Document:

Exhibit
10.2

 

CREDIT
AND GUARANTY AGREEMENT

 

dated as
of December 30, 2002

among

VERSAILLES
ACQUISITION CORPORATION

(to be merged with and into HOUGHTON MIFFLIN COMPANY),

 

VERSAILLES
U.S. HOLDING INC.,

THE
LENDERS NAMED HEREIN,

CIBC
WORLD MARKETS CORP.

and

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Joint Lead Arrangers

and

Joint Bookrunners,

 

GOLDMAN
SACHS CREDIT PARTNERS L.P.

and

DEUTSCHE BANK SECURITIES INC.,

as Co-Syndication Agents,

 

CANADIAN
IMPERIAL BANK OF COMMERCE,

as Administrative Agent and Collateral Trustee

 

and

 

FLEET
SECURITIES INC.,

as Co-Documentation Agent

 

 

$725,000,000
Senior Secured Credit Facilities

 

 

 

TABLE OF
CONTENTS

 

	
  SECTION
  1.

  	
  DEFINITIONS
  AND INTERPRETATION

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Definitions

  
	
   

  	
   

  	
   

  
	
   

  	
  1.2.

  	
  Terms Generally

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.

  	
  LOANS

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Term Loan B

  
	
   

  	
   

  	
   

  
	
   

  	
  2.2.

  	
  Revolving Loans

  
	
   

  	
   

  	
   

  
	
   

  	
  2.3.

  	
  Swing Line Loans.

  
	
   

  	
   

  	
   

  
	
   

  	
  2.4.

  	
  Issuance
  of Letters of Credit and Purchase of Participations Therein

  
	
   

  	
   

  	
   

  
	
   

  	
  2.5.

  	
  Pro Rata Shares;
  Availability of Funds

  
	
   

  	
   

  	
   

  
	
   

  	
  2.6.

  	
  Use of Proceeds

  
	
   

  	
   

  	
   

  
	
   

  	
  2.7.

  	
  Evidence
  of Debt; Register; Lenders’ Books and Records; Notes

  
	
   

  	
   

  	
   

  
	
   

  	
  2.8.

  	
  Interest on Loans

  
	
   

  	
   

  	
   

  
	
   

  	
  2.9.

  	
  Conversion/Continuation

  
	
   

  	
   

  	
   

  
	
   

  	
  2.10.

  	
  Default Interest

  
	
   

  	
   

  	
   

  
	
   

  	
  2.11.

  	
  Fees

  
	
   

  	
   

  	
   

  
	
   

  	
  2.12.

  	
  Scheduled
  Payments/Commitment Reductions

  
	
   

  	
   

  	
   

  
	
   

  	
  2.13.

  	
  Voluntary
  Prepayments/Commitment Reductions

  
	
   

  	
   

  	
   

  
	
   

  	
  2.14.

  	
  Mandatory
  Prepayments/Commitment Reductions

  
	
   

  	
   

  	
   

  
	
   

  	
  2.15.

  	
  Application of
  Prepayments/Reductions

  
	
   

  	
   

  	
   

  
	
   

  	
  2.16.

  	
  General
  Provisions Regarding Payments

  
	
   

  	
   

  	
   

  
	
   

  	
  2.17.

  	
  Ratable Sharing

  
	
   

  	
   

  	
   

  
	
   

  	
  2.18.

  	
  Making or
  Maintaining Eurodollar Rate Loans

  
	
   

  	
   

  	
   

  
	
   

  	
  2.19.

  	
  Increased Costs;
  Capital Adequacy

  
	
   

  	
   

  	
   

  
	
   

  	
  2.20.

  	
  Taxes; Withholding, etc.

  
	
   

  	
   

  	
   

  
	
   

  	
  2.21.

  	
  Obligation to Mitigate

  
	
   

  	
   

  	
   

  
	
   

  	
  2.22.

  	
  Defaulting Lenders

  
	
   

  	
   

  	
   

  
	
   

  	
  2.23.

  	
  Removal or
  Replacement of a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  2.24.

  	
  Increase in Revolving
  Commitments

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  CONDITIONS PRECEDENT

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Closing Date Loans

  
	
   

  	
   

  	
   

  
	
   

  	
  3.2.

  	
  Delayed Draw Term Loans

  
	
   

  	
   

  	
   

  
	
   

  	
  3.3.

  	
  Revolving
  Loans, Swing Line Loans, and Letters of Credit

  
	
   

  	
   

  	
   

  
	
   

  	
  3.4.

  	
  Notices

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  REPRESENTATIONS
  AND WARRANTIES

  

 

i

 

	
   

  	
  4.1.

  	
  Organization;
  Requisite Power and Authority; Qualification

  
	
   

  	
   

  	
   

  
	
   

  	
  4.2.

  	
  Capital Stock and Ownership

  
	
   

  	
   

  	
   

  
	
   

  	
  4.3.

  	
  Due Authorization

  
	
   

  	
   

  	
   

  
	
   

  	
  4.4.

  	
  No Conflict

  
	
   

  	
   

  	
   

  
	
   

  	
  4.5.

  	
  Governmental Consents

  
	
   

  	
   

  	
   

  
	
   

  	
  4.6.

  	
  Binding Obligation

  
	
   

  	
   

  	
   

  
	
   

  	
  4.7.

  	
  Historical Financial
  Statements

  
	
   

  	
   

  	
   

  
	
   

  	
  4.8.

  	
  Projections

  
	
   

  	
   

  	
   

  
	
   

  	
  4.9.

  	
  No Material Adverse Change

  
	
   

  	
   

  	
   

  
	
   

  	
  4.10.

  	
  No Restricted Junior
  Payments

  
	
   

  	
   

  	
   

  
	
   

  	
  4.11.

  	
  Adverse Proceedings, etc.

  
	
   

  	
   

  	
   

  
	
   

  	
  4.12.

  	
  Payment of Taxes

  
	
   

  	
   

  	
   

  
	
   

  	
  4.13.

  	
  Properties

  
	
   

  	
   

  	
   

  
	
   

  	
  4.14.

  	
  Environmental Matters

  
	
   

  	
   

  	
   

  
	
   

  	
  4.15.

  	
  No Defaults

  
	
   

  	
   

  	
   

  
	
   

  	
  4.16.

  	
  [Reserved]

  
	
   

  	
   

  	
   

  
	
   

  	
  4.17.

  	
  Governmental Regulation

  
	
   

  	
   

  	
   

  
	
   

  	
  4.18.

  	
  Margin Stock

  
	
   

  	
   

  	
   

  
	
   

  	
  4.19.

  	
  Employee Matters

  
	
   

  	
   

  	
   

  
	
   

  	
  4.20.

  	
  Employee Benefit Plans

  
	
   

  	
   

  	
   

  
	
   

  	
  4.21.

  	
  Certain Fees

  
	
   

  	
   

  	
   

  
	
   

  	
  4.22.

  	
  Solvency

  
	
   

  	
   

  	
   

  
	
   

  	
  4.23.

  	
  Subordination.
  Designation of the Credit Documents as “Designated Senior Indebtedness”; Etc.

  
	
   

  	
   

  	
   

  
	
   

  	
  4.24.

  	
  Disclosure

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  AFFIRMATIVE COVENANTS

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Financial Statements and Other
  Reports

  
	
   

  	
   

  	
   

  
	
   

  	
  5.2.

  	
  Existence

  
	
   

  	
   

  	
   

  
	
   

  	
  5.3.

  	
  Payment of Taxes and Claims

  
	
   

  	
   

  	
   

  
	
   

  	
  5.4.

  	
  Maintenance of Properties

  
	
   

  	
   

  	
   

  
	
   

  	
  5.5.

  	
  Insurance

  
	
   

  	
   

  	
   

  
	
   

  	
  5.6.

  	
  Inspections

  
	
   

  	
   

  	
   

  
	
   

  	
  5.7.

  	
  [Reserved]

  
	
   

  	
   

  	
   

  
	
   

  	
  5.8.

  	
  Use of Proceeds

  
	
   

  	
   

  	
   

  
	
   

  	
  5.9.

  	
  Compliance with Laws

  
	
   

  	
   

  	
   

  
	
   

  	
  5.10.

  	
  Subsidiaries

  
	
   

  	
   

  	
   

  
	
   

  	
  5.11.

  	
  [Reserved]

  
	
   

  	
   

  	
   

  
	
   

  	
  5.12.

  	
  Material Real Estate Assets

  

 

ii

 

	
   

  	
  5.13.

  	
  [Reserved]

  
	
   

  	
   

  	
   

  
	
   

  	
  5.14.

  	
  Further Assurances

  
	
   

  	
   

  	
   

  
	
   

  	
  5.15.

  	
  Debt Tender Process

  
	
   

  	
   

  	
   

  
	
   

  	
  5.16.

  	
  No Other
  “Designated Senior Indebtedness”

  
	
   

  	
   

  	
   

  
	
   

  	
  5.17.

  	
  Post-Closing Date
  Obligations

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  NEGATIVE COVENANTS

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Indebtedness

  
	
   

  	
   

  	
   

  
	
   

  	
  6.2.

  	
  Liens

  
	
   

  	
   

  	
   

  
	
   

  	
  6.3.

  	
  No Further Negative Pledges

  
	
   

  	
   

  	
   

  
	
   

  	
  6.4.

  	
  Restricted Junior Payments

  
	
   

  	
   

  	
   

  
	
   

  	
  6.5.

  	
  Restrictions on
  Subsidiary Distributions

  
	
   

  	
   

  	
   

  
	
   

  	
  6.6.

  	
  Investments

  
	
   

  	
   

  	
   

  
	
   

  	
  6.7.

  	
  Financial Covenants

  
	
   

  	
   

  	
   

  
	
   

  	
  6.8.

  	
  Fundamental Changes;
  Disposition of Assets; Acquisitions

  
	
   

  	
   

  	
   

  
	
   

  	
  6.9.

  	
  Disposal of Subsidiary Interests

  
	
   

  	
   

  	
   

  
	
   

  	
  6.10.

  	
  Sales and Lease-Backs

  
	
   

  	
   

  	
   

  
	
   

  	
  6.11.

  	
  Transactions with Shareholders
  and Affiliates

  
	
   

  	
   

  	
   

  
	
   

  	
  6.12.

  	
  Conduct of Business

  
	
   

  	
   

  	
   

  
	
   

  	
  6.13.

  	
  Permitted Activities of
  Holding

  
	
   

  	
   

  	
   

  
	
   

  	
  6.14.

  	
  Amendments or Waivers
  of Certain Related Agreements

  
	
   

  	
   

  	
   

  
	
   

  	
  6.15.

  	
  Fiscal Year

  
	
   

  	
   

  	
   

  
	
   

  	
  6.16.

  	
  Designation of
  Unrestricted Subsidiaries; RS Designations

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  GUARANTY

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Guaranty of the Obligations

  
	
   

  	
   

  	
   

  
	
   

  	
  7.2.

  	
  Contribution by Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
  7.3.

  	
  Payment by Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
  7.4.

  	
  Liability of
  Guarantors Absolute

  
	
   

  	
   

  	
   

  
	
   

  	
  7.5.

  	
  Waivers by Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
  7.6.

  	
  Guarantors’ Rights of
  Subrogation, Contribution, etc.

  
	
   

  	
   

  	
   

  
	
   

  	
  7.7.

  	
  Subordination of Other
  Obligations

  
	
   

  	
   

  	
   

  
	
   

  	
  7.8.

  	
  Continuing Guaranty

  
	
   

  	
   

  	
   

  
	
   

  	
  7.9.

  	
  Authority of Guarantors or
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
  7.10.

  	
  Financial Condition of Company

  
	
   

  	
   

  	
   

  
	
   

  	
  7.11.

  	
  Bankruptcy, etc.

  
	
   

  	
   

  	
   

  
	
   

  	
  7.12.

  	
  Discharge of Guaranty Upon Sale
  of Guarantor

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  EVENTS OF DEFAULT

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Events of Default

  
	
   

  	
   

  	
   

  
	
   

  	
  8.2.

  	
  Company’s Right to Cure
  Financial Performance Covenants

  

 

iii

 

	
  SECTION 9.

  	
  AGENTS

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Appointment of Agents

  
	
   

  	
   

  	
   

  
	
   

  	
  9.2.

  	
  Powers and Duties

  
	
   

  	
   

  	
   

  
	
   

  	
  9.3.

  	
  General Immunity

  
	
   

  	
   

  	
   

  
	
   

  	
  9.4.

  	
  Agents Entitled to Act as Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Lenders’
  Representations, Warranties and Acknowledgment

  
	
   

  	
   

  	
   

  
	
   

  	
  9.6.

