantor, the transferee must either be a Borrower or a Guarantor; and

 

(c)           a Permitted Acquisition may be
accomplished by merger provided that a Borrower shall be the continuing or
surviving Person.

 

7.05        Dispositions.  Make any Disposition or enter
into any agreement to make any Disposition, except:

 

(a)           Dispositions of obsolete or worn out
property, whether now owned or hereafter acquired, in the ordinary course of
business;

 

75

 

(b)           Dispositions of inventory in the
ordinary course of business;

 

(c)           Dispositions of equipment or real
property to the extent that (i) such property is exchanged for credit against
the purchase price of similar replacement property or (ii) the proceeds of such
Disposition are reasonably promptly applied to the purchase price of such
replacement property;

 

(d)           Dispositions of property by any
Subsidiary to a Borrower or to a wholly-owned Subsidiary; provided that
if the transferor of such property is a Guarantor, the transferee thereof must
either be a Borrower or a Guarantor; and

 

(e)           Dispositions permitted by Section
7.04.

 

provided, however,
that any Disposition pursuant to clauses (a) through (e) shall be for fair
market value.

 

7.06        Restricted
Payments.  Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
or issue or sell any Equity Interests, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or
would result therefrom:

 

(a)           each Subsidiary may make Restricted
Payments to Borrowers, Guarantors and any other Person that owns an Equity
Interest in such Subsidiary, ratably according to their respective holdings of
the type of Equity Interest in respect of which such Restricted Payment is
being made;

 

(b)           Borrowers and each Subsidiary may
declare and make dividend payments or other distributions payable solely in the
common stock or other common Equity Interests of such Person; and

 

(c)           Borrowers and each Subsidiary may
purchase, redeem or otherwise acquire Equity Interests issued by it with the
proceeds received from the substantially concurrent issue of new shares of its
common stock or other common Equity Interests.

 

7.07        Change in
Nature of Business.  Engage in any material line of business
substantially different from those lines of business conducted by Borrowers and
their Subsidiaries on the date hereof or any business substantially related or
incidental thereto.

 

7.08        Transactions
with Affiliates.  Without the prior written consent of
Administrative Agent, which shall not be unreasonably withheld, conditioned, or
delayed, enter into any transaction of any kind with any Affiliate of a
Borrower, which is not in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable to such Borrower or such
Subsidiary as would be obtainable by such Borrower or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate, provided that the foregoing restriction shall not apply to
transactions between or among any Borrower and any Guarantor or between and
among Guarantors.

 

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7.09        Burdensome
Agreements.  Enter into any Contractual Obligation (other
than this Agreement or any other Loan Document) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to a Borrower or
to otherwise transfer property to a Borrower, (ii) of any Subsidiary to
Guarantee the Indebtedness of a Borrower or (iii) of a Borrower or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of
such Person; provided, however, that this clause (iii) shall
not prohibit any negative pledge incurred or provided in favor of any holder of
Indebtedness permitted under Section 7.03(e) solely to the
extent any such negative pledge relates to the property financed by or the
subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person.

 

7.10        Use of
Proceeds.  Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or ultimately,
to purchase or carry margin stock (within the meaning of Regulation U of the
FRB) or to extend credit to others for the purpose of purchasing or carrying
margin stock or to refund indebtedness originally incurred for such purpose.

 

ARTICLE VIII.
 EVENTS OF DEFAULT AND REMEDIES

 

8.01        Events of
Default.  Any of the following shall constitute an
Event of Default:

 

(a)           Non-Payment.  Any Borrower or any other Loan Party fails to
pay (i) within three business days after the same becomes due, any amount of
principal of any Loan or any L/C Obligation, or any interest on any Loan or on
any L/C Obligation, or any fee due hereunder, or (ii) within five business
days after the same becomes due, any other amount payable hereunder or under
any other Loan Document; or

 

(b)           Specific Covenants.  Borrowers fail to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02,
6.03, 6.05, 6.10, 6.11,  6.12 or 6.13 or Article VII;
or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days or any default or Event of Default occurs under
any other Loan Document; or

 

(d)           Representations and Warranties.  Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of Borrowers or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
in any material respect when made or deemed made; or

 

(e)           Cross-Default.  (i) Any Borrower or any Subsidiary (A) fails
to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than the Threshold Amount
and such failure 

 

77

 

is
not being diligently contested in good faith by such Borrower or Subsidiary, or
(B) fails to observe or perform any other agreement or condition relating
to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to
its stated maturity, or such Guarantee to become payable or cash collateral in
respect thereof to be demanded; or (ii) there occurs under any Swap
Contract an Early Termination Date (as defined in such Swap Contract) resulting
from (A) any event of default under such Swap Contract as to which
Borrowers or any Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which Borrowers or any Subsidiary is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by Borrowers or
such Subsidiary as a result thereof is greater than the Threshold Amount; or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues undismissed
or unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) Any Borrower or any Subsidiary
admits in writing its inability or fails generally to pay its debts as they become
due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of
any such Person and is not released, vacated or fully bonded within 30 days
after its issue or levy; or

 

(h)           Judgments.  There is entered against any Borrower or any
Subsidiary (i) one or more final judgments or orders for the payment of
money in an aggregate amount (as to all such judgments or orders) exceeding the
Threshold Amount (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), or (ii) any
one or more non-monetary final judgments that have, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any
creditor upon such judgment or order, or (B) there is a period of 10
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of 

 

78

 

any
Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan
or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) any
Borrower or any ERISA Affiliate fails to pay when due, after the expiration of
any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j)            Invalidity of Loan Documents.  Any Loan Document or any provision thereof,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any Loan
Document or any provision thereof; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document or any provision thereof; or

 

(k)           Change of Control.  There occurs any Change of Control with
respect to any Borrower other than SI
Holdings; or

 

(l)            Material Adverse Effect.  There occurs any event or circumstance that
has a Material Adverse Effect.

 

8.02        Remedies
Upon Event of Default.  If any Event of Default occurs and is
continuing, Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

(a)           declare the commitment of each Lender
to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;

 

(b)           declare the unpaid principal amount
of all outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Borrowers;

 

(c)           require that Borrowers Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

 

(d)           exercise on behalf of itself, the
Lenders and the L/C Issuer all rights and remedies available to it, the Lenders
and the L/C Issuer under the Loan Documents;

 

provided, however,
that upon the occurrence of an actual or deemed entry of an order for relief
with respect to Borrowers under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C Credit Extensions shall automatically terminate, the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable, and the obligation of Borrowers to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of Administrative Agent or any
Lender.

 

79

 

8.03        Application
of Funds.  After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall, subject to the
provisions of Sections 2.15 and 2.16 be applied by Administrative Agent
in the following order:

 

First, to payment of
that portion of the Obligations constituting fees, indemnities, expenses and
other amounts (including fees, charges and disbursements of counsel to
Administrative Agent (including fees and time charges for attorneys who may be
employees of Administrative Agent) and amounts payable under Article III)
payable to Administrative Agent in its capacity as such;

 

Second, to payment of
that portion of the Obligations constituting fees, indemnities and other
amounts (other than principal, interest and L/C Fees) payable to Lenders and
the L/C Issuer (including fees, charges and disbursements of counsel to the
respective Lenders and the L/C Issuer (including fees and time charges for
attorneys who may be employees of any Lender or the L/C Issuer) and amounts
payable under Article III), ratably among them in proportion to the
respective amounts described in this clause Second payable to them;

 

Third, to payment of
that portion of the Obligations constituting accrued and unpaid L/C Fees and
interest on the Loans, L/C Borrowings and other Obligations arising under the
Loan Documents, ratably among Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;

 

Fourth, to payment of
that portion of the Obligations constituting unpaid principal of the Loans, L/C
Borrowings and Obligations then owing under Secured Hedge Agreements and
Secured Cash Management Agreements, ratably among Lenders, the L/C Issuer, the
Hedge Banks and the Cash Management Banks in proportion to the respective
amounts described in this clause Fourth held by them;

 

Fifth, to
Administrative Agent for the account of the L/C Issuer, to Cash Collateralize
that portion of L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit to the extent not otherwise Cash Collateralized by the
Borrower pursuant to Sections 2.03 and 2.15; and

 

Last, the balance,
if any, after all of the Obligations have been indefeasibly paid in full, to
Borrowers or as otherwise required by Law.

 

Subject
to Section 2.03(c) and 2.15, amounts used to Cash Collateralize
the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth
above shall be applied to satisfy drawings under such Letters of Credit as they
occur.  If any amount remains on deposit
as Cash Collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Obligations, if
any, in the order set forth above.

 

Notwithstanding
the foregoing, Obligations arising under Secured Cash Management Agreements and
Secured Hedge Agreements shall be excluded from the application described above
if Administrative Agent has not received written notice thereof, together with
such supporting documentation as Administrative Agent may request, from the
applicable Cash Management Bank or Hedge Bank, as the case may be.  Each Cash Management Bank or Hedge 

 

80

 

Bank
not a party to this Agreement that has given the notice contemplated by the
preceding sentence shall, by such notice, be deemed to have acknowledged and
accepted the appointment of the Administrative Agent pursuant to the terms of Article IX
hereof for itself and its Affiliates as if a “Lender” party hereto.

 

ARTICLE IX.  ADMINISTRATIVE AGENT

 

9.01        Appointment
and Authorization of Administrative Agent.  (a) Each of the Lenders and the
L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as
Administrative Agent hereunder and under the other Loan Documents and
authorizes Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to Administrative Agent by the terms
hereof and thereof, together with such actions and powers as are reasonably
incidental thereto.  The provisions of
this Article are solely for the benefit of Administrative Agent, the
Lenders and the L/C Issuer, and neither Borrowers nor any other Loan Party
shall have rights as a third party beneficiary of any of such provisions.

 

(b)           Administrative
Agent shall also act as the “collateral agent” under the Loan Documents, and
each of the Lenders (including in its capacities as a potential Hedge
Bank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably appoints and authorizes
Administrative Agent to act as the agent of such Lender and the L/C Issuer for
purposes of acquiring, holding and enforcing any and all Liens on Collateral
granted by any of the Loan Parties to secure any of the Obligations, together
with such powers and discretion as are reasonably incidental thereto.  In this connection, Administrative Agent, as “collateral
agent” and any co-agents, sub-agents and attorneys-in-fact appointed by
Administrative Agent pursuant to Section 9.05 or otherwise for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents, or for exercising any rights
and remedies thereunder at the direction of Administrative Agent), shall be
entitled to the benefits of all provisions of this Article IX and Article X,
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents as if set forth in full herein with respect
thereto.  The Collateral Agent shall not
have any authority or responsibility to exercise rights or remedies with
respect to the Collateral or Collateral Documents.

 

9.02        Rights as a
Lender.  The Person serving as Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not Administrative
Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include the Person serving
as Administrative 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
Borrowers or any Subsidiary or other Affiliate thereof as if such Person were
not Administrative Agent hereunder and without any duty to account therefor to
Lenders.

 

81

 

9.03        Exculpatory
Provisions. 
Administrative Agent shall not have any duties or obligations except
those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing,
Administrative Agent:

 

(a)           shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing;

 

(b)           shall not 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 Administrative 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 Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose Administrative Agent to
liability or that is contrary to any Loan Document or applicable Law; and

 

(c)           shall not, 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
Borrowers or any of its Affiliates that is communicated to or obtained by the
Person serving as Administrative Agent or any of its Affiliates in any
capacity.

 

(d)           Administrative Agent shall not be
liable for any action taken or not taken by it (i) 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 Administrative Agent shall believe in good
faith shall be necessary, under the circumstances as provided in Sections
8.02 and 10.01) or (ii) in the absence of its own gross negligence
or willful misconduct.  Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
written notice describing such Default is given to Administrative Agent by
Borrowers, a Lender or the L/C Issuer. 
Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement 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 Administrative Agent.

 

9.04        Reliance by
Administrative Agent. 
Administrative Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent, statement,
instrument, document or other writing (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.  Administrative 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 L/C Issuer, 

 

82

 

Administrative
Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless Administrative Agent shall have received notice to the contrary
from such Lender or the L/C Issuer prior to the making of such Loan or the
issuance of such Letter of Credit. 
Administrative Agent may consult with legal counsel (who may be counsel
for 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.

 

9.05        Delegation
of Duties.  Administrative 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
Administrative Agent.  Administrative
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 Administrative Agent
and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

9.06        Resignation
of Administrative Agent.  (a) Administrative Agent may at any time
give notice of its resignation to Lenders, the L/C Issuer and Borrowers.  Upon receipt of any such notice of
resignation, the Lenders shall have the right, in consultation with Borrowers,
to appoint a successor, which shall be a bank with an office in the United
States, 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 Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of Lenders
and the L/C Issuer, appoint a successor Administrative Agent meeting the
qualifications set forth above; provided that if Administrative Agent
shall notify Borrowers 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 Administrative 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 Administrative Agent on behalf of the Lenders or the L/C Issuer under any of
the Loan Documents, the retiring Administrative Agent shall continue to hold
such collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations
provided to be made by, to or through Administrative Agent shall instead be
made by or to each Lender and the L/C Issuer directly, until such time as the
Lenders appoint a successor Administrative Agent as provided for above in this
Section.  Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative 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 Section). 
The fees payable by Borrowers to a successor Administrative Agent shall
be the same as those payable to its predecessor unless otherwise agreed between
Borrowers and such successor.  After the
retiring Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be 

 

83

 

taken
by any of them while the retiring Administrative Agent was acting as
Administrative Agent.

 

(b)           Any resignation by Bank of America as
Administrative Agent pursuant to this Section shall also constitute its
resignation as L/C Issuer and Swing Line Lender.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (a) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring L/C Issuer and Swing Line Lender, (b) the retiring
L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (c) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

 

9.07        Non-Reliance
on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer
acknowledges that it has, independently and without reliance upon
Administrative Agent or any other Lender or any of their Related Parties 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 L/C Issuer also
acknowledges that it will, independently and without reliance upon
Administrative Agent or any other Lender or any of their Related Parties 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.

 

9.08        No Other
Duties, Etc.  Anything herein to the contrary
notwithstanding, no Lender holding a title listed on the cover page hereof
(including, without limitation, the Collateral Agent) shall have any rights,
powers, duties, obligations or responsibilities under this Agreement or any of
the other Loan Documents, except in its capacity, as applicable, as
Administrative Agent, a Lender or the L/C Issuer hereunder.  Without limiting the foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. 
Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.

 

9.09        Administrative
Agent May File Proofs of Claim.  In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any
Loan Party, Administrative Agent (irrespective of whether the principal of any
Loan or L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether Administrative Agent shall
have made any demand on Borrowers) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans, L/C Obligations and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have
the claims of Lenders, the L/C Issuer and Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
Lenders, the L/C Issuer and 

 

84

 

Administrative
Agent and their respective agents and counsel and all other amounts due
Lenders, the L/C Issuer and Administrative Agent under Sections 2.03(i) and
(j), 2.09 and 10.04) allowed in such judicial proceeding;
and

 

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender and the L/C Issuer to make such payments to Administrative Agent and, in
the event that Administrative Agent shall consent to the making of such
payments directly to Lenders and the L/C Issuer, to pay to Administrative Agent
any amount due for the reasonable compensation, expenses, disbursements and
advances of Administrative Agent and its agents and counsel, and any other
amounts due Administrative Agent under Sections 2.09 and 10.04.  Nothing contained herein shall be deemed to
authorize Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Lender
or the L/C Issuer or to authorize Administrative Agent to vote in respect of
the claim of any Lender or the L/C Issuer in any such proceeding.

 

9.10        Collateral
Matters. 
(a) Each Lender (including in its capacities as a potential
Hedge Bank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably authorizes and directs
Administrative Agent to enter into the Collateral Documents for the benefit of
such Lender and the L/C Issuer.  Each
Lender (including in its capacities as a potential Hedge Bank and a
potential Cash Management Bank) and the
L/C Issuer hereby agrees, and each holder of any Note by the acceptance thereof
will be deemed to agree, that, except as otherwise set forth in Section 10.01,
any action taken by the Required Lenders, in accordance with the provisions of
this Agreement or the Collateral Documents, and the exercise by the Required
Lenders of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all of Lenders and the L/C Issuer. 
Administrative Agent is hereby authorized (but not obligated) on behalf
of all of Lenders (including in its capacities as a potential Hedge Bank
and a potential Cash Management Bank) and
the L/C Issuer, without the necessity of any notice to or further consent from
any Lender or the L/C Issuer from time to time prior to, an Event of Default,
to take any action with respect to any Collateral or Collateral Documents which
may be necessary to perfect and maintain perfected the Liens upon the
Collateral granted pursuant to the Collateral Documents.

 

(b)           Each
Lender (including in its capacities as a potential Hedge Bank and a potential
Cash Management Bank) and the L/C
Issuer hereby irrevocably authorize Administrative Agent, at its option and in
its discretion,

 

(i)            to
release any Lien on any property granted to or held by Administrative Agent
under any Loan Document (A) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than (A) contingent
indemnification obligations and (B) obligations and liabilities
under Secured Cash Management Agreements and Secured Hedge Agreements as to
which arrangements satisfactory to the applicable Cash Management Bank or Hedge
Bank shall have been made) and the
expiration or termination of all Letters of Credit, (B) that is sold or to
be sold as part of or 

 

85

 

in connection with any sale permitted hereunder or
under any other Loan Document, (C) subject to Section 10.01,
if approved, authorized or ratified in writing by the Required Lenders, or (D) in
connection with any foreclosure sale or other disposition of Collateral after
the occurrence of an Event of Default; and

 

(ii)           to
subordinate any Lien on any property granted to or held by Administrative Agent
under any Loan Document to the holder of any Lien on such property that is
permitted by this Agreement or any other Loan Document.

 

Upon request by Administrative Agent at any time,
each Lender and the L/C Issuer will confirm in writing Administrative Agent’s
authority to release or subordinate its interest in particular types or items
of Collateral pursuant to this Section 9.10.

 

(c)           Subject
to (b) above, Administrative Agent shall (and is hereby irrevocably
authorized by each Lender and the L/C Issuer, to) execute such documents as may
be necessary to evidence the release or subordination of the Liens granted to
Administrative Agent for the benefit of Administrative Agent and Lenders and
the L/C Issuer herein or pursuant hereto upon the applicable Collateral;
provided that (i) Administrative Agent shall not be required to execute
any such document on terms which, in Administrative Agent’s opinion, would
expose Administrative Agent to or create any liability or entail any
consequence other than the release or subordination of such Liens without
recourse or warranty and (ii) such release or subordination shall not in
any manner discharge, affect or impair the Obligations or any Liens upon (or
obligations of Borrowers or any other Loan Party in respect of) all interests
retained by Borrowers or any other Loan Party, including the proceeds of the
sale, all of which shall continue to constitute part of the Collateral.  In the event of any sale or transfer of Collateral,
or any foreclosure with respect to any of the Collateral, Administrative Agent
shall be authorized to deduct all expenses reasonably incurred by
Administrative Agent from the proceeds of any such sale, transfer or
foreclosure.

 

(d)           Administrative
Agent shall have no obligation whatsoever to any Lender, the L/C Issuer or any
other Person to assure that the Collateral exists or is owned by Borrowers or
any other Loan Party or is cared for, protected or insured or that the Liens
granted to Administrative Agent herein or in any of the Collateral Documents or
pursuant hereto or thereto have been properly or sufficiently or lawfully
created or (absent direction from the Required Lenders) enforced, or to
exercise or to continue exercising at all or in any manner or under any duty of
care, disclosure or fidelity any of the rights, authorities and powers granted
or available to Administrative Agent in this Section 9.10 or in any
of the Collateral Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Administrative Agent
may act in any manner it may deem appropriate, in its sole discretion, given
Administrative Agent’s own interest in the Collateral as one of Lenders and
that Administrative Agent shall have no duty or liability whatsoever to Lenders
or the L/C Issuer.