  	
  Right to Indemnity

  
	
   

  	
   

  	
   

  
	
   

  	
  9.7.

  	
  Successor Administrative
  Agent and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  9.8.

  	
  Collateral Documents and
  Guaranty

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Notices

  
	
   

  	
   

  	
   

  
	
   

  	
  10.2.

  	
  Expenses

  
	
   

  	
   

  	
   

  
	
   

  	
  10.3.

  	
  Indemnity

  
	
   

  	
   

  	
   

  
	
   

  	
  10.4.

  	
  Set-Off

  
	
   

  	
   

  	
   

  
	
   

  	
  10.5.

  	
  Amendments and Waivers

  
	
   

  	
   

  	
   

  
	
   

  	
  10.6.

  	
  Successors and
  Assigns; Participations

  
	
   

  	
   

  	
   

  
	
   

  	
  10.7.

  	
  Independence of Covenants

  
	
   

  	
   

  	
   

  
	
   

  	
  10.8.

  	
  Survival of
  Representations, Warranties and Agreements

  
	
   

  	
   

  	
   

  
	
   

  	
  10.9.

  	
  No
  Waiver; Remedies Cumulative

  
	
   

  	
   

  	
   

  
	
   

  	
  10.10.

  	
  Marshalling; Payments Set Aside

  
	
   

  	
   

  	
   

  
	
   

  	
  10.11.

  	
  Severability

  
	
   

  	
   

  	
   

  
	
   

  	
  10.12.

  	
  Obligations Several; Independent
  Nature of Lenders’ Rights

  
	
   

  	
   

  	
   

  
	
   

  	
  10.13.

  	
  Headings

  
	
   

  	
   

  	
   

  
	
   

  	
  10.14.

  	
  APPLICABLE LAW

  
	
   

  	
   

  	
   

  
	
   

  	
  10.15.

  	
  CONSENT TO JURISDICTION

  
	
   

  	
   

  	
   

  
	
   

  	
  10.16.

  	
  WAIVER OF JURY TRIAL

  
	
   

  	
   

  	
   

  
	
   

  	
  10.17.

  	
  Confidentiality

  
	
   

  	
   

  	
   

  
	
   

  	
  10.18.

  	
  Usury Savings Clause

  
	
   

  	
   

  	
   

  
	
   

  	
  10.19.

  	
  Counterparts

  
	
   

  	
   

  	
   

  
	
   

  	
  10.20.

  	
  Effectiveness

  

 

iv

 

	
  APPENDICES:

  	
  A

  	
  Notice Addresses

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
  1.1 (a)

  	
  Certain Adjustments to Financial Covenant
  Definitions

  
	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Capital Stock and Ownership

  
	
   

  	
   

  	
   

  
	
   

  	
  4.13(b)

  	
  Properties

  
	
   

  	
   

  	
   

  
	
   

  	
  4.13(d)

  	
  Existing Real Estate Obligations

  
	
   

  	
   

  	
   

  
	
   

  	
  4.13(e)

  	
  Intellectual Property

  
	
   

  	
   

  	
   

  
	
   

  	
  4.14

  	
  Environmental Matters

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Existing Indebtedness

  
	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Liens

  
	
   

  	
   

  	
   

  
	
   

  	
  6.6

  	
  Investments

  
	
   

  	
   

  	
   

  
	
   

  	
  6.11

  	
  Transactions with Shareholders and Affiliates

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
  A-1

  	
  Funding Notice

  
	
   

  	
   

  	
   

  
	
   

  	
  A-2

  	
  Conversion/Continuation Notice

  
	
   

  	
   

  	
   

  
	
   

  	
  A-3

  	
  Issuance Notice

  
	
   

  	
   

  	
   

  
	
   

  	
  B-1

  	
  Term Loan B Note

  
	
   

  	
   

  	
   

  
	
   

  	
  B-2

  	
  Revolving Loan Note

  
	
   

  	
   

  	
   

  
	
   

  	
  B-3

  	
  Swing Line Note

  
	
   

  	
   

  	
   

  
	
   

  	
  C

  	
  Compliance Certificate

  
	
   

  	
   

  	
   

  
	
   

  	
  D

  	
  Solvency Certificate

  
	
   

  	
   

  	
   

  
	
   

  	
  E

  	
  Assignment Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
  F

  	
  Certificate re: Non-Bank Status

  
	
   

  	
   

  	
   

  
	
   

  	
  G

  	
  Closing Date Certificate

  
	
   

  	
   

  	
   

  
	
   

  	
  H

  	
  Counterpart Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
  I-1

  	
  Pledge and Security and Collateral Trust
  Agreement/Holding

  
	
   

  	
   

  	
   

  
	
   

  	
  I-2

  	
  Pledge and Security Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
  J

  	
  Joinder Agreement

  

 

v

 

CREDIT
AND GUARANTY AGREEMENT

 

This CREDIT AND
GUARANTY AGREEMENT, dated as of December 30, 2002, is entered into
by and among VERSAILLES ACQUISITION
CORPORATION, a Delaware corporation (“VAC”), VERSAILLES U.S.
HOLDING INC., a Delaware corporation (“Holding”), the Lenders party hereto from time to time, CIBC WORLD MARKETS CORP. (“CIBCWM”) and GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as Joint Lead Arrangers and Joint
Bookrunners (in such capacities, each a “Joint
Lead Arranger” and collectively, the “Joint Lead Arrangers”), GSCP
and DEUTSCHE BANK SECURITIES INC.
(“DB”), as Co-Syndication Agents
(in such capacity, each a “Co-Syndication
Agent” and collectively, the “Co-Syndication
Agents”), CANADIAN IMPERIAL BANK
OF COMMERCE (“CIBC”),
as Administrative Agent (together with its permitted successors in such
capacity, “Administrative Agent”)
and as Collateral Trustee (together with its permitted successors in such
capacity, “Collateral Trustee”)
and FLEET SECURITIES INC. (“FLEET”), as Co-Documentation Agent (in such
capacity, “Co-Documentation Agent”).

 

RECITALS:

 

WHEREAS,
Holding, a corporation newly-formed by the Sponsors (this and other capitalized
terms used in these recitals without definition being used as defined in
subsection 1.1), was formed to own all of the capital stock of VAC;

 

WHEREAS,
VAC has entered into the Share Purchase Agreement with Seller and Vivendi
Universal, S.A., pursuant to which VAC has agreed to acquire and Seller has
agreed to sell all of the outstanding capital stock of Houghton Mifflin
Company, a Massachusetts corporation (“HM”);

 

WHEREAS,
following the consummation of the Acquisition, VAC will merge with and into HM;

 

WHEREAS,
VAC and Holding have requested that Lenders extend certain credit facilities,
subject to the terms and conditions herein, in an aggregate amount not to
exceed $725,000,000, consisting of $400,000,000 aggregate principal amount of
Term Loan B and up to $325,000,000 aggregate principal amount of Revolving
Commitments, the proceeds of which are to be used for the purposes specified
herein;

 

WHEREAS,
as of the Closing Date, Holding will be the only Guarantor, but after the HM
Release Date, certain Domestic Subsidiaries of HM shall become Guarantor
Subsidiaries; and

 

WHEREAS,
(w) the proceeds of the Term Loan B (other than the Delayed Draw Term Loans)
and up to $50,000,000 of Revolving Loans will be used on the Closing Date,
together with the proceeds of the Bridge Facility and the Sponsor Equity, (i)
to effect the Acquisition, (ii) to repay certain indebtedness of the HM Group
and (iii) to pay related fees, expenses and other transaction costs, (x) the
proceeds of the Delayed Draw Term Loans will be used to finance the Debt
Tenders, (y) the proceeds of Revolving Loans (except as described above) will
be used, subject to certain limitations, for general corporate purposes, and
(z) the Letters of Credit will be used for general corporate purposes.

 

 

NOW,
THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:

 

SECTION 1.                            DEFINITIONS
AND INTERPRETATION

 

1.1.                            Definitions. 
The following terms used herein, including in the preamble, recitals,
exhibits and schedules hereto, shall have the following meanings:

 

“Acquisition”
means the acquisition by VAC of all of the outstanding capital stock of HM from
the Seller in accordance with the Acquisition Documents.

 

“Acquisition
Documents” means the Share Purchase Agreement and all other material
documents executed and delivered in accordance with the terms thereof and in
connection therewith.

 

“Adjusted Eurodollar
Rate” means, for any Interest Rate Determination Date with respect
to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained
by dividing (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%)
equal to the rate determined by Administrative Agent to be the offered rate
which appears on the page of the Telerate Screen which displays an average
British Bankers Association Interest Settlement Rate (such page currently being
page number 3740 or 3750, as applicable) for deposits (for delivery on the
first day of such period) with a term equivalent to such period in Dollars,
determined as of approximately 11:00 a.m. (London, England time) on such
Interest Rate Determination Date, or (b) in the event the rate referenced in
the preceding clause (a) does not appear on such page or service or if such
page or service shall cease to be available, the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be
the offered rate on such other page or other service which displays an average
British Bankers Association Interest Settlement Rate for deposits (for delivery
on the first day of such period) with a term equivalent to such period in
Dollars, determined as of approximately 11:00 a.m. (London, England time) on
such Interest Rate Determination Date, or (c) in the event the rates referenced
in the preceding clauses (a) and (b) are not available, the rate per annum
(rounded to the nearest 1/100 of 1%) equal to the offered quotation rate by
first class banks in the London interbank market to CIBC for deposits (for
delivery on the first day of the relevant period) in Dollars of amounts in same
day funds comparable to the principal amount of the applicable Loan of
Administrative Agent, in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such
period as of approximately 11:00 a.m. (London, England time) on such Interest
Rate Determination Date, by (ii) an amount equal to (a) one minus (b)
the Applicable Reserve Requirement.

 

“Adjusted Purchase
Price Mechanism” means the provisions contained in Sections 2.2 and
2.4 of the Share Purchase Agreement for the determination and payment of the
“Adjusted Purchase Price” (as defined therein).

 

“Administrative
Agent” as defined in the preamble hereto.

 

“Adverse Proceeding”
means any action, suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration (whether or not purportedly on behalf of Holding or any of
its Subsidiaries) at law or in equity, or before or by 

 

2

 

any Governmental Authority, domestic or foreign (including any
Environmental Claims), whether pending or, to the knowledge of Holding or any
of its Subsidiaries, threatened against or affecting Holding or any of its
Subsidiaries or any property of Holding or any of its Subsidiaries as to which
there is a reasonable possibility of an adverse determination and which, if
adversely determined could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect or materially adversely affect
the transactions contemplated by the Credit Documents.

 

“Affected Lender”
as defined in Section 2.18(b).

 

“Affected Loans”
as defined in Section 2.18(b).

 

“Affiliate”
shall mean, when used with respect to a specified person, another person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the person specified.  For the avoidance of doubt, the Sponsors and
their respective Affiliates are Affiliates of Holding.

 

“Agent”
means each of the Co-Syndication Agents, the Administrative Agent, the
Collateral Trustee and the Joint Lead Arrangers.

 

“Aggregate Amounts
Due” as defined in Section 2.17.

 

“Aggregate Payments”
as defined in Section 7.2.

 

“Agreement”
means this Credit and Guaranty Agreement, dated as of the Closing Date, as it
may be amended, supplemented or otherwise modified from time to time.

 

“Applicable Margin”
means with respect to Revolving Loans and Swing Line Loans, (a) for the period
commencing on the Closing Date and ending on December 31, 2003, 3.25% per annum
with respect to Eurodollar Rate Loans and 2.25% per annum with respect to Base
Rate Loans and (b) thereafter, a percentage, per annum, determined by reference
to the Total Leverage Ratio in effect from time to time as set forth below:

 

	
  Total
  Leverage

  Ratio

  	
   

  	
  Applicable Margin for

  Eurodollar Rate Loans

  	
   

  	
  Applicable Margin for

  Base Rate Loans

  	
   

  
	
  >
  3.75:1.00

  	
   

  	
  3.25

  	
  %

  	
  2.25

  	
  %

  
	
  < 3.75:1.00

  > 3.25:1.00

  	
   

  	
  3.00

  	
  %

  	
  2.00

  	
  %

  
	
  < 3.25:1.00

  > 2.75:1.00

  	
   

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  
	
  < 2.75:1.00

  > 2.25:1.00

  	
   

  	
  2.50

  	
  %

  	
  1.50

  	
  %

  
	
  < 2.25:1.00

  	
   

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  

 

3

 

No change in the Applicable Margin shall be effective until three
Business Days after the date on which Administrative Agent shall have received
the applicable financial statements and a Compliance Certificate pursuant to
Section 5.1 (d) calculating the Total Leverage Ratio.  For the period commencing January 1, 2004 and ending upon
delivery of the Compliance Certificate for the four Fiscal Quarter period
ending March 31, 2004, the applicable Total Leverage Ratio shall be that shown
in the Compliance Certificate for the four Fiscal Quarter period ending
September 30, 2003.  At any time Company
has not submitted to Administrative Agent the applicable information as and
when required under Section 5.1 (d) or an Event of Default shall have occurred
and be continuing, the Applicable Margin shall be determined as if the Total
Leverage Ratio were in excess of 3.75:1.00. 
Within one Business Day of receipt of the applicable information under
Section 5.1(d), Administrative Agent shall give each Lender telefacsimile or
telephonic notice (confirmed in writing) of the Applicable Margin in effect
from such date.

 

“Applicable Reserve
Requirement” means, at any time, for any Eurodollar Rate Loan, the
maximum rate, expressed as a decimal, at which reserves (including, without
limitation, any basic marginal, special, supplemental, emergency or other
reserves) are required to be maintained with respect thereto against
“Eurocurrency liabilities” (as such term is defined in Regulation D) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System or other applicable banking regulator.  Without limiting the effect of the foregoing, the Applicable
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (i) any category of liabilities which
includes deposits by reference to which the applicable Adjusted Eurodollar Rate
or any other interest rate of a Loan is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Rate
Loans.  A Eurodollar Rate Loan shall be
deemed to constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without benefits of credit for proration,
exceptions or offsets that may be available from time to time to the applicable
Lender.  The rate of interest on
Eurodollar Rate Loans shall be adjusted automatically on and as of the
effective date of any change in the Applicable Reserve Requirement.

 

“Asset Sale”
means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback,
assignment, conveyance, transfer or other disposition to, or any exchange of
property with, any Person (other than Company or any Guarantor Subsidiary), in
one transaction or a series of transactions, of all or any part of Holding’s or
any of its Subsidiaries’ businesses, assets or properties of any kind, whether
real, personal or mixed and whether tangible or intangible, whether now owned
or hereafter acquired, including, without limitation, the Capital Stock of any
of Holding’s Subsidiaries, other than (i) inventory (or other assets) sold or
leased in the ordinary course of business, (ii) sales of other assets the
aggregate Net Cash Proceeds of which are less than $1,000,000 with respect to
any transaction or series of related transactions and less than $10,000,000 in
the aggregate during any Fiscal Year, (iii) sales and dispositions pursuant to
clauses (g) and (k) of Section 6.8 and (iv) dispositions of accounts receivable
and other financial and related assets and participations therein in connection
with any Receivables Facility.

 

“Assignment
Agreement” means an Assignment and Assumption Agreement
substantially in the form of Exhibit E, with such amendments or
modifications as may be approved by Administrative Agent.

 

4

 

“Authorized Officer”
means, as applied to any Person, any individual holding the position of
chairman of the board (if an officer), chief executive officer, chief operating
officer, chief financial officer, treasurer, vice president of finance and any
other Person approved by the Administrative Agent.

 

“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.

 

“Base Rate”
means, for any day, a rate per annum equal to the greater of (i) the Prime Rate
in effect on such day and (ii) the Federal Funds Effective Rate in effect on
such day plus 1⁄2 of 1%.  Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds Effective
Rate shall be effective on the effective day of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.

 

“Base Rate Loan”
means a Loan bearing interest at a rate determined by reference to the Base
Rate.

 

“Beneficiary”
means each Agent, Fronting Bank, Lender and Lender Counterparty.

 

“BNP Preferred
Securities” means 75,000 shares of Auction Market Preferred
Securities issued by McDougal Littell, on October 12, 2001 with a liquidation
preference equal to $1,666.67 per share, to BNP Paribas for $125,000,000.

 

“Bond Redemption
Period” means the period commencing on the Closing Date and ending
on the date that is the earlier of (a) the consummation of the Debt Tenders and
(b) February 28, 2003.

 

“Bridge Facility”
means the $500,000,000 senior unsecured subordinated bridge loan facility
(including the exchange notes contemplated thereby to the extent issued) made
available pursuant to the Bridge Facility Documents.

 

“Bridge Facility
Documents” means the Bridge Loan Agreement and all other material
documents (including, without limitation, any documents relating to the
exchange notes contemplated thereby) executed and delivered in accordance with
the terms thereof and in connection therewith.

 

“Bridge Loan
Agreement” means the Senior Subordinated Bridge Loan Agreement dated
as of December 30, 2002 among Holding, Company, GSCP, CIBCWM and DB, as Joint
Lead Arrangers and Joint Bookrunners, CIBCWM as Syndication Agent, the lenders
thereunder and GSCP, as Administrative Agent.

 

“Bridge Refinancing
Date” means the earlier of (i) the date on which all amounts
outstanding under the Bridge Facility are repaid in full with the proceeds of
Permitted Refinancing Indebtedness and (ii) the first anniversary of the
Closing Date.

 

“Business Day”
means (i) any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking 

 

5

 

institutions located in such state are authorized or required by law or
other governmental action to close and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” shall mean any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in Dollar deposits in the London interbank market.

 

“Capital Lease”
means, as applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is
or should be accounted for as a capital lease on the balance sheet of that
Person.

 

“Capital Stock”
means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation), including, without
limitation, partnership interests and membership interests, and any and all
warrants, rights or options to purchase or other arrangements or rights to
acquire any of the foregoing.

 

“Cash”
means money, currency or a credit balance in any demand or Deposit Account.

 

“CERCLA”
as defined in the definition of Environmental Law.

 

“Certificate re
Non-Bank Status” means a certificate substantially in the form of Exhibit
F.

 

“Change of Control”
means:

 

(a)                                  at
any time prior to the initial public offering of Holding, (i) the Sponsors,
(ii) their Affiliates and (iii) after the Bridge Loan Refinancing Date, with
respect to Capital Stock representing up to 10% of the outstanding Capital
Stock of Holding, members of senior management of Holding and Company who hold
Capital Stock of Holding or options to acquire such Capital Stock,
collectively, shall cease to have the power to vote or direct the voting of
securities having a majority of the ordinary voting power for the election of
directors of Holding and to have a majority of the economic interests in the
Capital Stock of Holding;

 

(b)                                 at
any time after the initial public offering of Holding, either:

 

(i)                                     the
Sponsors and their Affiliates shall cease to be the “beneficial owner” (as
defined in Rules 13(d)-3 and 13(d)-5 of the Exchange Act, directly or
indirectly of at least 35% of the outstanding common stock of Holding having
ordinary voting power for the election of directors of Holding and at least 35%
of the economic interests in the Capital Stock of Holding, or

 

(ii)                                  (A)
any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), excluding the Sponsors and their Affiliates, shall become
the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 of the Exchange
Act), directly or indirectly, of more than 35% of the outstanding common stock
of Holding having ordinary voting power for the election of directors of
Holding, or 

6

 

more than 35% of the
economic interests in the Capital Stock of Holding, and (B) the Sponsors and
their Affiliates, collectively, shall own beneficially and of record a lesser
amount of common stock of Holding having ordinary voting power for the election
of directors of Holding or a lesser amount of economic interests in the Capital
Stock of Holding;

 

(c)                                  the
board of directors of Holding shall cease to consist of a majority of directors
who (i) were members of the board of directors of Holding on the Closing Date
or (ii) were either (A) nominated for election by the board of directors of
Holding, a majority of whom were directors on the Closing Date or whose
election or nomination for election was previously approved by a majority of
such directors or (B) designated or appointed by a Sponsor or an Affiliate
thereof,

 

(d)                                 Holding
shall cease to own and control, of record and beneficially, directly or
indirectly, 100% of each class of outstanding capital stock of Company free and
clear of all Liens (except Liens granted pursuant to the Collateral Documents
and other than shares held by management); or

 

(e)                                  a
change of control under the Bridge Facility or any refinancing thereof shall
occur.

 

“CIBC” means Canadian Imperial Bank of
Commerce.

 

“CIBCWM”
means CIBC World Markets Corp.

 

“Class”
means (a) with respect to Lenders, each of the following classes of Lenders:
(i) Lenders having Term Loan B Exposure and (ii) Lenders having Revolving Loan
Exposure (including Swing Line Lenders), and (b) with respect to Loans, each of
the following classes of Loans: (i) Term Loan B and (ii) Revolving Loans
(including Swing Line Loans).

 

“Clean-Up Period
Termination Date” shall mean the date falling thirty (30) days
following the Closing Date.

 

“Closing Date”
means the date on or before January 20, 2003 on which the conditions set forth
in Section 3.1 have been satisfied or waived in accordance with Section 10.5
and the initial Loans are made.

 

“Closing Date
Certificate” means a Closing Date Certificate substantially in the
form of Exhibit G.

 

“Collateral”
means, collectively, all of the real, personal and mixed property (including
Capital Stock) in which Liens are purported to be granted pursuant to the
Collateral Documents as security for the Obligations.

 

“Collateral
Documents” means the Pledge and Security and Collateral Trust
Agreement, the Holding Pledge and Security Agreement, the Mortgages, if any,
and all other instruments, documents and agreements delivered by any Credit
Party pursuant to this Agreement or any of the other Credit Documents in order
to grant to Collateral Trustee, for the 

 

7

 

benefit of Secured Parties, a Lien on any real, personal or mixed
property of that Credit Party as security for the Obligations.

 

“Collateral
Questionnaire” means a certificate in form reasonably satisfactory
to the Collateral Trustee that provides information with respect to the
personal or mixed property of each Credit Party.

 

“Collateral Trustee”
as defined in the preamble hereto.

 

“Commercial Letter
of Credit” shall mean a commercial documentary Letter of Credit
under which any Fronting Bank agrees to make payments in Dollars for the
account of Company, on behalf of Company or a Subsidiary of Company, in respect
of obligations of Company or such Subsidiary in connection with the purchase of
goods or services.

 

“Commitment”
means any Term Loan B Commitment or Revolving Commitment.

 

“Commitment Fee
Percentage” means 0.75% per annum.

 

“Company”
means, prior to consummation of the Merger, VAC and, after consummation of the
Merger, HM.

 

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

 

“Consolidated
Capital Expenditures” means, in respect of any period, the aggregate
of all expenditures incurred by Company and its Subsidiaries as determined on a
consolidated basis for such period that, in accordance with GAAP, are or should
be included in additions to “property, plant or equipment,” book plates or
similar items reflected in the statement of cash flows of such Person; provided,
however, that Consolidated Capital Expenditures shall not include (a)
the purchase price of equipment that is purchased substantially
contemporaneously with the trade-in of existing equipment to the extent that
the gross amount of such purchase price is reduced by the credit granted by the
seller of such equipment for the equipment being traded in at such time as the
proceeds of such disposition, (b) the purchase of plant, property or equipment
made within 270 days of the sale of any asset to the extent purchased with the
proceeds of such sale, (c) expenditures of proceeds of insurance settlements,
condemnation awards and other settlements in respect of lost, destroyed,
damaged or condemned assets, equipment or other property to the extent such
expenditures are made to replace or repair such lost, destroyed, damaged or
condemned assets, equipment or other property or otherwise to acquire assets or
properties useful in the business of Company and its Subsidiaries within 270
days of receipt of such proceeds, (d) interest capitalized during such period,
(e) expenditures that are accounted for as capital expenditures of such person
and that actually are paid for by a third party (excluding Holding or any
Subsidiary thereof) and for which neither Holding nor any Subsidiary thereof
has provided or is required to provide or incur, any consideration or
obligation to such third party or any other person (whether before, during or
after such period), (f) the book value of any asset owned by such person prior
to or during such period to the extent that such book value is included as a
capital expenditure during such period as a result of such person reusing or
beginning to reuse such asset during such period without a corresponding 

 

8

 

expenditure actually having been made in such period, provided
that any expenditure necessary in order to permit such asset to be reused shall
be included as a Consolidated Capital Expenditure during the period that such
expenditure actually is made and such book value shall have been included in
Consolidated Capital Expenditures when such asset was originally acquired, (g)
expenditures made during such period with respect to Systems Establishment
Expenses, or (h) expenditures that constitute Permitted Business Acquisitions.

 

“Consolidated Cash
Interest Expense” means, for any period, Consolidated Interest
Expense for such period, excluding any amount not payable in Cash; provided
that, with respect to any period or portion thereof occurring prior to the
Closing Date, the foregoing shall be subject to adjustment as set forth in
Schedule 1.1(a).