 

(e)           Each
Lender and the L/C Issuer hereby
appoints each other Lender as agent for the purpose of perfecting Lenders’ and
the L/C Issuer’s security interest in assets which, in accordance with Article 9
of the UCC can be perfected only by possession. 
Should any Lender or the L/C Issuer (other than Administrative Agent)
obtain possession of any such Collateral, such Lender or the L/C Issuer shall
notify Administrative Agent thereof, and, promptly upon 

 

86

 

Administrative Agent’s request therefor shall
deliver such Collateral to Administrative Agent or in accordance with
Administrative Agent’s instructions.

 

9.11        Secured Cash
Management Agreements and Secured Hedge Agreements.  No Cash Management Bank or Hedge
Bank that obtains the benefits of Section 8.03, the Security Agreement or
any Collateral by virtue of the provisions hereof or of the Security Agreement
or any Collateral Document shall have any right to notice of any action or to
consent to, direct or object to any action hereunder or under any other Loan
Document or otherwise in respect of the Collateral (including the release or
impairment of any Collateral) other than in its capacity as a Lender and, in
such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article IX
to the contrary, Administrative Agent shall not be required to verify the
payment of, or that other satisfactory arrangements have been made with respect
to, Obligations arising under Secured Cash Management Agreements and Secured
Hedge Agreements unless Administrative Agent has received written notice of
such Obligations, together with such supporting documentation as Administrative
Agent may request, from the applicable Cash Management Bank or Hedge Bank, as
the case may be.

 

ARTICLE X.  MISCELLANEOUS

 

10.01      Amendments, Etc.  No amendment or waiver of
any provision of this Agreement or any other Loan Document, and no consent to
any departure by Borrowers or any other Loan Party therefrom, shall be
effective unless in writing signed by the Required Lenders and Borrowers or the
applicable Loan Party, as the case may be, and acknowledged by Administrative
Agent, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however,
that no such amendment, waiver or consent shall:

 

(a)           waive any condition set forth in Section 4.01(a) without
the written consent of each Lender; provided, however, in the
sole discretion of Administrative Agent, only a waiver by Administrative Agent
shall be required with respect to immaterial matters or items specified in Section 4.01(a) (iii) or
(iv) with respect to which Borrowers have given assurances
satisfactory to Administrative Agent that such items shall be delivered
promptly following the Closing Date;

 

(b)           extend or increase the Commitment of
any Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

 

(c)           postpone any date fixed by this
Agreement or any other Loan Document for any payment (excluding mandatory
prepayments) of principal, interest, fees or other amounts due to Lenders (or
any of them) hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby;

 

(d)           reduce the principal of, or the rate
of interest specified herein on, any Loan or L/C Borrowing, or (subject to
clause (iv) of the second proviso to this Section 10.01) any
fees or other amounts payable hereunder or under any other Loan Document,
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of Borrowers to pay interest or L/C Fees at the Default Rate or (ii) to
amend any 

 

87

 

financial
covenant hereunder (or any defined term used therein), unless the effect of
such amendment would be to reduce the rate of interest on any Loan or L/C
Borrowing or to reduce any fee payable hereunder, in which case the consent of
all Lenders shall be required;

 

(e)           change Section 2.13 or Section 8.03
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender;

 

(f)            change any provision of this Section or
the definition of “Required Lenders” or any other provision hereof specifying
the number or percentage of Lenders required to amend, waive or otherwise
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; or

 

(g)           release any Borrower as an obligor
hereunder, or release any Guarantor from the Guaranty or release the Liens on
all or substantially all of the Collateral in any transaction or series of
related transactions except in accordance with the terms of any Loan Document,
without the written consent of each Lender;

 

and,
provided  further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the L/C Issuer in addition to the
Lenders required above, affect the rights or duties of the L/C Issuer under
this Agreement or any Issuer Document relating to any Letter of Credit issued
or to be issued by it; (ii) no amendment, waiver or consent shall, unless
in writing and signed by Swing Line Lender in addition to the Lenders required
above, affect the rights or duties of Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of Administrative Agent under this Agreement or any other Loan
Document; and (iv) the Administrative Agent Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the
parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder (and any
amendment, waiver or consent which by its terms requires the consent of all
Lenders or each affected Lender may be effected with the consent of the
applicable Lenders other than Defaulting Lenders), except that (x) the
Commitment of any Defaulting Lender may not be increased or extended without
the consent of such Lender and (y) any waiver, amendment or modification
requiring the consent of all Lenders or each affected Lender that by its terms
affects any Defaulting Lender more adversely than other affected Lenders shall
require the consent of such Defaulting Lender.

 

Notwithstanding
any provision herein to the contrary, this Agreement may be amended with the
written consent of Required Lenders, Administrative Agent and Borrowers (i) to
add one or more additional revolving credit or term loan facilities to this
Agreement , in each case subject to the limitations in Section 2.14,
and to permit the extensions of credit and all related obligations and
liabilities arising in connection therewith from time to time outstanding to
share ratably (or on a basis subordinated to the existing facilities hereunder)
in the benefits of this Agreement and the other Loan Documents with the
obligations and liabilities from time to time outstanding in respect of the
existing facilities hereunder, and (ii) in connection with the foregoing,
to permit, as deemed appropriate by Administrative Agent and approved by the
Required Lenders, the Lenders providing such additional credit facilities to
participate in any 

 

88

 

required
vote or action required to be approved by the Required Lenders or by any other
number, percentage or class of Lenders hereunder.

 

10.02      Notices;
Effectiveness; Electronic Communications.  (a) Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (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, and all notices and other communications expressly permitted
hereunder to be given by telephone shall be made to the applicable telephone
number, as follows:

 

(i)            if to Borrowers, Administrative
Agent, the L/C Issuer or Swing Line Lender, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on Schedule
10.02 ; and

 

(ii)           if to any other Lender, to the
address, telecopier number, electronic mail address or telephone number
specified in its Administrative Questionnaire (including, as appropriate,
notices delivered solely to the Person designated by a Lender on its
Administrative Questionnaire then in effect for the delivery of notices that
may contain material non-public information relating to the Borrower).

 

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 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 subsection (b) below,
shall be effective as provided in such subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to Lenders
and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by Administrative Agent, provided that the foregoing shall
not apply to notices to any Lender or the L/C Issuer pursuant to Article II
if such Lender or the L/C Issuer, as applicable has notified Administrative
Agent that it is incapable of receiving notices under such Article by
electronic communication.  Administrative
Agent or Borrowers may, in its or their discretion, agree to accept notices and
other communications to it or them hereunder by electronic communications
pursuant to procedures approved by it, provided that approval of such
procedures may be limited to particular notices or communications.  Unless 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.

 

89

 

(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM BORROWER MATERIALS. 
NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
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 PARTY IN CONNECTION WITH BORROWER MATERIALS
OR THE PLATFORM.  In no event shall
Administrative Agent or any of its Related Parties (collectively, the “Administrative
Agent Parties”) have any liability to Borrowers, any Lender, the L/C Issuer
or any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of Borrowers’ or
Administrative Agent’s transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Administrative Agent Party; provided, however, that in no
event shall any Administrative Agent Party have any liability to Borrowers, any
Lender, the L/C Issuer or any other Person for indirect, special, incidental,
consequential or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of Borrowers, Administrative Agent, the
L/C Issuer and Swing Line Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to
the other parties hereto.  Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to Borrowers, Administrative Agent,
the L/C Issuer and Swing Line Lender.  In
addition, each Lender agrees to notify Administrative Agent from time to time
to ensure that Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender. 
Furthermore, each Public Lender agrees to cause at least one individual
at or on behalf of such Public Lender to at all times have selected the “Private
Side Information” or similar designation on the content declaration screen of
the Platform in order to enable such Public Lender or its delegate, in
accordance with such Public Lender’s compliance procedures and applicable Law,
including United States Federal and state securities Laws, to make reference to
Borrower Materials that are not made available through the “Public Side
Information” portion of the Platform and that may contain material non-public
information with respect to the Borrowers or their securities for purposes of
United States Federal or state securities laws.

 

(e)           Reliance by Administrative Agent.
L/C Issuer and Lenders.  Administrative Agent, the L/C
Issuer and Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices and Swing Line Loan Notices)
purportedly given by or on behalf of Borrowers even if (i) such notices
were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof.  Borrowers shall indemnify
Administrative Agent, the L/C Issuer, each Lender and the Related Parties of
each of them from all losses, costs, expenses and liabilities resulting from
the reliance 

 

90

 

by
such Person on each notice purportedly given by or on behalf of Borrowers.  All telephonic notices to and other
telephonic communications with Administrative Agent may be recorded by
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

10.03      No Waiver;
Cumulative Remedies.  No failure by any Lender, the L/C Issuer or
Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

 

10.04      Expenses;
Indemnity; Damage Waiver.  (a) Costs and Expenses.  Borrowers shall jointly and severally pay
(i) all reasonable out-of-pocket expenses incurred by Administrative Agent
and its Affiliates (including the reasonable fees, charges and disbursements of
counsel for Administrative Agent), in connection with the syndication of the
credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
L/C Issuer in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by Administrative Agent, any Lender or the L/C
Issuer (including the fees, charges and disbursements of any counsel for
Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and
time charges for attorneys who may be employees of Administrative Agent, any
Lender or the L/C Issuer, in connection with the enforcement or protection of
its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b)           Indemnification by Borrowers.  Borrowers shall indemnify Administrative
Agent (and any sub-agent thereof), each Lender and the L/C Issuer, 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), and shall indemnify and hold
harmless each Indemnitee from all fees and time charges and disbursements for
attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by 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, or, in the
case of Administrative Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of
the proceeds therefrom (including any refusal by the L/C Issuer to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such 

 

91

 

demand
do not comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by any Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to any Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by any
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto IN ALL CASES, WHETHER OR NOT CAUSED BY OR
ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE
NEGLIGENCE OF THE INDEMNITEE; 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 any Borrower 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 such Borrower or 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 Borrowers for any reason
fail to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to Administrative Agent (or any sub-agent thereof), the L/C
Issuer or any Related Party of any of the foregoing, each Lender severally
agrees to pay to Administrative Agent (or any such sub-agent), the L/C Issuer
or such Related Party, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against Administrative
Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or
against any Related Party of any of the foregoing acting for Administrative
Agent (or any such sub-agent) or L/C Issuer in connection with such
capacity.  The obligations of the Lenders
under this subsection (c) are subject to the provisions of Section 2.12(d).