 

“Consolidated
Current Assets” means, as at any date of determination, the total
assets of Holding and its Subsidiaries on a consolidated basis that may
properly be classified as current assets in conformity with GAAP, excluding
deferred Tax assets, Cash and Permitted Investments.

 

“Consolidated
Current Liabilities” means, as at any date of determination, the
total liabilities of Holding and its Subsidiaries on a consolidated basis that
may properly be classified as current liabilities in conformity with GAAP,
excluding (i) the current portion of long term debt, (ii) accruals of
Consolidated Interest Expense (excluding Consolidated Interest Expense that is
due and unpaid), (iii) Revolving Loans and any other revolving credits
classified as current, (iv) loans of Foreign Subsidiaries of Company classified
as current, (v) accruals, if any, of Transaction Costs resulting from the
Acquisition, (vi) accruals of any costs or expenses related to severance or
termination of employees prior to the date hereof, (vii) accruals for add-backs
to Consolidated EBITDA that are non-cash charges and (viii) deferred Tax
liabilities.

 

“Consolidated EBITDA”
means, for any period, an amount determined for Company and its Subsidiaries on
a consolidated basis equal to (i) Consolidated Net Income, plus (in each case
without duplication and to the extent the respective amounts described in
clauses (a) through (1) below reduced Consolidated Net Income for such period)
(a) Consolidated Interest Expense, (b) provisions for taxes, (c) total
depreciation expense, (d) total amortization expense (including any related to
book plates and purchase accounting fair value “step up” to inventory and other
assets), (e) Transaction Costs paid during such period (to the extent
expensed), (f) restructuring, retention and pension costs associated with the
Acquisition in the amounts and subject to the limitations specified in Schedule
1.1 (a) with respect thereto, (g) fees, expenses or charges related to any
equity offering by Holding or Indebtedness permitted to be incurred under this
Agreement, (h) costs and expenses of the Debt Tenders, (i) Systems
Establishment Expenses, (j) other non-cash items reducing Consolidated Net
Income including, but not limited to, asset impairment charges (excluding any
such non-Cash item to the extent that it represents an accrual or reserve for
potential Cash items in any future period or amortization of a prepaid Cash
item that was paid in a prior period), (k) the amount of management,
consulting, monitoring and advisory fees paid to the Sponsors and their
Affiliates during such period, (1) subject to the limitations with respect
thereto in Schedule 1.1(a), the amount of any nonrecurring charges and (m) the
Cure Amount, if any, received by Company in respect of such period minus
(ii) other non-cash items increasing Consolidated Net Income for such period
(excluding any such non-Cash item to the extent it represents the reversal of
any accrual or reserve for potential 

 

9

 

cash items in any prior period); provided that, with
respect to any period or portion thereof occurring prior to the Closing Date
the foregoing shall be subject to adjustment as set forth in Schedule 1.1(a).

 

“Consolidated
Interest Expense” means, for any period, total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP
and capitalized interest) of Company and its Subsidiaries on a consolidated
basis (net of interest income) with respect to all outstanding Indebtedness of
Company and its Subsidiaries, including all commissions, discounts and other
fees and charges owed with respect to letters of credit and net costs under
Interest Rate Agreements; provided that, with respect to any
period or portion thereof occurring prior to the Closing Date, the foregoing
shall be subject to adjustment as set forth on Schedule 1.1(a).  For purposes of the foregoing, Consolidated
Interest Expense shall be determined after giving effect to any net payments
made or received by Company and its Subsidiaries with respect to Interest Rate
Agreements.

 

“Consolidated Net
Income” means, with respect to any period, the aggregate of the Net
Income of Company and its Subsidiaries for such period, determined on a
consolidated basis; provided, however, that (i) any net after-tax
extraordinary gains or extraordinary losses shall be excluded, (ii)
Consolidated Net Income for such period shall not include the cumulative effect
of a change in accounting principles during such period, (iii) any net
after-tax gains or losses attributable to asset dispositions other than in the
ordinary course of business (as determined in good faith by Company) shall be
excluded, (iv) the Net Income for such period of any person that is not a
Subsidiary, or that is accounted for by the equity method of accounting, shall
be included only to the extent of the amount of dividends or distributions or
other payments paid in cash (or to the extent converted into cash) to the
relevant person or a Subsidiary thereof in respect of such period, (v) the Net
Income for such period of any Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary of its Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or, by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule, or governmental regulation applicable
to that Subsidiary or its stockholders, unless such restriction with respect to
the payment of dividends or in similar distributions has been legally waived,
and (vi) any income or loss from certain discontinued operations specified in
Schedule 1.1 (a) shall be excluded.

 

“Consolidated
Working Capital” means, as at any date of determination, the excess
of Consolidated Current Assets over Consolidated Current Liabilities.

 

“Consolidation Date”
means the earliest to occur of (i) January 31, 2003, (ii) the date of
completion of general syndication of the credit facilities evidenced by this
Agreement (as reasonably determined by the Joint Lead Arrangers in consultation
with Company) and (iii) the date set for determination of the fixed interest
rate of the Permitted Refinancing Indebtedness the proceeds of which are to be
used to refinance amounts owed under the Bridge Loan Agreement.

 

“Contractual
Obligation” means, as applied to any Person, any provision of any
Security issued by that Person or of any indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.

 

10

 

“Contributing
Guarantors” as defined in Section 7.2.

 

“Control”
means the possession of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of voting
securities, by contract or otherwise, and “Controlling”
and “Controlled” shall have
meanings correlative thereto.

 

“Conversion/Continuation
Date” means the effective date of a continuation or conversion, as
the case may be, as set forth in the applicable Conversion/Continuation Notice.

 

“Conversion/Continuation
Notice” means a Conversion/Continuation Notice substantially in the
form of Exhibit A-2.

 

“Co-Syndication
Agents” as defined in the preamble hereto.

 

“Counterpart
Agreement” means a Counterpart Agreement substantially in the form
of Exhibit H delivered by a Credit Party pursuant to Section 5.10.

 

“Credit Date”
means the date of a Credit Extension.

 

“Credit Document”
means any of this Agreement, the Notes, if any, the Joinder Agreements, if any,
the Collateral Documents, Counterpart Agreements, if any, and Letters of Credit
and any documents or certificates executed by Company in favor of a Fronting
Bank relating to Letters of Credit.

 

“Credit Extension”
means the making of a Loan or the issuing of a Letter of Credit.

 

“Credit Party”
means Holding, Company, and each Subsidiary of Company from time to time party
to a Credit Document.

 

“Cumulative Capital
Contribution Amount” means, at any date, an amount not less than
zero determined on a cumulative basis equal to (i) the aggregate cumulative
amount of Designated Capital Contributions, plus (ii) the aggregate
cumulative amount of any Cash proceeds (other than proceeds of Designated
Capital Contributions and Permitted Cure Securities) received by Company as a
capital contribution from Holding with the proceeds of any capital contribution
or issuance of Capital Stock by Holding that are not required to be applied to
repay Loans and reduce Commitments pursuant to Section 2.14(c), minus
(iii) the sum of (x) the aggregate amount of Consolidated Capital Expenditures
made on or prior to such date pursuant to Section 6.7(d)(ii)(x), (y) the
aggregate amount of Investments made on or prior to such date pursuant to
Section 6.6(m)(i), and (z) the aggregate amount, if any, by which the Permitted
Business Acquisition Amount has been increased on or prior to such date
pursuant to clause (x) of the definition thereof.

 

“Cumulative Retained
Excess Cash Flow Amount” means, at any date, an amount, not less
than zero, determined on (a) cumulative basis equal to (i) the aggregate amount
of Excess Cash Flow that was not required to be applied to repay Loans and
reduce Commitments in accordance with Section 2.14(e) minus (ii) the sum
of (x) the aggregate amount 

 

11

 

of Investments made on or prior to such date pursuant to Section
6.6(m)(ii), (y) the aggregate amount of Consolidated Capital Expenditures made
on or prior to such date pursuant to Section 6.7(d)(ii)(y), and (z) the amount,
if any, by which the Permitted Business Acquisition Amount has been increased
on or prior to such date pursuant to clause (y) of the definition thereof.

 

“Cure Amount”
means the lesser of (a) the amount necessary to cure the relevant failure to
comply with all of the Financial Performance Covenants pursuant to Section 8.2,
and (b) $20,000,000.

 

“Cure Right”
as defined in Section 8.2.

 

“Currency Agreement”
means any foreign exchange contract, currency swap agreement, futures contract,
option contract, synthetic cap or other similar agreement or arrangement, each
of which is for the purpose of hedging the foreign currency risk associated
with Holding’ and its Subsidiaries’ operations and not for speculative
purposes.

 

“DB” as
defined in the preamble hereto.

 

“Debt Service”
shall mean, with respect to the Company and its Subsidiaries on a consolidated
basis for any period, Consolidated Cash Interest Expense for such period plus
scheduled principal amortization of Total Debt for such period (whether or not
such payments are made).

 

“Debt Tenders”
means the tender or defeasance by Company conducted pursuant to Section 5.15
with respect to the 2004 HM Bonds and the 2006 HM Bonds.

 

“Default”
means a condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.

 

“Defaulted Loan”
as defined in Section 2.22.

 

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

 

“Defaulting Lender”
as defined in Section 2.22.

 

“Default Period”
means, with respect to any Defaulting Lender, the period commencing on the date
of the applicable Funding Default and ending on the earliest of the following
dates: (i) the date on which all Commitments are cancelled or terminated and/or
the Obligations are declared or become immediately due and payable, (ii) the
date on which (a) the Default Excess with respect to such Defaulting Lender
shall have been reduced to zero (whether by the funding by such Defaulting Lender
of any Defaulted Loans of such Defaulting Lender or by the non-pro rata
application of any voluntary or mandatory prepayments of the Loans in
accordance with the terms of Section 2.13 or Section 2.14 or by a combination
thereof) and (b) such Defaulting Lender shall have delivered to Company and
Administrative Agent a written 

 

12

 

reaffirmation of its intention to honor its obligations hereunder with
respect to its Commitments, and (iii) the date on which Company, Administrative
Agent and Requisite Lenders waive all Funding Defaults of such Defaulting
Lender in writing.

 

“Delayed Draw Term
Loans” as defined in Section 2.1(a) of this Agreement.

 

“Deposit Account”
means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account
evidenced by a negotiable certificate of deposit.

 

“Designated Capital
Contributions” shall mean any common equity contributions made after
the Closing Date by the Designated Investors to Holding (which equity
contributions are, in turn, contributed by Holding to Company as common equity)
so long as all proceeds thereof are used by Company to make Capital
Expenditures pursuant to Section 6.7(d)(ii)(x) and/or Permitted Business
Acquisitions pursuant to Section 6.8(c) and/or Investments pursuant to Section
6.6(m).  For avoidance of doubt, it is
understood and agreed that in no event shall (x) any amounts contributed
pursuant to the exercise of a Cure Right pursuant to Section 8.2, or (y) any
amounts received from the issuance and sale of common equity of Holding through
one or more registered public offerings thereof, be deemed to constitute (in
whole or in part) Designated Capital Contributions.

 

“Designated
Investors” shall mean management of Holding and any other entity
holding Capital Stock in Holding on the Closing Date, including, in any event,
the Sponsors, any Affiliate of any of the Sponsors and any other person
approved by the Agents.

 

“Dollars”
and the sign “$” mean the lawful
money of the United States of America.

 

“Domestic Subsidiary”
means any Subsidiary organized under the laws of the United States of America,
any State thereof or the District of Columbia.

 

“EBITDA Purchase
Price Adjustment Amount” means the amount equal to any purchase
price adjustment pursuant to Section 2.4(d)(ii) of the Share Purchase Agreement
due to a purchase price adjustment described in Section 2.2(b)(iii) of the
Share Purchase Agreement.

 

“Eligible Assignee”
means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two
or more Related Funds being treated as a single Eligible Assignee for all
purposes hereof), and (ii) any commercial bank, insurance company, investment
or mutual fund or other entity that is an “accredited investor” (as defined in
Regulation D under the Securities Act) and which extends credit or buys loans
as one of its businesses.

 

“Employee Benefit
Plan” means any “employee benefit plan” as defined in Section 3(3)
of ERISA (i) which is or was, within the last six years, sponsored, maintained
or contributed to by, or required to be contributed by, Holding, any of its
Subsidiaries or any of their respective ERISA Affiliates or (ii) with respect
to which Holding or any of its Subsidiaries may reasonably be expected to incur
any liabilities under Title N of ERISA.

 

13

 

“Employee Equity
Sales” means sales of Capital Stock of Holding to directors,
officers or employees of Holding or any of its Subsidiaries in connection with
permitted employee compensation and incentive arrangements.

 

“Environmental Claim”
means any written accusation, allegation, notice of violation, claim, demand,
order, directive, cost recovery action or other cause of action by, or on
behalf of, any Governmental Authority or any person for damages, injunctive or
equitable relief, personal injury (including sickness, disease or death),
Remedial Action costs, tangible or intangible property damage, natural resource
damages, nuisance, pollution, any adverse effect on the environment caused by
any Hazardous Material, or for fines, penalties or restrictions, resulting from
or based upon: (a) the threat, the existence, or the continuation of the
existence of a Release (including sudden or non-sudden, accidental or
non-accidental Releases); (b) exposure to any Hazardous Material; (c) the
presence, use, handling, transportation, storage, treatment or disposal of any
Hazardous Material; or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.

 

“Environmental Laws”
means any and all applicable current and future treaties, laws, rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to human health or safety,
including the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.
(“CERCLA”), the Solid Waste
Disposal Act, as amended, 42 U.S.C. § 6901 et seq., the Federal Water Pollution
Control Act, as amended, 33 U.S.C. § 1251 et seq., the Clean Air Act of 1970, as
amended, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act
of 1976, 15 U.S.C. § 2601 et seq.,
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §
11001 et seq., the National
Environmental Policy Act of 1975, 42 U.S.C. § 4321 et seq., the Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. § 300(f) et seq., and any similar or
implementing state, local or foreign law, and all amendments or regulations
promulgated under any of the foregoing.

 

“Environmental
Permit” means any permit, approval, authorization, certificate,
license, variance, filing or permission required by or from any Governmental
Authority pursuant to any Environmental Law.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor thereto.

 

“ERISA Affiliate”
means, as applied to any Person, (i) any corporation which is a member of a
controlled group of corporations within the meaning of Section 414(b) of the
Internal Revenue Code of which that Person is a member; (ii) any trade or
business (whether or not incorporated) which is a member of a group of trades
or businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is a member; and (iii) any member of
an affiliated service group within the meaning of Section 414(m) or (o) of the
Internal Revenue Code of which that Person, any corporation described in clause
(i) above or any trade or business described in clause (ii) above is a member.

 

14

 

“ERISA Event”
means (i) a “reportable event” within the meaning of Section 4043 of ERISA and
the regulations issued thereunder with respect to any Pension Plan (excluding
those for which the provision for 30-day notice to the PBGC has been waived by
regulation) for which Holding, any of its Subsidiaries or any of their respective
ERISA Affiliates is responsible for providing notice to the PBGC thereunder;
(ii) the failure to meet the minimum funding standard of Section 412 of the
Internal Revenue Code with respect to any Pension Plan (whether or not waived
in accordance with Section 412(d) of the Internal Revenue Code) or the failure
to make by its due date a required installment under Section 412(m) of the
Internal Revenue Code with respect to any Pension Plan or the failure to make
any required contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a
notice of intent to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Holding, any of its
Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability to Holding, any of its Subsidiaries or any of their
respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which could constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Holding, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of Holding, any of its Subsidiaries or any of their
respective ERISA Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt by Holding, any of
its Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an
act or omission which could reasonably be expected to give rise to the
imposition on Holding, any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of
the Internal Revenue Code or under Section 409, Section 502(c), (i) or (1), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against Holding, any of its Subsidiaries or any of their respective
ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from
the Internal Revenue Service of notice of the failure of any Pension Plan (or
any other Employee Benefit Plan intended to be qualified under Section 401(a)
of the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan (other than a Multiemployer Plan).

 

“Eurodollar Rate
Loan” means a Loan bearing interest at a rate determined by
reference to the Adjusted Eurodollar Rate.

 

“Event of Default”
means each of the conditions or events set forth in Section 8.1.

 

15

 

“Excess Amount”
as defined in Section 2.15(d).

 

“Excess Cash Flow”
shall mean, with respect to Company and its Subsidiaries on a consolidated basis
for any Excess Cash Flow Period, Consolidated EBITDA of Company and its
Subsidiaries on a consolidated basis for such Excess Cash Flow Period, minus,
(to the extent not otherwise deducted in determining Consolidated EBITDA)
without duplication, (a) Debt Service for such Excess Cash Flow Period, (b) any
voluntary prepayments of Term Loans B during such Excess Cash Flow Period and
any permanent voluntary reductions to the Revolving Commitments to the extent
that an equal amount of the Revolving Loans simultaneously is repaid, so long
as such amounts are not already reflected in Debt Service, (c)(i) Consolidated
Capital Expenditures by Company and its Subsidiaries on a consolidated basis
during such Excess Cash Flow Period that are paid in cash and (ii) the aggregate
consideration paid in cash during such Excess Cash Flow Period in respect of
Permitted Business Acquisitions and other Investments permitted hereunder
(other than Investments in a Subsidiary (other than an Unrestricted
Subsidiary)) less any amounts received in respect thereof as a return of
capital, (d) Taxes paid in cash by Company and its Subsidiaries on a
consolidated basis during such Excess Cash Flow Period including income tax
expense and withholding tax expense incurred in connection with cross-border
transactions involving its Foreign Subsidiaries, (e) an amount equal to any
increase in Consolidated Working Capital of Company and its Subsidiaries for
such Excess Cash Flow Period, (f) monitoring and management fees to the extent
paid in cash to the Sponsors and/or any of their Affiliates during such Excess
Cash Flow Period, (g) cash expenditures made in respect of Hedge Agreements and
Other Hedge Agreements during such Excess Cash Flow Period, to the extent not
reflected in the computation of Consolidated Cash Interest Expense, (h)
Restricted Junior Payments permitted to be paid in cash by Company during such
Excess Cash Flow Period pursuant to clauses (c), (d), (h), (i) and (1) of
Section 6.4, (i) amounts paid in cash during such Excess Cash Flow Period on
account of items that were accounted for as noncash reductions of Consolidated
Net Income of Company and its Subsidiaries in the current or a prior period,
(j) special charges or any extraordinary or nonrecurring losses paid in cash
during such Excess Cash Flow Period, and (k) to the extent included in
determining Consolidated EBITDA, all items paid that did not result from a cash
payment to Company and its Subsidiaries on a consolidated basis during such
Excess Cash Flow Period; plus,
without duplication, (i) an amount equal to any decrease in Consolidated
Working Capital for such Excess Cash Flow Period, (ii) all proceeds received
during such Excess Cash Flow Period in respect of Capital Leases, purchase
money Indebtedness, Sale and Lease-Back Transactions pursuant to Section 6.10
and any other Indebtedness or financing of any type (including from the
reinvestment of proceeds of sales of assets and expenditures funded with the
Cumulative Excess Cash Flow amount), in each case to the extent used to finance
any Consolidated Capital Expenditure, Permitted Business Acquisitions, or
Investment (other than Indebtedness under this Agreement to the extent there is
no corresponding deduction to Excess Cash Flow above in respect of the use of
such borrowings), (iii) all amounts referred to in (c) above to the extent
funded with the proceeds of the issuance of Capital Stock of, or capital
contributions to, Holdings after the Closing Date (to the extent not previously
used to prepay Indebtedness (other than Revolving Loans or Swingline Loans),
make any Permitted Business Acquisition, Investment or Consolidated Capital
Expenditure or otherwise for any purpose resulting in a deduction to Excess
Cash Flow in any prior Excess Cash Flow Period), in each case to the extent
there is a corresponding deduction in determining Excess Cash Flow above, (iv)
cash payments received in respect of Hedge Agreements and Other Hedge
Agreements

 

16

 

during such Excess Cash Flow Period to the extent (A) not included in
the computation of Consolidated EBITDA or (B) reducing Consolidated Cash
Interest Expense, (v) any extraordinary or nonrecurring gain realized in cash
during such Excess Cash Flow Period (except to the extent such gain is subject
to Section 2.14(a), (b), (c) or (d)), (vi) to the extent deducted in the
computation of Consolidated EBITDA, interest income and (vii) to the extent
subtracted in determining Consolidated EBITDA, all items that did not result
from a cash payment by Company and its Subsidiaries on a consolidated basis
during such Excess Cash Flow Period.

 

“Excess Cash Flow
Period” shall mean each fiscal year of Company, commencing with its
fiscal year ended closest to December 31, 2003.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.

 

“Excluded Subsidiary”
means an Unrestricted Subsidiary and/or a Subsidiary that is not a Wholly-Owned
Subsidiary of Company.

 

“Existing
Indebtedness” means with respect to the Indebtedness of HM and its
Subsidiaries existing as of the Closing Date and listed on Schedule 6.1.

 

“Fair Share”
as defined in Section 7.2.

 

“Fair Share
Contribution Amount” as defined in Section 7.2.

 

“Fair Share
Shortfall” as defined in Section 7.2.

 

“Federal Funds
Effective 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, (i) 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 (ii) 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 charged to Administrative Agent, in its capacity as a Lender, on
such day on such transactions as determined by Administrative Agent.

 

“Financial Officer
Certification” means, with respect to the financial statements for
which such certification is required, the certification of the chief financial
officer of Company (or such other financial officer of Company reasonably
acceptable to Joint Lead Arrangers) that such financial statements fairly
present, in all material respects, the financial condition of Holding and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments.

 

“Financial
Performance Covenants” means the covenants of Holding and Company
set forth in Section 6.7(a)-(c).

 

“Financial Plan”
as defined in Section 5.1(i).

 

17

 

“First Priority”
means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that such Lien is the only Lien to which
such Collateral is subject, other than Permitted Liens.

 

“Fiscal Quarter”
means a fiscal quarter of any Fiscal Year.

 

“Fiscal Year”
means the fiscal year of Holding and its Subsidiaries ending on December 31 of
each calendar year.

 

“Flood Hazard
Property” means any Real Estate Asset subject to a mortgage in favor
of Collateral Trustee, for the benefit of Lenders, and located in an area
designated by the Federal Emergency Management Agency as having special flood
or mud slide hazards.

 

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

 

“Fronting Bank”
shall mean (i) with respect to Standby Letters of Credit, any Lender which, at
the request of Company and with the consent of the Administrative Agent, agrees
in such Lender’s sole discretion to become a Fronting Bank for purposes of
issuing Standby Letters of Credit pursuant to Section 2.4, and (ii) with
respect to Commercial Letters of Credit, any Lender (but expressly excluding
CIBC) which, at the request of Company and with the consent of the
Administrative Agent, agrees in such Lender’s sole discretion to become a
Fronting Bank for purposes of issuing Commercial Letters of Credit pursuant to
Section 2.4.

 

“Funding Default”
as defined in Section 2.22.

 

“Funding Guarantors”
as defined in Section 7.2.

 

“Funding Notice”
means a notice substantially in the form of Exhibit A-1.

 

“GAAP”
means, subject to the limitations on the application thereof set forth in
Section 1.2, United States generally accepted accounting principles in effect
as of the date of determination thereof.

 

“GSCP”
means Goldman Sachs Credit Partners L.P.

 

“Governmental Acts”
means any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority.

 

“Governmental
Authority” means any federal, state, municipal, national or other
government, governmental department, commission, board, bureau, court, agency
or instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a foreign
entity or government.

 

“Governmental Authorization”
means any permit, license, authorization, plan, directive, consent order or
consent decree of or from any Governmental Authority.

 

18

 

“Grantor”
as defined in the Pledge and Security and Collateral Trust Agreement, and in
the case of the Holdings Pledge and Security Agreement, Holdings.

 

“Guaranteed
Obligations” as defined in Section 7.1.

 

“Guarantor”
means Holding and, following the HM Release Date, each Domestic Subsidiary of
Holding (other than Company, any Receivables Subsidiary and Excluded
Subsidiaries).

 

“Guarantor
Subsidiary” means following the HM Release Date, each Domestic
Subsidiary of Holding other than Company, any Receivables Subsidiary and
Excluded Subsidiaries.

 

“Guaranty”
means the guaranty of each Guarantor set forth in Section 7.

 

“Hazardous Materials”
means any material meeting the definition of a “hazardous substance” in CERCLA
42 U.S.C. § 9601(14) and all explosive or radioactive substances or wastes;
hazardous or toxic substances or wastes; pollutants; solid, liquid or gaseous
wastes, including petroleum, petroleum distillates or fractions or residues,
asbestos or asbestos containing materials, polychlorinated biphenyls (“PCBs”) or materials or equipment containing
PCBs in excess of 50 parts per million (ppm), radon gas, infectious or medical
wastes, and all other substances or wastes of any nature regulated pursuant to
any Environmental Law, or that reasonably could form the basis of an
Environmental Claim.