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, Borrowers shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, 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
subsection (b) above shall be liable for any damages arising from the use
by unintended recipients of any information or other materials distributed to
such unintended recipients by such Indemnitee 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 other than for direct or actual damages resulting from the gross
negligence or willful misconduct of such Indemnitee as determined by a final
and nonappealable judgment of a court of competent jurisdiction.

 

(e)           Payments.  All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.

 

92

 

(f)            Survival.  The agreements in this Section shall
survive the resignation of Administrative Agent, the L/C Issuer and the Swing
Line Lender, the replacement of any Lender, the termination of the Aggregate
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.

 

10.05      Payments Set
Aside.  To the extent that any payment by or on
behalf of Borrowers is made to Administrative Agent, the L/C Issuer or any
Lender, or Administrative Agent, the L/C Issuer or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each
Lender and the L/C Issuer severally agrees to pay to Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by Administrative Agent, plus interest thereon from the date of
such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
The obligations of the Lenders and the L/C Issuer under clause (b) of
the preceding sentence shall survive the payment in full of the Obligations and
the termination of this Agreement.

 

10.06      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 neither
Borrowers nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of
Administrative Agent, the L/C Issuer and each Lender and no Lender may assign
or otherwise transfer any of its rights or obligations hereunder except (i) to
an assignee in accordance with the provisions of subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section, or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of subsection (f) of
this Section (and any other attempted assignment or transfer by any party
hereto 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 subsection (d) of
this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of Administrative Agent, the L/C Issuer and the Lenders) 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 assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans
(including for purposes of this subsection (b), participations in L/C
Obligations and in Swing Line Loans) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:

 

93

 

(i)            Minimum Amounts

 

(A)          in the case of an assignment of the entire remaining amount
of the assigning Lender’s Commitment under any Facility and the Loans at the
time owing to it  under such Facility  or in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund no minimum amount need be assigned; and

 

(B)          in any case not described in subsection (b)(i)(A) of
this Section, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the 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 Administrative Agent
or, if “Trade Date” is specified in the Assignment and Assumption, as of the
Trade Date, shall not be less than $5,000,000 unless each of Administrative
Agent and, so long as no Event of Default has occurred and is continuing,
Borrowers otherwise consent (each such consent not to be unreasonably withheld
or delayed); provided, however, that concurrent assignments to members of an
Assignee Group and concurrent assignments from members of an Assignee Group to
a single Eligible Assignee (or to an Eligible Assignee and members of its
Assignee Group) will be treated as a single assignment for purposes of
determining whether such minimum amount has been met.

 

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

 

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

 

(A)          the consent of Borrowers (such consent not to be
unreasonably withheld or delayed) shall be required unless (1) an Event of
Default has occurred and is continuing at the time of such assignment or (2) such
assignment is to a Lender or an Affiliate of a Lender or an Approved Fund; provided
that Borrowers shall be deemed to have consented to any such assignment unless
they shall object thereto by written notice to Administrative Agent within five
(5) Business Days after having received notice thereof;

 

(B)          the consent of Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required  for
assignments in respect of any Commitment if such assignment is to a Person that
is not a Lender with a Commitment in respect of the applicable Facility, or an
Affiliate of such Lender or an Approved Fund with respect to such Lender.

 

94

 

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

 

(D)          the consent of the Swing Line Lender (such consent not to
be unreasonably withheld or delayed) shall be required for any assignment in
respect of the Commitments.

 

(iv)          Assignment and
Assumption.  The parties to each
assignment shall execute and deliver to Administrative Agent an Assignment and
Assumption, together with a processing and recordation fee in the amount of
$3,500.00; provided, however, that Administrative Agent may, in
its sole discretion, elect to waive such processing and recordation fee in the
case of any assignment.  The assignee, if
it is not a Lender, shall deliver to Administrative Agent an Administrative
Questionnaire.

 

(v)           No Assignment to
Borrowers.  No such assignment shall
be made (A) to Borrowers or any of Borrowers’ Affiliates or Subsidiaries
or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person
who, upon becoming a Lender hereunder, would constitute any of the foregoing
Persons described in this clause (B), or (C) to a natural person.

 

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

 

(vii)         Certain
Additional Payments.  In connection
with any assignment of rights and obligations of any Defaulting Lender
hereunder, no such assignment shall be effective unless and until, in addition
to the other conditions thereto set forth herein, the parties to the assignment
shall make such additional payments to Administrative Agent in an aggregate
amount sufficient, upon distribution thereof as appropriate (which may be
outright payment, purchases by the assignee of participations or
subparticipations, or other compensating actions, including funding, with the
consent of the Borrower and Administrative Agent, the applicable pro rata share
of Loans previously requested but not funded by the Defaulting Lender, to each
of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay
and satisfy in full all payment liabilities then owed by such Defaulting Lender
to Administrative Agent or any Lender hereunder (and interest accrued thereon)
and (y) acquire (and fund as appropriate) its full pro rata share of all
Loans and participations in Letters of Credit and Swing Line Loans in
accordance with its Applicable Percentage. 
Notwithstanding the foregoing, in the event that any assignment of
rights and obligations of any Defaulting Lender hereunder shall become
effective under applicable Law without compliance with the provisions of this
paragraph, then the assignee of such interest shall be deemed to be a
Defaulting Lender for all purposes of this Agreement until such compliance
occurs.

 

Subject to acceptance and recording thereof by Administrative Agent
pursuant to subsection (c) of this Section, from and after the effective
date specified in each Assignment and Assumption, the assignee thereunder shall
be a party to this Agreement and, to the extent of the interest

 

95

 

assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
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 Sections
3.01, 3.04, 3.05, and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, Borrowers (at its expense)
shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection 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
subsection (d) of this Section.

 

(c)           Register.  Administrative Agent, acting solely for this
purpose as an agent of Borrowers (and such agency being solely for tax
purposes), shall maintain at Administrative Agent’s Office 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 L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and Borrowers, Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  In addition,
Administrative Agent shall maintain on the Register information regarding the
designation, and revocation of designation, of any Lender as a Defaulting
Lender.  The Register shall be available
for inspection by Borrowers and any Lender, 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, Borrowers or Administrative Agent, sell
participations to any Person (other than a natural person, a Defaulting Lender
or Borrowers or any of 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
(including such Lender’s participations in L/C Obligations and/or Swing Line
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) Borrowers, Administrative Agent, the L/C Issuer and
the Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.01 that
affects such Participant.  Subject to
subsection (e) of this Section, Borrowers agree that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to subsection (b) of
this Section.  To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it
were a Lender.

 

96

 

(e)           Limitations upon Participant
Rights.  A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.04  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 Borrowers’ prior written consent.

 

(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
(including under its Note, if any) 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.

 

(g)           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 law, including the Federal Electronic Signatures in Global and
National Commerce Act, the Rhode Island Uniform Electronic Transactions Act, or
any other similar state laws based on the Uniform Electronic Transactions Act.

 

(h)           Deemed Consent of Borrowers.  If the consent of Borrowers to an assignment
to an Eligible Assignee is required hereunder (including a consent to an
assignment which does not meet the minimum assignment threshold specified in Section 10.06(b)(i)(B)),
Borrowers shall be deemed to have given its consent five Business Days after
the date notice thereof has been delivered to Borrowers by the assigning Lender
(through Administrative Agent) unless such consent is expressly refused by
Borrowers prior to such fifth Business Day.

 

(i)            Resignation as L/C Issuer or
Swing Line Lender.  Notwithstanding
anything to the contrary contained herein, if at any time Bank of America assigns
all of its Commitment and  Loans pursuant
to subsection (b) above, Bank of America may, (i) upon 30 days’
notice to Borrowers and the Lenders, resign as L/C Issuer and/or (ii) upon
30 days’ notice to Borrowers, resign as Swing Line Lender.  In the event of any such resignation as L/C
Issuer or Swing Line Lender, Borrowers shall be entitled to appoint from among
Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided,
however, that no failure by Borrowers to appoint any such successor shall
affect the resignation of Bank of America as L/C Issuer or Swing Line Lender,
as the case may be.  If Bank of America
resigns as L/C Issuer, it shall retain all the rights, powers, privileges and
duties of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Committed Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Base Rate Committed Loans or fund risk participations in outstanding
Swing Line Loans pursuant to Section 2.04(c).  Upon the appointment of a successor L/C
Issuer and/or Swing Line Lender, (a) such successor shall succeed to and
become vested with all of the rights, powers, privileges and 

 

97

 

duties
of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the
successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to Bank of America to effectively assume the
obligations of Bank of America with respect to such Letters of Credit.

 

10.07      Treatment of
Certain Information; Confidentiality.  Each of Administrative Agent, Lenders and the
L/C Issuer agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and 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 laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any 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, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to Borrowers and its
obligations, (g) with the consent of 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 Administrative
Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a
nonconfidential basis from a source other than Borrowers.  For purposes of this Section, “Information”
means all information received from Borrowers or any Subsidiary relating to
Borrowers or any Subsidiary or any of their respective businesses, other than
any such information that is available to Administrative Agent, any Lender or
the L/C Issuer on a nonconfidential basis prior to disclosure by Borrowers or
any Subsidiary, provided that, in the case of information received from
Borrowers or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.  Each of Administrative
Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning Borrowers or
a Subsidiary, as the case may be, (b) it has developed compliance
procedures regarding the use of material non-public information and (c) it
will handle such material non-public information in accordance with applicable
Law, including Federal and state securities Laws.