 

“Hazardous Materials
Activity” means any past, current, proposed or threatened activity,
event or occurrence involving any Hazardous Materials, including the use,
manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action
or response action with respect to any of the foregoing.

 

“Hedge Agreement”
means an Interest Rate Agreement or a Currency Agreement of Company entered
into in the ordinary course of Company’s or any of its Subsidiaries’ businesses
and not for speculative purposes.

 

“Highest Lawful Rate”
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable
to any Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.

 

“Historical
Financial Statements” means as of the Closing Date, (i) the audited
financial statements of HM and its Subsidiaries, for the Fiscal Year Ended
December 31, 2001 consisting of balance sheets and the related consolidated
statements of income, stockholders’ equity and cash flows for such Fiscal Year,
and (ii) the unaudited financial statements of HM and its Subsidiaries as at
the most recently ended Fiscal Quarter, consisting of a balance sheet and the
related consolidated statements of income, stockholders’ equity and cash flows
for the three-, six-or nine-month period, as applicable, ending on such date.

 

19

 

“HM” as
defined in the recitals hereto.

 

“HM Bonds”
means, collectively, each of the US$100,000,000 7.125% Notes due 2004 (the “2004 HM Bonds”), the US$125,000,000 7.0%
Notes due 2006 (the “2006 HM Bonds”)
and the US$150,000,000 7.20% Notes due 2011 (the “2011 HM Bonds”) issued pursuant to that certain Indenture,
dated as of March 15, 1994, as supplemented by that certain First Supplemental
Indenture, dated as of July 27, 1995, between HM and State Street Bank and
Trust Company, as Trustee (“HM Indenture”).

 

“HM Group”
means HM and its Subsidiaries.

 

“HM Release Date”
means the date on which all of the HM Bonds have been redeemed, defeased or
repaid or, if earlier, the date as of which the prohibitions under the HM Bonds
and the HM Indenture with respect to Subsidiaries becoming Guarantor
Subsidiaries hereunder no longer apply.

 

“HM Release Date
Mortgaged Property” as defined in Section 5.12(a).

 

“Holding”
as defined in the preamble hereto.

 

“Holding Pledge and
Security Agreement” means the “Pledge and Security Agreement” among
Holding and the Collateral Trustee substantially in the form of Exhibit I,
as it may be amended, supplemented or otherwise modified from time to time, and
each document required thereunder.

 

“Increased Amount
Date” as defined in Section 2.24.

 

“Increased-Cost
Lenders” as defined in Section 2.23.

 

“Indebtedness”,
as applied to any Person, means, without duplication, (i) all indebtedness for
borrowed money; (ii) (x) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP and (y) any obligation owed for all or any part of the
deferred purchase price of property or services having a term of twelve months
or more except any such balance that constitutes a trade payable or similar
obligation to a trade creditor or deferred compensation to employees, in each
case accrued in the ordinary course of business; (iii) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (iv) all indebtedness secured by any Lien on
any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; (v) the face amount of any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (vi) the guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making of the Indebtedness of another; (vii) any obligation of such Person
the primary purpose of which is to provide assurance to an obligee that
Indebtedness of the obligor thereof will be paid or discharged, other than
performance guarantees issued in the ordinary course of business; (viii) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge 

 

20

 

of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (b) to maintain the solvency
or any balance sheet item, level of income or financial condition of another
if, in the case of any agreement described under subclauses (a) or (b) of this
clause (viii), the primary purpose or intent thereof is as described in clause
(vii) above; (ix) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment prior to six months following the
scheduled final maturity of this Term Loan B in respect of any equity interests
in such Person or any other Person, valued, in the case of redeemable preferred
interests, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; (x) all obligations of such
Person under any synthetic lease, tax retention operating lease, off-balance
sheet loan and similar off-balance sheet financing, if the transaction giving
rise to such obligation is considered indebtedness for borrowed money for tax
purposes but is classified as an operating lease in accordance with GAAP; and
(xi) upon termination of any Hedge Agreement or Other Hedge Agreement,
obligations of such Person to make payments in the event of early termination,
on the date the Indebtedness of such Person is determined, in respect of such
Hedge Agreement or Other Hedge Agreement; provided, however, that
obligations in connection with Receivables Facilities shall not be deemed to
constitute Indebtedness.

 

“Indemnified
Liabilities” means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
claims (including Environmental Claims), reasonable costs (including the costs
of any investigation, study, sampling, testing, abatement, cleanup, removal,
remediation or other response action necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity), reasonable expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto, and any fees or expenses incurred by Indemnitees
in enforcing this indemnity), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Credit Documents or the transactions contemplated hereby
or thereby (including Lenders’ agreement to make Credit Extensions or the use
or intended use of the proceeds thereof, or any enforcement of any of the
Credit Documents (including any sale of, collection from, or other realization
upon any of the Collateral or the enforcement of the Guaranty)); (ii) the
statements contained in any commitment letter delivered by any Lender to VAC
with respect to the transactions contemplated, by this Agreement; or (iii) any
Environmental Claim or any Hazardous Materials Activity relating to or arising
from any past or present activity, operation, land ownership, or practice of
Holding or any of its Subsidiaries.

 

“Indemnitee”
as defined in Section 10.3.

 

“Installment”
as defined in Section 2.12.

 

“Installment Date”
as defined in Section 2.12.

 

21

 

“Interest Coverage
Ratio” means the ratio as of the last day of any Fiscal Quarter of
(i) Consolidated EBITDA for the four-Fiscal Quarter period then ended, to (ii)
Consolidated Cash Interest Expense for such four-Fiscal Quarter period.

 

“Interest Payment
Date” means with respect to (i) any Base Rate Loan, each March 31,
June 30, September 30 and December 31 of each year, commencing on the first
such date to occur after the Closing Date and the final maturity date of such
Loan; and (ii) any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided, in the case of each Interest Period
of longer than three months “Interest Payment Date” shall also include each
date that is three months, or an integral multiple thereof, after the
commencement of such Interest Period.

 

“Interest Period”
means, in connection with a Eurodollar Rate Loan, an interest period of one,
two, three or six months (or such other periods as may be generally made
available by all Lenders), as selected by Company in the applicable Funding
Notice or Conversion/Continuation Notice, (i) initially, commencing on the
Credit Date or Conversion/Continuation Date thereof, as the case may be; and
(ii) thereafter, commencing on the day on which the immediately preceding
Interest Period expires; provided, (a) if an Interest Period would
otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day unless no further Business Day
occurs in such month, in which case such Interest Period shall expire on the
immediately preceding Business Day; (b) 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, subject to clauses (c) and (d), of this definition, end on the
last Business Day of a calendar month; (c) no Interest Period with respect to
any portion of the Term Loan B shall extend beyond the Term Loan B Maturity
Date; and (d) no Interest Period with respect to any portion of the Revolving
Loans shall extend beyond the Revolving Commitment Termination Date.

 

“Interest Rate
Agreement” means any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedging agreement or
other similar agreement or arrangement, each of which is for the purpose of
hedging the interest rate exposure associated with Holding’s and its
Subsidiaries’ operations and not for speculative purposes.

 

“Interest Rate
Determination Date” means, with respect to any Interest Period, the
date that is two Business Days prior to the first day of such Interest Period.

 

“Internal Revenue
Code” means the Internal Revenue Code of 1986, as amended to the
date hereof and from time to time hereafter, and any successor statute.

 

“Investment”
means (i) any purchase or other acquisition by Holding or any of its
Subsidiaries of, or of a beneficial interest in, any of the Securities of any
other Person (other than Company or a Guarantor Subsidiary); (ii) any
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Holding from any Person (other than a Guarantor Subsidiary), of
any Capital Stock of such Person; and (iii) any loan, advance or capital
contribution by Holding or any of its Subsidiaries to any Person (other than
Company or any Guarantor Subsidiary), including all indebtedness and accounts
receivable from that other Person 

 

22

 

that are not current assets or did not arise from sales to that other
Person  in the ordinary course of
business.  The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, less all
returns (including returns of capital) paid in Cash thereon.  For the avoidance of doubt, Guarantees shall
not constitute Investments.

 

“Issuance Notice”
means an Issuance Notice substantially in the form of Exhibit A-3.

 

“Joinder Agreement”
means an agreement substantially in the form of Exhibit J.

 

“Joint Lead
Arrangers” as defined in the preamble hereto.

 

“Joint Venture”
means a joint venture, partnership or other similar arrangement, whether in
corporate, partnership or other legal form; provided, in no event shall
any corporate Subsidiary of any Person be considered to be a Joint Venture to
which such Person is a party.

 

“Lender”
means each financial institution listed on the signature pages hereto as a
Lender, and any other Person that becomes a party hereto pursuant to an
Assignment Agreement or a Joinder Agreement.

 

“Lender Counterparty”
means each Lender or any Affiliate of a Lender counterparty to a Hedge
Agreement (including any Person who is a Lender as of the Closing Date but
subsequently, whether before or after entering into a Hedge Agreement, ceases
to be a Lender) including, without limitation, each such Affiliate that enters
into a Joinder Agreement with the Collateral Trustee.

 

“Letter of Credit”
means a Commercial Letter of Credit or Standby Letter of Credit issued or to be
issued by a Fronting Bank pursuant to this Agreement.

 

“Letter of Credit Sublimit”
means, as of any date of determination, the lesser of (i) $50,000,000 and (ii)
the aggregate unused amount of the Revolving Commitments then in effect.

 

“Letter of Credit
Usage” means, as at any date of determination, the sum of (i) the
maximum aggregate amount which is, or at any time thereafter may become,
available for drawing under all Letters of Credit then outstanding, and (ii)
the aggregate amount of all drawings under Letters of Credit honored by
Fronting Banks and not theretofore reimbursed by or on behalf of Company.

 

“Lien”
means any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, and any lease in the
nature thereof) and any option, trust or other preferential arrangement having
the practical effect of any of the foregoing.

 

“Loan”
means a Term Loan B, a Revolving Loan or a Swing Line Loan, as applicable.

 

23

 

“Major Default”
means the occurrence or existence of any of the following conditions or events:
(i) any event or condition entitling the purchaser under the Share Purchase
Agreement to terminate the Share Purchase Agreement, (ii) any restatement,
amendment, supplement, or other modification, or waiver in connection with the
Share Purchase Agreement contrary to the terms of this Agreement without the
prior written consent of the Lead Arrangers, (iii) a Change of Control, (iv)
any Event of Default shall occur and be continuing under Section 8.1 (d) with
respect to any representation, warranty or statement which is made with respect
to VAC or Holding under Sections 4.1 (Organization;
Requisite Power and Authority; Qualification), 4.3 (Due Authorization), 4.4 (No Conflict), 4.5 (Governmental Consents), 4.6 (Binding Obligation), (v) any Event of
Default occurring and continuing with respect to VAC or Holding under Sections
8.1 (f) or 8.1 (g) or 8.1(1).

 

“Margin Stock”
as defined in Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.

 

“Material Adverse
Effect” means a material adverse effect or circumstance with respect
to (i) the business, results of operations, assets or liabilities, or financial
condition of HM Group taken as a whole; or (ii) the rights or remedies
available to, or conferred upon, any Agent or Lenders under any Credit
Document.

 

“Material Real
Estate Asset” means any fee-owned Real Estate Asset having a fair
market value in excess of $2,500,000 as of the date of the acquisition thereof.

 

“Merger”
means the merger of VAC with and into HM which shall occur on the Closing Date,
or on the immediately following day, and pursuant to which, HM shall be the
surviving corporation and shall assume all obligations of VAC.

 

“Moody’s”
means Moody’s Investor Services, Inc.

 

“Mortgage”
means a mortgage, deed of trust or similar document in form and substance
reasonably satisfactory to Collateral Trustee.

 

“Multiemployer Plan”
means any Employee Benefit Plan which is a “multiemployer plan” as defined in
Section 3(37) of ERISA.

 

“NAIC”
means The National Association of Insurance Commissioners, and any successor
thereto.

 

“Narrative Report”
means, with respect to the financial statements for which such narrative report
is required, a narrative report describing the operations of Holding and its
Subsidiaries in the form prepared for presentation to senior management thereof
for the applicable month, Fiscal Quarter or Fiscal Year and for the period from
the beginning of the then current Fiscal Year to the end of such period to
which such financial statements relate; provided that, the management
discussion of operations contained in any periodic reports on Form 10(K) or
10(Q) filed by Company (or equivalent information to the extent no such filings
are made) shall be deemed satisfactory for purposes of providing a Narrative
Report.