 

10.08      Right of
Setoff.   If an Event of Default shall have occurred and
be continuing, each Lender, the L/C Issuer and each of their respective
Affiliates is hereby authorized at any time and from time to time, after
obtaining the prior written consent of Administrative Agent, to the fullest
extent permitted by applicable 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 L/C Issuer or any such 

 

98

 

Affiliate
to or for the credit or the account of Borrowers or any other Loan Party
against any and all of the obligations of Borrowers or such Loan Party now or
hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer or any such Affiliate, irrespective of whether or not
such Lender or the L/C Issuer shall have made any demand under this Agreement
or any other Loan Document and although such obligations of Borrowers or such
Loan Party may be contingent or unmatured or are owed to a branch or office of
such Lender or the L/C Issuer different from the branch or office holding such
deposit or obligated on such indebtedness; provided, that in the event
that any Defaulting Lender shall exercise any such right of setoff, (x) all
amounts so set off shall be paid over immediately to Administrative Agent for
further application in accordance with the provisions of Section 2.16 and,
pending such payment, shall be segregated by such Defaulting Lender from its
other funds and deemed held in trust for the benefit of Administrative Agent
and the Lenders, and (y) the Defaulting Lender shall provide promptly to
Administrative Agent a statement describing in reasonable detail the
Obligations owing to such Defaulting Lender as to which it exercised such right
of setoff.  The rights of each Lender,
the L/C Issuer and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that
such Lender, the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to
notify Borrowers and Administrative Agent 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.

 

10.09      Interest Rate
Limitation.  Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under
the Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”).  If Administrative Agent or any Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to Borrowers. 
In determining whether the interest contracted for, charged, or received
by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may,
to the extent permitted by applicable Law, (a) characterize any payment
that is not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.

 

10.10      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 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
Administrative Agent and when 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 telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

10.11      Survival of
Representations and Warranties.   All representations and warranties made
hereunder and in any other Loan Document or other document delivered 

 

99

 

pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
Administrative Agent and each Lender, regardless of any investigation made by
Administrative Agent or any Lender or on their behalf and notwithstanding that
Administrative Agent or any Lender may have had notice or knowledge of any
Default at the time of any Credit Extension, and shall continue in full force
and effect as long as any Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

10.12      Severability. 
If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of
this Section 10.12, if and to the extent that the enforceability of
any provisions in this Agreement relating to Defaulting Lenders shall be
limited by Debtor Relief Laws, as determined in good faith by Administrative
Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such
provisions shall be deemed to be in effect only to the extent not so limited.

 

10.13      Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
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 3.01,
or  if
any Lender is a Defaulting Lender or if
any other circumstance exists hereunder that gives the Borrower the right to
replace a Lender as a party hereto, then Borrowers may, at their sole
expense and effort, upon notice to such Lender and Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by, Section 10.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

 

(a)           Borrowers
shall have paid to Administrative Agent the assignment fee specified in Section 10.06(b);

 

(b)           such
Lender shall have received payment of an amount equal to 100% of the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts);

 

(c)           in
the case of any such assignment resulting from a claim for compensation under Section 3.04
or payments required to be made pursuant to Section 3.01, such
assignment will result in a reduction in such compensation or payments
thereafter; and

 

(d)           such
assignment does not conflict with applicable Laws.

 

100

 

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 the Borrower to require such assignment and delegation
cease to apply

 

10.14      Governing
Law; Jurisdiction; Etc. 
(a) GOVERNING LAW. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF RHODE ISLAND.

 

(b)           SUBMISSION TO JURISDICTION.  BORROWERS AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF RHODE ISLAND SITTING IN
PROVIDENCE COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE STATE
OF RHODE ISLAND, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH RHODE ISLAND STATE 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 IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY
LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST
BORROWERS OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(c)           WAIVER OF VENUE.  BORROWERS AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS
SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

10.15      Waiver of
Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  

 

101

 

EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON 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 AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16      No Advisory
or Fiduciary Responsibility.  In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), Borrowers and each other Loan Party acknowledges and agrees and
acknowledges its Affiliates’ understanding that:  (i) (A) the arranging and other
services regarding this Agreement provided by Administrative Agent are arm’s-length
commercial transactions between Borrowers, each other Loan Party and their
respective Affiliates, on the one hand, and Administrative Agent, on the other hand,
(B) each of Borrowers and the other Loan Parties have consulted their own
legal, accounting, regulatory and tax advisors to the extent they have deemed
appropriate, and (C) Borrowers and each other Loan Party is capable of
evaluating and understanding, and understands and accepts, the terms, risks and
conditions of the transactions contemplated hereby and by the other Loan
Documents; (ii) (A) Administrative Agent is and has been acting
solely as a principal and, except as expressly agreed in writing by the
relevant parties, has not been, is not, and will not be acting as an advisor,
agent or fiduciary, for Borrowers, any other Loan Party, or any of their
respective Affiliates, or any other Person and (B) Administrative Agent
does not have any obligation to Borrowers, any other Loan Party or any of their
Affiliates with respect to the transaction contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and
(iii) Administrative Agent and its Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of
Borrowers, the other Loan Parties and their respective Affiliates, and
Administrative Agent has no obligation to disclose any of such interests to
Borrowers, any other Loan Party of any of their respective Affiliates.  To the fullest extent permitted by law, each
of Borrowers and the other Loan Parties hereby waive and release, any claims
that it may have against Administrative Agent with respect to any breach or alleged
breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.

 

10.17      USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and Administrative Agent (for itself and not on behalf of
any Lender) hereby notifies Borrower 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 Borrower, which information includes the name and
address of Borrower and other information that will allow such Lender or
Administrative Agent, as applicable, to identify Borrower in accordance with
the Act.

 

102

 

ARTICLE XI.  APPOINTMENT OF THE BORROWER REPRESENTATIVE;
JOINT AND SEVERAL LIABILITY OF THE BORROWERS

 

11.01      Borrower
Representative.  Each
Borrower hereby irrevocably appoints the Borrower Representative, as the agent
for such Borrower on its behalf, to (i) request Loans from Lenders,
(ii) request L/C Issuer to issue Letters of Credit, (iii) to give and
receive notices under the Loan Documents and (iv) take all other action
which the Borrower Representative or Borrowers are permitted or required to
take under this Agreement.

 

11.02      Joint and Several
Liability of Borrowers.

 

(a)           Joint and Several
Liability.  Each Borrower hereby
agrees that such Borrower is jointly and severally liable for, and hereby
absolutely and unconditionally guarantees to Administrative Agent and Lenders
and their respective successors and assigns, the full and prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of,
all Obligations owed or hereafter owing to Administrative Agent and Lenders by
each other Borrower.  Each Borrower
agrees that its guaranty obligation hereunder is a continuing guaranty of
payment and performance and not of collection, that its obligations under this Section 11.02
shall not be discharged until payment and performance, in full, of the
Obligations (other than contingent indemnification obligations) has occurred,
and that its obligations under this Section 11.02 shall be
absolute, unconditional and irrevocable, irrespective of, and unaffected by, (i) the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in, this Agreement, any other Loan Document or any other agreement,
document or instrument to which any Borrower is or may become a party; (ii) the
absence of any action to enforce this Agreement (including this Section 11.02)
or any other Loan Document or the waiver or consent by Administrative Agent and
Lenders with respect to any of the provisions thereof; (iii) the
insolvency of any Borrower or Subsidiary; and (iv) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor.  Each
Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.

 

(b)           Waivers
by Borrowers.  Each Borrower
expressly waives all rights it may have now or in the future under any statute,
or at common law, or at law or in equity, or otherwise, to compel
Administrative Agent or Lenders to marshal assets or to proceed in respect of
the Obligations guaranteed hereunder against any other Borrower or Subsidiary,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower.  Each Borrower consents
and agrees that Administrative Agent or the Lenders may, at any time and from
time to time, without notice or demand, whether before or after any actual or
purported termination, repudiation or revocation of this Agreement by any
Borrower, and without affecting the enforceability or continuing effectiveness
hereof as to such Borrower:  (i) with
the consent of the other Borrowers, supplement, restate, modify, amend,
increase, decrease, extend, renew or otherwise change the time for payment or
the terms of this Agreement or any part thereof, including any increase or
decrease of the rate(s) of interest thereon; (ii) with the consent of
the other Borrowers, supplement, restate, modify, amend, increase, decrease, or
enter into or give any agreement with respect to, this Agreement or any part
thereof, or any of the Security Documents; (iii) waive, approve or consent
to any action, condition, covenant, default, remedy, 

 

103

 

right,
representation or term of this Agreement or any other Loan Document;
(iv) accept partial payments; (v) release, reconvey, terminate,
waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer or
enforce any security or guarantees, and apply any security and direct the order
or manner of sale thereof as the Agents or Lenders in their sole and absolute
discretion may determine; (vi) release any person from any personal
liability with respect to this Agreement or any part thereof; (vii) settle,
release on terms satisfactory to the Required Lenders or by operation of
applicable Laws or otherwise liquidate or enforce any security or guaranty in
any manner, consent to the transfer of any security and bid and purchase at any
sale; or (viii) consent to the merger, change or any other restructuring
or termination of the corporate or partnership existence of any Borrower or any
other person, and correspondingly restructure the obligations evidenced hereby,
and any such merger, change, restructuring or termination shall not affect the
liability of any Borrower or the continuing effectiveness hereof, or the
enforceability hereof with respect to all or any part of the obligations
evidenced hereby.  It is agreed among
each Borrower, Administrative Agent and Lenders that the foregoing consents and
waivers are of the essence of the transaction contemplated by this Agreement
and the other Loan Documents and that, but for the provisions of this Section 11.02
and such waivers, Administrative Agent and Lenders would decline to enter into
this Agreement.