 

24

 

“Net Asset Sale
Proceeds” means, with respect to any Asset Sale (or other applicable
asset disposition transaction), an amount equal to: (i) Cash payments
(including any Cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) actually received by Holding or any of its Subsidiaries from such
Asset Sale, minus (ii) any costs incurred in connection with such Asset
Sale, including (a) taxes payable by the seller (or Holding on behalf of
Seller) as a result of any gain recognized in connection with such Asset Sale,
(b) payment of the outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Loans) that is secured by a
Lien on the stock or assets in question and that is required to be repaid under
the terms thereof as a result of such Asset Sale, (c) attorneys’ fees,
accountants’ fees, investment banking fees, survey costs, title insurance
premiums, and related search and recording charges, transfer taxes, deed or
mortgage recording taxes, other customary expenses and brokerage, consultant
and other customary fees actually incurred in connection therewith and (d) a
reasonable reserve, including for any indemnification payments (fixed or
contingent) attributable to seller’s indemnities and representations and
warranties to purchaser in respect of such Asset Sale undertaken by Holding or
any of its Subsidiaries in connection with such Asset Sale.

 

“Net Income”
means, with respect to any Person, the net income (loss) of such person,
determined in accordance with GAAP.

 

“Net
Insurance/Condemnation Proceeds” means an amount equal to: (i) any
Cash payments or proceeds received by Holding or any of its Subsidiaries (a)
under any casualty insurance policy in respect of a covered loss thereunder or
(b) as a result of the taking of any assets of Holding or any of its
Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, minus (ii) (a)
any reasonable costs incurred by Holding or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of Holding or such
Subsidiary in respect thereof, (b) any costs incurred in connection with any
sale of such assets as referred to in clause (i)(b) of this definition,
including income taxes payable as a result of any gain recognized in connection
therewith, (c) the amount of such proceeds, if any, which is required by law or
contract to be applied for the benefit of third parties and (d) reasonable
reserves.

 

“New Revolving
Commitments” as defined in Section 2.24.

 

“New Revolving
Lender” as defined in Section 2.24.

 

“Non-Consenting
Lender” as defined in Section 2.23.

 

“Non-US Lender”
as defined in Section 2.20(c). 

 

“Note”
means a Term Loan B Note, a Revolving Loan Note or a Swing Line Note.

 

“Notice”
means a Funding Notice, an Issuance Notice, or a Conversion/ Continuation
Notice.

 

25

 

“Obligations”
means all obligations of every nature of each Credit Party from time to time
owed to the Agents (including former Agents), the Lenders or any of them and
Lender Counterparties, under any Credit Document or Hedge Agreement (including,
without limitation, with respect to a Hedge Agreement, obligations owed
thereunder to any person who was a Lender or an Affiliate of a Lender at the
time such Hedge Agreement was entered into), whether for principal, interest
(including interest which, but for the filing of a petition in bankruptcy with
respect to such Credit Party, would have accrued on any Obligation, whether or
not a claim is allowed against such Credit Party for such interest in the
related bankruptcy proceeding), reimbursement of amounts drawn under Letters of
Credit, payments for early termination of Hedge Agreements, fees, expenses,
indemnification or otherwise.

 

“Obligee Guarantor”
as defined in Section 7.7.

 

“Organizational
Documents” means (i) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as amended, (ii) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership agreement,
as amended, (iii) with respect to any general partnership, its partnership
agreement, as amended, and (iv) with respect to any limited liability company,
its articles of organization, as amended, and its operating agreement, as
amended.  In the event any term or
condition of this Agreement or any other Credit Document requires any
Organizational Document to be certified by a secretary of state or similar
governmental official, the reference to any such “Organizational Document”
shall only be to a document of a type customarily certified by such
governmental official.

 

“Other Hedge
Agreement” shall mean any commodity agreements or other similar
agreements or arrangements entered into by Company in order to protect against
the fluctuations in commodity values and not for speculative purposes.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Pension Plan”
means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

 

“Permitted Business
Acquisition” shall mean any acquisition of all or substantially all
the assets of, or shares or other equity interests in, a Person or division or
line of business of a Person (or any subsequent Investment made in a previously
acquired Permitted Business Acquisition) if immediately after giving effect
thereto: (a) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (b) all transactions related thereto
shall be consummated in accordance with applicable laws, (c) (i) prior to the
HM Release Date any such acquisition of assets shall be made by HM and any
entity or Person the subject of such acquisition shall be acquired by (y) HM
and shall be concurrently with such acquisition merged into HM or (z) either an
Excluded Subsidiary or by a Wholly-Owned Subsidiary (subject to the
requirements of Section 6.6(i)) and (ii) after the HM Release Date, 100% of the
equity interests of any acquired or newly formed corporation, partnership,
association or other business entity are owned directly by Company or a
domestic Wholly-Owned Subsidiary of Company which is a Guarantor (unless there
is a material tax or 

 

26

 

legal or other economic disadvantage in not having a Foreign Subsidiary
of Company hold such equity interests, in which case such equity interests may
be held directly by a Foreign Subsidiary of Company), or by an Excluded
Subsidiary and all actions required to be taken, if any, with respect to such
acquired or newly formed Subsidiary under Sections 5.10 and 5.12 shall have
been taken and (d)(i) Holding and its Subsidiaries shall be in compliance, on a
Pro Forma Basis after giving effect to such acquisition or formation, with the
covenants contained in Section 6.7(a)-(c) recomputed as at the last day of the
most recently ended Fiscal Quarter of Holding and its Subsidiaries as if such
acquisition had occurred on the first day of each relevant period for testing
such compliance, and Company shall have delivered to the Administrative Agent
an officers’ certificate to such effect, together with all relevant financial
information for such Subsidiary or assets, (ii) any acquired or newly formed
Subsidiary shall not be liable for any Indebtedness, other than as permitted
under Section 6.1(r), and (iii) the businesses being acquired are primarily
located in the United States.

 

“Permitted Business
Acquisition Amount” shall mean, each of $25,000,000 in the aggregate
in any Fiscal Year and $150,000,000 in the aggregate since the Closing Date to
the date of determination; provided that, after the second anniversary of the
Closing Date (i) as of any date that the Total Leverage Ratio is equal to or
less than 3:50:1.00 the foregoing amounts shall increase to $35,000,000 in the
aggregate in any Fiscal Year and $200,000,000 in the aggregate from the Closing
Date to the date of determination, and (ii) as of any date that the Total
Leverage Ratio is equal to or less than 3:00:1.00 the foregoing amounts shall
increase to $50,000,000 in the aggregate in any Fiscal Year and $250,000,000 in
the aggregate from the Closing Date to the date of determination, provided
further that, the Permitted Business Acquisition Amounts shall be further
increased at any time to the extent, and only to the extent, that Company makes
an election in writing delivered to Administrative Agent to increase the
Permitted Business Acquisition Amount by (x) all or a portion of the available
Cumulative Capital Contribution Amount, (y) all or a portion of the available
Cumulative Retained Excess Cash Flow Amount and/or (z) amounts designated to
fund Permitted Business Acquisitions pursuant to Section 2.14(a); provided
still further that, the Permitted Business Acquisition Amount shall be
decreased to the extent of any Indebtedness assumed in connection with any
Permitted Business Acquisition.

 

“Permitted Cure
Security” means an equity security of Holding having no mandatory
redemption, repurchase, repayment or similar requirements prior to the date
which occurs four calendar months after the Term Loan B Maturity Date and upon
which all dividends or distributions, at the election of Holding, may be
payable in additional shares of such equity security.

 

“Permitted Holding
Debt” means (a) Permitted Refinancing Indebtedness in an aggregate
principal amount of up to $100,000,000 the proceeds of which are used to
refinance the Bridge Facility and with respect to which (i) Holding is the only
obligor and (ii) no scheduled payments of principal or cash interest payments
are required to be made prior to the third anniversary of the date of issuance
thereof and (b) after completion of syndication of the Commitments and the
Loans, as determined by the Joint Lead Arrangers, and so long as no Permitted
Holding Debt is outstanding pursuant to clause (a), Indebtedness of Holding
owing to any of the Sponsors or any of their respective Affiliates with respect
to which (i) Holding is the only obligor, (ii) no scheduled payments of
principal or cash interest payments are required to be 

 

27

 

made prior to the later of (x) repayment in full of the Obligations and
(y) maturity of the Bridge Facility and any Permitted Refinancing Indebtedness,
(iii) no covenants or rights to demand repayment (other than customary limited
provisions acceptable to the Agents), other than the right to payment at final
maturity shall apply, and (iv) such Indebtedness is unsecured.

 

“Permitted
Indebtedness” as defined in Section 6.1.

 

“Permitted
Investments” shall mean: (a) direct obligations of the United States
of America or any agency thereof or obligations guaranteed by the United States
of America or any agency thereof; (b) time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250,000,000 (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company’s long-term debt, is rated A (or such similar equivalent rating or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act of 1933, as amended)); (c)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) above entered into with a bank
meeting the qualifications described in clause (b) above; (d) commercial paper,
maturing not more than 180 days after the date of acquisition, issued by a
corporation (other than an Affiliate of Company) organized and in existence
under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of
which any investment therein is made of P-1 (or higher) according to Moody’s,
or A-1 (or higher) according to S&P; (e) securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least A by
S&P or A by Moody’s; (f) in the case of any Subsidiary organized in a
jurisdiction outside the United States: (i) direct obligations of the sovereign
nation (or any agency thereof) in which such Subsidiary is organized and is
conducting business or in obligations fully and unconditionally guaranteed by
such sovereign nation (or any agency thereof), (ii) investments of the type and
maturity described in clauses (a) through (e) above of foreign obligors, which
investments or obligors (or the parents of such obligors) have ratings described
in such clauses or equivalent ratings from comparable foreign rating agencies
or (iii) investments of the type and maturity described in clauses (a) through
(e) above of foreign obligors (or the parents of such obligors), which
investments or obligors (or the parents of such obligors) are not rated as
provided in such clauses or in clause (ii) above but which are, in the
reasonable judgment of Company, comparable in investment quality to such
investments and obligors (or the parents of such obligors); (g) shares of
mutual funds whose investment guidelines restrict 95% of such funds’
investments to those satisfying the provisions of clauses (a) through (e)
above; (h) time deposit accounts, certificates of deposit and money market
deposits in an aggregate face amount not in excess of 1/2 of 1% of total assets
of Holding and its Subsidiaries, on a consolidated basis, as of the end of
Holding’ most recently completed fiscal year; and (i) any Investment by Holding
in a Receivables Subsidiary; provided that any such Investment in a
Receivables Subsidiary is in the form of a Purchase Money Note, contribution of
additional receivables and other financial and related assets or Capital Stock.

 

“Permitted Liens”
means each of the Liens permitted pursuant to Section 6.2.

 

28

 

“Permitted
Refinancing Indebtedness” means any Indebtedness of Company or a
Subsidiary of Company or, in the case of Permitted Holding Debt, Holding,
issued in exchange for (excluding, in the case of the Bridge Facility, the
exchange notes contemplated by the Bridge Facility Documents), or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund (collectively, to “Refinance”),
Indebtedness permitted by Section 6.1(g) or Section 6.1(h) or Section 6.1(r)
(or previous refinancings thereof constituting Permitted Refinancing
Indebtedness) of Company, such Subsidiary or Company, or Holding, as the case
may be, provided that (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
Refinanced (plus any related fees, unpaid accrued interest and premium
thereon), (ii) the average life to maturity of such Permitted Refinancing
Indebtedness is greater than or equal to that of the Indebtedness being
Refinanced, (iii) if the Indebtedness being Refinanced is subordinated in right
of payment to the Obligations under this Agreement, such Permitted Refinancing
Indebtedness shall be subordinated in right of payment to such Obligations on
terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being Refinanced, (iv) no Permitted
Refinancing Indebtedness shall have different obligors (other than in the case
of Permitted Holding Debt, in which case Holding may be the Obligor), or
greater guarantees or security, than the Indebtedness being Refinanced and (v)
if the Indebtedness being Refinanced is secured by any collateral (whether
equally and ratably with, or junior to, the Secured Parties or otherwise), such
Permitted Refinancing Indebtedness may be secured by such collateral (including
any collateral pursuant to after acquired property clauses to the extent any
such collateral secured the Indebtedness being Refinanced) on terms no less
favorable to the Secured Parties than those contained in the documentation
governing the Indebtedness being Refinanced.

 

“Person”
means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships,
joint stock companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether
or not legal entities, and Governmental Authorities.

 

“Pledge and Security
and Collateral Trust Agreement” means the “Pledge and Security and
Collateral Trust Agreement” among VAC, HM and the Collateral Trustee
substantially in the form of Exhibit I, as it may be amended,
supplemented or otherwise modified from time to time, and each document
required thereunder.