 

(c)           Benefit
of Guaranty.  Each Borrower agrees
that the provisions of this Section 11.02 are for the benefit of
Administrative Agent and Lenders and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between
any other Borrower and Administrative Agent or Lenders, the obligations of such
other Borrower under the Loan Documents.

 

(d)           Waiver
of Subrogation, Etc. 
Notwithstanding anything to the contrary in this Agreement or in any
other Loan Document, and except as set forth in Section 11.02(g),
each Borrower hereby expressly and irrevocably waives any and all rights at law
or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor. 
Each Borrower acknowledges and agrees that this waiver is intended to
benefit Administrative Agent and Lenders and shall not limit or otherwise
affect such Borrower’s liability hereunder or the enforceability of this Section 11.02,
and that Administrative Agent, Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and agreements
set forth in this Section 11.02(d).

 

(e)           Election
of Remedies.  If Administrative Agent
or any Lender may, under applicable law, proceed to realize its benefits under
any of the Loan Documents, Administrative Agent or any Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 11.02.  If, in the exercise of any of its rights and
remedies, Administrative Agent or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or the like, each Borrower hereby consents to such
action by Administrative Agent or such Lender and waives any claim based upon
such action, even if such action by Administrative Agent or such Lender shall
result in a full or partial loss of any rights of subrogation that each
Borrower might otherwise have had but for such action by Administrative Agent
or such Lender.  Any election of remedies
that results in the denial or impairment of the right of Administrative 

 

104

 

Agent
or any Lender to seek a deficiency judgment against any Borrower shall not
impair any other Borrower’s obligation to pay the full amount of the
Obligations.

 

(f)            Limitation.  Notwithstanding any provision herein
contained to the contrary, each Borrower’s liability under this Section 11.02
(which liability is in any event in addition to amounts for which such Borrower
is primarily liable under Section 2) shall be limited to an amount
not to exceed as of any date of determination the greater of:

 

(i)            the net amount of all Loans advanced to any other
Borrower under this Agreement and then re-loaned or otherwise transferred to,
or for the benefit of, such Borrower; and

 

(ii)           the amount that could be claimed by Administrative Agent
and Lenders from such Borrower under this Section 11.02 without
rendering such claim voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law after taking
into account, among other things, such Borrower’s right of contribution and
indemnification from each other Borrower under Section 11.02(g).

 

(g)           Contribution
with Respect to Guaranty Obligations.

 

(i)            To the extent that any Borrower shall make a payment
under this Section 11.02 of all or any of the Obligations (other
than Loans made to that Borrower for which it is primarily liable) (a “Guarantor
Payment”) that, taking into account all other Guarantor Payments then
previously or concurrently made by any other Borrower, exceeds the amount that
such Borrower would otherwise have paid if each Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payment in the same proportion that
such Borrower’s “Allocable Amount” (as defined below) (as determined
immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts
of each of the Borrowers as determined immediately prior to the making of such
Guarantor Payment, then, following payment in full of the Obligations (other
than contingent indemnification obligations) and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.

 

(ii)           As of any date of determination, the “Allocable Amount”
of any Borrower shall be equal to the maximum amount of the claim that could
then be recovered from such Borrower under this Section 11.02
without rendering such claim voidable or avoidable under Section 548 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer
Act, Uniform Fraudulent Conveyance Act or similar statute or common law.

 

105

 

(iii)          This Section 11.02(g) is intended only to
define the relative rights of the Borrowers and nothing set forth in this Section 11.02(g) is
intended to or shall impair the obligations of Borrowers, jointly and
severally, to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement, including Section 11.02(a).  Nothing contained in this Section 11.02(g) shall
limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, fees and expenses with
respect thereto for which such Borrower shall be primarily liable.

 

(iv)          The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrowers to which such contribution and indemnification is owing.

 

(v)           The rights of the indemnifying Borrowers against other
Borrowers under this Section 11.02(g) shall be exercisable
upon the full payment of the Obligations (other than contingent indemnification
obligations) and the termination of the Commitments.

 

(h)           Liability
Cumulative.  The liability of
Borrowers under this Section 11.02 is in addition to and shall be
cumulative with all liabilities of each Borrower to Administrative Agent and
Lenders under this Agreement and the other Loan Documents to which such
Borrower is a party or in respect of any Obligations or obligation of the other
Borrowers, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.

 

(i)            Stay
of Acceleration.  If acceleration of
the time for payment of any amount payable by Borrowers under this Agreement is
stayed upon the insolvency, bankruptcy or reorganization of any of Borrowers,
all such amounts otherwise subject to acceleration under the terms of this
Agreement shall nonetheless be payable jointly and severally by Borrowers
hereunder forthwith on demand by Administrative Agent made at the request of
the Required Lenders.

 

(j)            Benefit
to Borrowers.  All of Borrowers and
their Subsidiaries are engaged in related businesses and integrated to such an
extent that the financial strength and flexibility of each such Person has a
direct impact on the success of each other Person.  Each Borrower and each Subsidiary will derive
substantial direct and indirect benefit from the extension of credit hereunder.

 

(The next page is the signature page.)

 

106

 

IN
WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the date first
above written.

 

	
   

  	
  SUMMER INFANT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jason P. Macari, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUMMER INFANT (USA), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jason P. Macari, President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KIDDOPOTAMUS & COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jason P. Macari, President and CEO

  

 

 

[Summer
Infant/A&R Credit Agreement]

 

(Signatures continued on next page.)

 

 

	
   

  	
  BANK OF AMERICA, N.A.,
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Ken
  Puro

  
	
   

  	
   

  	
  Title:
  

  	
  Vice
  President

  

 

 

[Summer Infant/A&R
Credit Agreement]

 

(Signatures continued on next page.)

 

 

	
   

  	
  BANK OF AMERICA, N.A.,
  as a Lender, L/C

  Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Donald
  C. McQueen

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

 

[Summer Infant/A&R
Credit Agreement]

 

(Signatures continued on next page.)

 

 

	
   

  	
  LENDER AND COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  RBS CITIZENS, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[Summer Infant/A&R
Credit Agreement]

 

(Signatures continued on next page.)

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK
  RHODE ISLAND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  William
  C. Tsonos

  
	
   

  	
   

  	
  Title:
  

  	
  Senior
  Vice President

  

 

 

[Summer Infant/A&R
Credit Agreement]

 

(Signatures continued on next page.)

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[Summer Infant/A&R
Credit Agreement]

 

 

SCHEDULE 2.01

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

Commitments

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  41.666666667

  	
  %

  
	
  RBS Citizens, National Association

  	
   

  	
  $

  	
  12,500,000

  	
   

  	
  20.833333333

  	
  %

  
	
  Bank Rhode Island

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  16.666666667

  	
  %

  
	
  Wells Fargo Bank, National Association

  	
   

  	
  $

  	
  12,500,000

  	
   

  	
  20.833333333

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  60,000,000

  	
   

  	
  100.000000000

  	
  %

  

 

 

SCHEDULE 4.01(a)(iv)

 

Landlord Waiver Sites

 

	
  Landlord

  	
   

  	
  Grantor

  	
   

  	
  Locations

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dean
  Warehouse Services Inc.

  	
   

  	
  Summer
  Infant (USA),Inc.

  	
   

  	
  100
  Higginson Avenue, Lincoln, RI 02865

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIT
  Commerce Distribution, LLC

  	
   

  	
  Summer
  Infant (USA),Inc.

  	
   

  	
  6101-6121
  Peachtree Street, Commerce, CA 90040

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Peachtree
  Commerce LLC

  	
   

  	
  Summer
  Infant (USA),Inc.

  	
   

  	
  6108-6120
  Peachtree Street, Commerce, CA 90040

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FAITH
  REALTY II, LLC

  	
   

  	
  Summer
  Infant (USA),Inc.

  	
   

  	
  1275
  Park East Drive, Woonsocket, RI 02895

  

 

 

SCHEDULE 5.09

 

Environmental Matters

 

None

 

 

SCHEDULE 5.12(D)

 

ERISA Disclosures

 

None

 

 

SCHEDULE 5.13

 

Subsidiaries and Other Equity Investments

 

Summer
Infant, Inc. has 3 wholly owned Subsidiaries

 

a.             Summer Infant (USA), Inc.

b.             Summer Infant Europe Limited

c.             Summer Infant Asia Limited

 

Summer
Infant (USA), Inc. has 2 wholly owned Subsidiaries

 

a.             Kiddopotamus & Company

b.             Summer Infant Canada Limited

 

 

SCHEDULE 7.01

 

Existing Liens

 

1.             Liens in favor of Administrative
Agent

 

2.             Leased Equipment Under Capitalized
Leases Described in Schedule 7.03

 

 

SCHEDULE 7.03

 

Existing Indebtedness

 

	
  Lease
  #

  	
   

  	
  Lease Name

  	
   

  	
  Leased Equipment

  	
   

  	
  Current Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-006

  	
   

  	
  Bank
  of West #6

  	
   

  	
  Computer
  Equipment

  	
   

  	
  $

  	
  6,512.74

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-007

  	
   

  	
  Bank
  of West #7

  	
   

  	
  Computer &
  Warehouse Equipment

  	
   

  	
  9,492.86

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-008

  	
   

  	
  Bank
  of West #8

  	
   

  	
  Computer
  Equipment

  	
   

  	
  12,748.12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-009

  	
   

  	
  Bank
  of West #9

  	
   

  	
  Computer &
  Warehouse Equipment

  	
   

  	
  26,245.49

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-010

  	
   

  	
  Bank
  of West #10

  	
   

  	
  Computer
  Equipment

  	
   

  	
  23,757.61

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-011

  	
   

  	
  Bank
  of West #11

  	
   

  	
  Computer &
  Office Equipment

  	
   

  	
  68,537.89

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-012

  	
   

  	
  Bank
  of West #12

  	
   

  	
  Computer &
  Warehouse Equipment

  	
   

  	
  72,841.85

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-013

  	
   

  	
  Bank
  of West #13

  	
   

  	
  Computer
  Equipment

  	
   

  	
  99,310.76

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-014

  	
   

  	
  Bank
  of West #14

  	
   

  	
  Computer &
  Office Equipment

  	
   

  	
  78,892.74

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  080-0808829-015

  	
   

  	
  Bank
  of West #15

  	
   

  	
  Computer
  Equipment

  	
   

  	
  160,501.71

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  558,841.77

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  229931

  	
   

  	
  CSI
  Leasing

  	
   

  	
  New
  California Warehouse Expansion

  	
   

  	
  90,000.00 

  (approved)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wells
  Fargo Financial Leasing

  	
   

  	
  2
  Konica Minolta bizzhubs

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  90,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grand
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  648,841.77

  	
   

  

 

 

Interest
Swap Contracts:

 

	
  Rate

  	
   

  	
  Notional Amt

  	
   

  	
  Eff. Date

  	
   

  	
  Mat. Date

  	
   

  	
  Mark-to-Market @ 6/30/10

  	
   

  
	
  Swap 17.06%

  	
   

  	
  3,771,904

  	
   

  	
  6/21/2007

  	
   

  	
  6/7/2012

  	
   

  	
  (349,471

  	
  )

  
	
  Swap 23.50%

  	
   

  	
  6,000,000

  	
   

  	
  5/12/2008

  	
   

  	
  4/08/2011

  	
   

  	
  (155,638

  	
  )

  
	
  Swap 32.92%

  	
   

  	
  10,000,000

  	
   

  	
  11/3/2008

  	
   

  	
  11/01/2010

  	
   

  	
  (107,599

  	
  )

  

 

 

SCHEDULE 10.02

 

ADMINISTRATIVE
AGENT’S OFFICE,

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

c/o Summer Infant (USA), Inc.

1275 Park East Drive

Woonsocket, Rhode Island  02895

Attention: Jason Macari

Telephone:

Telecopier:

Electronic
Mail: jmacari@summerinfant.com

Website Address: www.summerinfant.com

 

U.S. Taxpayer Identification Number (Summer Infant, Inc.):
20-1994619

U.S. Taxpayer Identification Number (Summer Infant
(USA), Inc.): 20-8641043

U.S. Taxpayer Identification Number (Kiddopotamus &
Company): 84-1448352

VAT Number (Summer Infant Europe Limited): 789 9287
34

Canadian Taxpayer Number (Summer Infant Canada,
Limited): BN 835413212 NP

 

ADMINISTRATIVE AGENT:

 

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

 

Bank
of America, N.A.

Mail
Code: TX1-492-14-12

901 MAIN ST

DALLAS TX 75202-3714

Attention: Arlene Minor

Telephone:
214-209-9177

Telecopier: 214.290-9412

Electronic Mail: 
arlene.l.minor@baml.com

 

	
  Bank of America, N.A., New
  York NY

  	
   

  	
   

  
	
  ABA
  # 026009593

  	
   

  	
   

  
	
  Account
  Name: Corporate FTA

  	
   

  	
   

  
	
  Account
  Number:

  	
  1292000883

  	
   

  	
   

  
	
  Attn:

  	
  Arlene
  Minor

  	
   

  	
   

  
	
  Ref:

  	
  Summer
  Infant (USA) Inc.

  	
   

  	
   

  
					

 

Other Notices as Administrative Agent:

Bank
of America, N.A.

Agency Management

WA1-501-17-32

800
5th Avenue, Floor 17

Seattle,
Washington  98104

Attention: 
Brenda H. Little, Vice President

Telephone: 
206.358.0048

Telecopier: 
415.343.0557

Electronic Mail: 
brenda.h.little@baml.com

 

 

L/C ISSUER:

 

Standby Letters of Credit:

 

	
  Bank of America, N.A.

  	
   

  
	
  Trade Operations

  	
   

  
	
  One Fleet Way

  	
   

  
	
  Mail Code: PA6-580-02-30

  	
   

  
	
  Scranton, PA 18507

  	
   

  
	
  Attention:

  	
  Mary
  Cooper

  	
   

  
	
   

  	
  Telephone:
  570.330.4235

  	
   

  
	
   

  	
  Telecopier:
  570.330.4186

  	
   

  
	
   

  	
  Electronic
  Mail: mary.j.cooper@baml.com

  	
   

  

 

Commercial Letters of Credit

 

	
  Bank of America, N.A.

  	
   

  
	
  Trade Operations-Scranton

  	
   

  
	
  1 Fleet Way

  	
   

  
	
  Mail Code: PA6-580-02-30

  	
   

  
	
  Scranton, PA 18507

  	
   

  
	
  Attention:

  	
  Anissa
  Canova

  	
   

  
	
   

  	
  Telephone:
  570.330.4661

  	
   

  
	
   

  	
  Telecopier:
  570.330.3701

  	
   

  
	
   

  	
  Electronic
  Mail: anissa.m.canova@baml.com

  	
   

  

 

	
  SWING LINE LENDER:

  
	
  Bank
  of America, N.A.

  
	
  Mail
  Code: TX1-492-14-12

  
	
  901
  MAIN ST

  
	
  DALLAS
  TX 75202-3714

  
	
  Attention:
  Arlene Minor

  
	
  Telephone:
  214-209-9177

  
	
  Telecopier:
  214.290-9412

  
	
  Electronic
  Mail: arlene.l.minor@baml.com

  
	
   

  
	
  Bank
  of America, N.A., New York NY

  
	
  ABA
  # 026009593

  
	
  Account
  Name: Corporate FTA

  
	
  Account
  Number:

  	
  1292000883

  
	
  Attn:

  	
  Arlene
  Minor

  
	
  Ref:

  	
  Summer
  Infant (USA) Inc.

  
			

 

 

EXHIBIT A

 

FORM OF
COMMITTED LOAN NOTICE

 

Date:
                      ,
       

 

To:                             Bank of
America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference
is made to that certain Amended and Restated Credit Agreement, dated as of
[August 2], 2010 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement”; the
terms defined therein being used herein as therein defined), among Summer
Infant, Inc., Summer Infant (USA), Inc.,
and Kiddopotamus & Company (collectively, the “Borrowers”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
undersigned hereby requests (select one):

 

A Borrowing of Committed Loans                               
A conversion or continuation of Committed Loans

 

1.             On                    (a
Business Day).

 

2.             In the amount of $                               .

 

3.             Comprised of
                               .

[Type of Committed Loan requested]

 

4.             For Eurodollar Rate Loans:  with an Interest Period of
                               
months.

 

 

The
Committed Borrowing, if any, requested herein complies with the provisos to the
first sentence of Section 2.01 of the Agreement.

 

	
   

  	
  SUMMER INFANT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUMMER INFANT (USA), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KIDDOPOTAMUS & COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT B

 

FORM OF
SWING LINE LOAN NOTICE

 

Date:
                      ,
       

 

To:                             Bank of
America, N.A., as Swing Line Lender

Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference
is made to that certain Amended and Restated Credit Agreement, dated as of
[August 2], 2010 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement”; the terms
defined therein being used herein as therein defined), among Summer Infant, Inc.,
Summer Infant (USA), Inc., and
Kiddopotamus & Company (collectively, the “Borrowers”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent, L/C Issuer and Swing Line Lender.

 

The
undersigned hereby requests a Swing Line Loan:

 

1.             On                               
(a Business Day).

 

2.             In the amount of $                               .

 

The
Swing Line Borrowing requested herein complies with the requirements of the
provisos to the first sentence of Section 2.04(a) of the
Agreement.

 

	
   

  	
  SUMMER INFANT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUMMER INFANT (USA), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KIDDOPOTAMUS & COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT C

 

FORM OF
NOTE

 

NOTE

 

(REVOLVING
CREDIT)

 

	
  $                                   

  	
   

  

 

FOR VALUE RECEIVED, the undersigned (collectively, jointly and
severally, “Borrowers”), hereby jointly and severally promise to pay to
                                
or registered assigns (“Lender”), in accordance with the provisions of
the Agreement (as hereinafter defined), the principal amount of
                                                                    
DOLLARS ($                    )
or so much thereof as may be advanced, repaid and advanced by Lender to
Borrowers under that certain Amended and Restated Credit Agreement, dated as of
August 2, 2010 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement”; the terms
defined therein being used herein as therein defined), among Borrowers, the
Lenders from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line Lender, together with interest thereon, or on
the amount thereof from time to time outstanding, to be computed as provided in
the Agreement.

 

Borrowers
promise jointly and severally to pay interest on the unpaid principal amount of
each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates and at such times as provided in the
Agreement.  Except as otherwise provided
in Section 2.04(f) of the Agreement with respect to Swing Line
Loans, all payments of principal and interest shall be made to Administrative
Agent for the account of Lender in Dollars in immediately available funds at
the Administrative Agent’s Office.  If
any amount is not paid in full when due hereunder, such unpaid amount shall
bear interest, to be paid upon demand, from the due date thereof until the date
of actual payment (and before as well as after judgment) computed at the per
annum rate set forth in the Agreement.

 

This
Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms
and conditions provided therein.  This Note is also entitled to the benefits of
the Security Agreement and is secured by the Collateral.  Upon the occurrence and continuation of one
or more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement.  Loans made by Lender shall be evidenced by
one or more loan accounts or records maintained by Lender in the ordinary
course of business.  Lender may also
attach schedules to this Note and endorse thereon the date, amount and maturity
of its Loans and payments with respect thereto.

 

Borrower,
for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of
this Note.

 

 

THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF RHODE ISLAND.

 

IN
WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed as of
the date and year first above written.

 

 

	
   

  	
  SUMMER INFANT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUMMER INFANT (USA), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KIDDOPOTAMUS & COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

C - 2

 

LOANS AND
PAYMENTS WITH RESPECT THERETO

 

	
  Date

  	
   

  	
  Type of

  Loan Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest

  Paid This

  Date

  	
   

  	
  Outstanding

  Principal

  Balance

  This Date

  	
   

  	
  Notation

  Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT D

 

FORM OF
COMPLIANCE CERTIFICATE

 

Financial Statement Date:              ,

 

To:                             Bank of
America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference
is made to that certain Amended and Restated Credit Agreement, dated as of
[August 2], 2010 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the
terms defined therein being used herein as therein defined), among Summer
Infant, Inc., Summer Infant (USA), Inc.,
and Kiddopotamus & Company (collectively, “Borrowers”),
the Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent, L/C Issuer and Swing Line Lender.

 

The undersigned Responsible Officer hereby certifies as of the date
hereof that he/she is the                                               of
Borrowers, and that, as such, he/she is authorized to execute and deliver this
Certificate to Administrative Agent on the behalf of Borrowers, and that:

 

[Use following paragraph 1 for fiscal year-end financial statements]

 

1.             Borrowers have delivered the
year-end audited financial statements required by Section 6.01(a) of
the Agreement for the fiscal year of Borrowers ended as of the above date,
together with the report and opinion of an independent certified public
accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end financial statements]

 

1.             Borrowers have delivered the
unaudited financial statements required by Section 6.01(b) of
the Agreement for the fiscal quarter of Borrowers ended as of the above
date.  Such financial statements fairly
present the financial condition, results of operations and cash flows of
Borrowers and their Subsidiaries in accordance with GAAP as at such date and
for such period, subject only to normal year-end audit adjustments and the
absence of footnotes.

 

2.             The undersigned has reviewed and is
familiar with the terms of the Agreement and has made, or has caused to be made
under his/her supervision, a detailed review of the transactions and condition
(financial or otherwise) of Borrowers during the accounting period covered by
such financial statements.

 

3.             A review of the activities of
Borrowers during such fiscal period has been made under the supervision of the
undersigned with a view to determining whether during such fiscal period
Borrower performed and observed all their Obligations under the Loan Documents,
and

 

 

[select one:]

 

[to the best knowledge of the undersigned during such
fiscal period, Borrowers performed and observed each covenant and condition of
the Loan Documents applicable to them, and no Default has occurred and is
continuing.]

 

—or—

 

[to the best knowledge of the undersigned, during such
fiscal period, the following covenants or conditions have not been performed or
observed and the following is a list of each such Default and its nature and
status:]

 

4.             The representations and warranties
of Borrowers contained in Article V of the Agreement, and/or any
representations and warranties of Borrower or any other Loan Party that are
contained in any document furnished at any time under or in connection with the
Loan Documents, are true and correct on and as of the date hereof, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this Compliance Certificate, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 of the Agreement shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively,
of Section 6.01 of the Agreement, including the statements in
connection with which this Compliance Certificate is delivered.

 

5.             The financial covenant analyses and
information set forth on Schedules 2 and 3 attached hereto are true and
accurate on and as of the date of this Certificate.

 

IN WITNESS WHEREOF, the undersigned has
executed this Certificate as of
                           
,                                       .

 

	
   

  	
  SUMMER INFANT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUMMER INFANT (USA), INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KIDDOPOTAMUS & COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

D-2

 

For the Quarter/Year ended
                                     
(“Statement Date”)

 

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

 

	
  I.

  	
  Section 6.12(a) —Consolidated
  EBITDA.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Consolidated EBITDA at
  Statement Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  net income:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  less non-cash
  income or plus non-cash loss:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  plus income
  taxes:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  plus Consolidated
  Interest Charges:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  plus
  depreciation, depletion and amortization:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  equals Consolidated
  EBITDA:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  1.

  	
  Minimum
  Required Consolidated EBITDA:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Excess (deficient) for
  covenant compliance (Line I.A.6 less I.B.1):

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  Section 6.12(b) — Consolidated Funded
  Indebtedness to Consolidated EBITDA Ratio.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Consolidated
  Funded Indebtedness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  all outstanding
  liabilities for borrowed money plus other interest-bearing
  liabilities, including current and long-term liabilities:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  less the
  non-current portion of Subordinated Liabilities: ($                          )

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Total Consolidated Funded
  Indebtedness:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  1.

  	
  Consolidated EBITDA From
  I.B.1. (above)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Ratio (Line II.A.3  ̧ Line
  II.B.1):

  	
   

  	
               to
  1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Minimum Required:

  	
   

  	
  3.25
  to 1.00

  	
   

  

 

 

	
  III.

  	
  Section 6.12(c) —
  Basic Fixed Charge Coverage Ratio.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Consolidated EBITDA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Consolidated EBITDA from
  I.B.1 above:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  plus lease
  expense and rent expense:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  minus income tax,
  unfinanced capital expenditures, dividends, withdrawals and other
  distributions: 

  	
   

  	
  ($                          

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Total:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Fixed Charges

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Consolidated Interest
  Charges:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  plus lease and
  rent expense:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  plus the current
  portion of long term liabilities:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  plus the current
  portion of capitalized lease obligations:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Total Fixed Charges:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Ratio (Line III.A.4  ̧ Line
  III.B.5):

  	
   

  	
       to
  1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Minimum Required:

  	
   

  	
  1.50
  to 1.00

  	
   

  

 

D-2

 

EXHIBIT E

 

FORM

 

OF

 

ASSIGNMENT AND ASSUMPTION

 

This
Assignment and Assumption (this “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between [the][each] Assignor identified in item 1
below ([the][each, an]  “Assignor”)
and [the][each] Assignee identified in item 2
below ([the][each, an] “Assignee”). [It is understood and agreed that the
rights and obligations of [the Assignors][the Assignees] hereunder are several
and not joint.].  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (the “Credit Agreement”), receipt of a
copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

 

For
an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by Administrative
Agent as contemplated below (i) all of [the Assignor’s][the respective
Assignors’] rights and obligations in [its capacity as a Lender][their
respective capacities as Lenders] under the Credit Agreement and any other documents
or instruments delivered pursuant thereto to the extent related to the amount
and percentage interest identified below of all of such outstanding rights and
obligations of [the Assignor][the respective Assignors] under the respective
facilities identified below (including, without limitation, the Letters of
Credit and Swing Line Loans included in such facilities) and (ii) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of [the Assignor (in its capacity as a
Lender)][the respective Assignors (in their respective capacities as Lenders)]
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract
claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned
pursuant to clause (i) above (the rights and obligations sold and assigned
by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above
being referred to herein collectively as, [the][an] “Assigned Interest”).  Each such sale and assignment is without
recourse to [the][any] Assignor and, except as expressly provided in this
Assignment and Assumption, without representation or warranty by [the][any]
Assignor.

 

1.                                      Assignor[s]:                                                             

 

2.                                      Assignee[s]:                                                              
for each Assignee, indicate Affiliate of
[identify Lender]]

 

 

3.                                      Borrower(s):  Summer Infant, Inc., Summer Infant (USA), Inc.,
Summer Infant Europe Limited, Summer Infant Asia Limited and Summer Infant
Canada, Limited

 

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

 

5.                                      Credit
Agreement:  Amended and Restated Credit Agreement, dated as of [August 2,
2010], among Summer Infant, Inc., Summer Infant (USA), Inc.,
and Kiddopotamus & Company,
the Lenders from time to time party thereto, Bank of America, N.A., as
Administrative Agent, L/C Issuer and Swing Line Lender

 

6.             Assigned Interest[s]:

 

	
  Assignor[s]

  	
   

  	
  Assignee[s]

  	
   

  	
  Facility

  Assigned

  	
   

  	
  Aggregate

  Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage

  Assigned of

  Commitment/Loans

  	
   

  	
  CUSIP

  No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

[7.          Trade
Date:
                                       ]

 

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

 

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

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

	
  [Consented to and] Accepted:

  	
   

  
	
   

  	
   

  
	
  Bank
  of America, N. A., as

  	
   

  
	
  Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  [Consented to:]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND
ASSUMPTION

 

1.             Representations and Warranties.

 

1.1.         Assignor.  [The][Each] Assignor (a) represents and
warrants that (i) it is the legal and beneficial owner of [the][the
relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free
and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated
in respect of any Loan Document or (iv) the performance or observance by
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

 

1.2.         Assignee.  [The][Each] Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it meets all the requirements to be an assignee
under Section 10.06(b)(iii),(v) and (vi) of the Credit Agreement
(subject to such consents, if any, as may be required under Section 10.06(b)(iii) of
the Credit Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the Credit Agreement as a Lender thereunder and,
to the extent of [the][the relevant] Assigned Interest, shall have the
obligations of a Lender thereunder, and (iv) it is sophisticated with
respect to decisions to acquire assets of the type represented by [the][such]
Assigned Interest and either it, or the Person exercising discretion in making
its decision to acquire [the][such] Assigned Interest, is experienced in
acquiring assets of such type, (v) it has received a copy of the Credit
Agreement, and has received or has been accorded the opportunity to receive
copies of the most recent financial statements delivered pursuant to Section [    ] thereof, as
applicable, and such other documents and information as it deems appropriate to
make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase [the][such] Assigned Interest ,and (vi) it has
independently and without reliance upon Administrative Agent or any other
Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase [the][such] Assigned Interest; and (b) agrees
that (i) it will, independently and without reliance upon Administrative
Agent, [the][any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii) it
will perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.

 

 

2.             Payments.  From and after the Effective Date,
Administrative Agent shall make all payments in respect of [the][each] Assigned
Interest (including payments of principal, interest, fees and other amounts) to
[the][the relevant] Assignor for amounts which have accrued to but excluding
the Effective Date and to [the][the relevant] Assignee for amounts which have
accrued from and after the Effective Date.

 

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

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