 

“Prime Rate”
means the rate of interest per annum that CIBC announces from time to time as
its prime lending rate for its United States commercial lending units, as in
effect from time to time.  The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. 
CIBC or any other Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.

 

“Principal Office”
means, for each of the Administrative Agent and Swing Line Lender, such
Person’s “Principal Office” as set forth on Appendix A, or such other
office as such Person may from time to time designate in writing to Company,
Administrative Agent and each Lender.

 

29

 

“Pro Forma Basis”
shall mean for purposes of the definition of “Permitted Business Acquisition”
and Sections 6.1, 6.4(h), 6.7 and 6.17 (but not for determining Applicable
Margin) as to any person, for any events as described in clauses (ii) and (iii)
below which occur subsequent to the commencement of a period for which the
financial effect of such events is being calculated, and giving effect to the
events for which such calculation is being made, such calculation as will give
pro forma effect to such events as if same had occurred at the beginning of
such period of calculation; and

 

(i)                                     for
purposes of the foregoing calculation, each transaction giving rise to the need
to calculate the pro forma effect to any of the following events shall be
assumed to have occurred on the first day of the four consecutive Fiscal
Quarter period last ended on or before the occurrence of the respective event
for which such pro forma effect is being determined (the “Reference Period”);

 

(ii)                                  in
making any determination of Consolidated EBITDA, pro forma effect shall be
given to any Asset Sale, to any Permitted Business Acquisition, or any designation
pursuant to Section 6.17 (or any similar transaction or transactions which
require a determination on a Pro Forma Basis or a waiver or consent of the
Requisite Lenders pursuant to Section 6.8), in each case which occurred during
the Reference Period (or, in the case of determinations made pursuant to the
definition of Permitted Business Acquisition contained herein, occurring during
the Reference Period or thereafter and through and including the date upon
which the respective Permitted Business Acquisition is consummated) as if such
Asset Sale, Permitted Business Acquisition or other transaction, as the case
may be, occurred on the first day of the Reference Period; and

 

(iii)                               in
making any determination on a Pro Forma Basis, (x) all Indebtedness (including
Indebtedness incurred or assumed and for which the financial effect is being
calculated, whether incurred under this Agreement or otherwise, but including,
with respect to revolving indebtedness the average amount of such Indebtedness
outstanding) incurred or permanently repaid during the Reference Period (or, in
the case of determinations made pursuant to the definition of Permitted
Business Acquisition contained herein, occurring during the Reference Period or
thereafter and through and including the date upon which the respective
Permitted Business Acquisition is consummated) shall be deemed to have been
incurred or repaid at the beginning of such period and (y) interest expense of
such person attributable to interest on any Indebtedness, for which pro forma
effect is being given as provided in preceding clause (x), bearing floating
interest rates shall be computed on a pro forma basis as if the rates which
would have been in effect during the period for which pro forma effect is being
given had been actually in effect during such periods.

 

Pro forma calculations made pursuant to the definition
of Pro Forma Basis shall be determined in good faith by an Authorized Officer
of Company and may include adjustments, in the reasonable determination of
Company as set forth in an officers’ certificate, to (i) reflect operating
expense reductions reasonably expected to result from any acquisition, merger
or Asset Sale to the extent (x) determined on a basis consistent with Article
11 of Regulation S-X promulgated under the Securities Act or (y) reasonably
acceptable to two of the three persons 

 

30

 

constituting the Administrative Agent and the Co-Syndication Agents and
(ii) eliminate the effect of any extraordinary accounting event with respect to
any acquired person or assets on Consolidated Net Income.

 

“Projections”
as defined in Section 4.8.

 

“Properties”
means any property (including all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used
by Holding or any of its Subsidiaries or any of their respective predecessors
or Affiliates.

 

“Pro Rata Share”
means (i) with respect to all payments, computations and other matters relating
to the Term Loan B of any Lender, the percentage obtained by dividing (a) the
Term Loan B Exposure of that Lender by (b) the aggregate Term Loan B Exposure
of all Lenders; and (ii) with respect to all payments, computations and other
matters relating to the Revolving Loan of any Lender or any Letters of Credit
issued by a Fronting Bank or participations purchased therein by any Lender or
any participations in any Swing Line Loans purchased by any Lender, the
percentage obtained by dividing (a) the Revolving Exposure of that Lender by
(b) the aggregate Revolving Exposure of all Lenders.  For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage
obtained by dividing (i) an amount equal to the sum of the Tern Loan B Exposure
and the Revolving Exposure of that Lender by (ii) an amount equal to the sum of
the aggregate Tern Loan B Exposure and the aggregate Revolving Exposure of all
Lenders.

 

“Purchase Money Note”
means a promissory note of a Receivables Subsidiary evidencing a line of
credit, which may be irrevocable, from Holding or any of its Subsidiaries to a
Receivables Subsidiary, which note shall be repaid from cash available to the
Receivables Subsidiary other than amounts required to be established as
reserves, amounts paid to investors in respect of interest and principal and
other obligations and amounts paid in connection with the purchase of newly
generated receivables.

 

“Real Estate Asset”
means, at any time of determination, any interest (fee, leasehold or otherwise)
then owned by any Credit Party in any real property.

 

“Receivables
Facility” means one or more receivables financing facilities, as
amended from time to time, the Indebtedness of which is non-recourse (except
for standard representations, warranties, covenants, servicing and indemnities
made in connection with such facilities) to Holding and its Subsidiaries (other
than any Receivables Subsidiary), as amended from time to time, pursuant to
which Holding, the Company and/or any Subsidiary transfers its accounts
receivable and other financial and related assets to a Receivables Subsidiary;
provided that the aggregate outstanding principal amount of investment by third
party investors or indebtedness owed to third party lenders at any time with
respect to such Receivables Facility shall not exceed $50,000,000.

 

“Receivables Fees”
means reasonable distributions or payments made directly or by means of
discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Subsidiary in
connection with, any Receivables Facility.

 

31

 

“Receivables
Subsidiary” means a Wholly-Owned Subsidiary of Holding (or another
Person formed for the purposes of engaging in a Receivables Facility in which
Holding or any Subsidiary of Holding makes an Investment and to which Holding
or any Subsidiary of Holding transfers accounts receivable and other financial
and related assets customarily transferred with such accounts receivable and
other financial assets) that acts as a purchaser of accounts receivable and
other financial and related assets customarily transferred with such accounts
receivable and other financial assets under a Receivables Facility.

 

“Refunded Swing Line
Loans” as defined in Section 2.3(b)(iv).

 

“Register”
as defined in Section 2.7(b).

 

“Regulation D”
means Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

 

“Regulation T”
means Regulation T of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

 

“Regulation U”
means Regulation of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

 

“Regulation X”
means Regulation X of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

 

“Reimbursement Date”
as defined in Section 2.4(d).

 

“Related Agreement”
means Share Purchase Agreement, the Sponsors Monitoring Agreement, the HM
Indenture, the Stockholders Agreement, and the documents governing Subordinated
Indebtedness.

 

“Related Fund”
means, with respect to any Lender that is an investment fund, any other
investment fund that invests in commercial loans and that is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“Release”
has the meaning assigned to that term in CERCLA, 42 U.S.C. § 9601(22).

 

“Remaining Present
Value” means, as of any date with respect to any lease, the present
value as of such date of the scheduled future lease payments with respect to
such lease, determined with a discount rate equal to a market rate of interest
for such lease reasonably determined at the time such lease was entered into.

 

“Remedial Action”
shall mean (a) “remedial action” as such term is defined in CERCLA, 42 U.S.C.
Section 9601(24), and (b) all other actions, including studies and
investigations, required by any Governmental Authority or voluntarily
undertaken to (i) clean up, remove, treat, abate or in any other way respond to
any Hazardous Material in the environment or (ii) prevent the Release or
threatened Release, or minimize the further Release, of any Hazardous Material.

 

32

 

“Replacement Lender”
as defined in Section 2.23.

 

“Requisite Class
Lenders” means, at any time of determination, (i) for the Class of
Lenders having Term Loan B Exposure, Lenders holding more than 50% of the
aggregate Term Loan B Exposure of all Lenders; and (ii) for the Class of
Lenders having Revolving Exposure, Lenders holding more than 50% of the
aggregate Revolving Exposure of all Lenders.

 

“Requisite Lenders”
means one or more Lenders having or holding Term Loan B Exposure and/or
Revolving Exposure and representing more than 50% of the sum of (i) the
aggregate Term Loan B Exposure of all Lenders and (ii) the aggregate Revolving
Exposure of all Lenders.

 

“Restricted Junior
Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of Holding or Company
now or hereafter outstanding, except a dividend payable solely in shares of
that class of stock to the holders of that class; (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Holding or
Company now or hereafter outstanding (other than non-cash repurchases of
Capital Stock deemed to occur upon exercise of stock options if such Capital
Stock represents a portion of the exercise price of such options); (iii) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of
Holding or Company now or hereafter outstanding; (iv) any payment made under
the Sponsors Monitoring Agreement and (v) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, Subordinated Indebtedness.

 

“Revolving
Commitment” means the commitment of a Lender to make or otherwise
fund any Revolving Loan or purchase a participation in any Letter of Credit and
Swing Line Loans hereunder and “Revolving
Commitments” means such commitments of all Lenders in the
aggregate.  The amount of each Lender’s
Revolving Commitment, if any, is set forth on its respective signature page
hereto or in the applicable Assignment Agreement or Joinder Agreement (including
pursuant to Section 2.24), subject to any adjustment or reduction pursuant to
the terms and conditions hereof.  The
aggregate amount of the Revolving Commitments as of the Closing Date is
$325,000,000.

 

“Revolving
Commitment Period” means the period from the Closing Date to but
excluding the Revolving Commitment Termination Date.

 

“Revolving
Commitment Termination Date” means the earliest to occur of (i) the
Revolving Loan Maturity Date (ii) the date the Revolving Commitments are
permanently reduced to zero pursuant to Section 2.13(b) or 2.15, and (iii) the
date of the termination of the Revolving Commitments pursuant to Section 8.1.

 

“Revolving Exposure”
means, with respect to any Lender as of any date of determination, (i) prior to
the termination of the Revolving Commitments, that Lender’s Revolving
Commitment; and (ii) after the termination of the Revolving Commitments, the
sum of the aggregate outstanding principal amount of the Revolving Loans of
that Lender.

 

33

 

“Revolving Lenders”
means each Lender with a Revolving Commitment (including any Lender with a New
Revolving Commitment).

 

“Revolving Loan”
means any Revolving Loans made by Lenders to Company pursuant to Section 2.2(a)
of this Agreement (including any Loans made by Lenders pursuant to Section 2.24
of this Agreement).

 

“Revolving Loan
Maturity Date” means the earlier of (i) December 30, 2008 and (ii)
the date that all Revolving Loans shall become due and payable in full
hereunder, whether by acceleration or otherwise.

 

“Revolving Loan Note”
means a promissory note in the form of Exhibit B-2, as it may be
amended, supplemented or otherwise modified from time to time.

 

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

 

“Secured Parties”
has the meaning assigned to that term in the Pledge and Security and Collateral
Trust Agreement.

 

“Securities”
means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.

 

“Securities Act”
means the Securities Act of 1933, as amended from time to time, and any
successor statute.

 

“Seller”
means Vivendi Communications North America, Inc., a Delaware corporation.

 

“Senior Leverage
Ratio” means, as of the last day of any Fiscal Quarter, the ratio of
(a) the sum of: (i) the outstanding principal amount of the Term Loan B and the
outstanding principal amount of the HM Bonds plus (ii) the average daily
aggregate principal amount of all Revolving Loans and Letters of Credit (but in
the case of Letters of Credit, only to the extent the aggregate principal face
amount of such Letters of Credit exceeds $35,000,000) outstanding during the
four-Fiscal Quarter period ending on such date plus (iii) to the extent not
otherwise included in subclause (a)(i) or (a)(ii) of this definition, all
Indebtedness of Company and its Subsidiaries outstanding on such date that
would (or would be required to) appear on the consolidated balance sheet of
Company and its Subsidiaries, other than the Subordinated Indebtedness minus,
subject to the following proviso, an amount, if any, equal to (x) the sum of
the aggregate amount of Cash and Permitted Investments of Company and its
Subsidiaries not subject to a Lien (other than the Liens, if any, under the
Credit Documents and customary set-off rights) as of the close of business on
each day on which no Revolving Loans are outstanding during the four-Fiscal
Quarter period ending on such date divided by (y) 365; provided that,
such 

 

34

 

amount shall be subtracted for purposes of the foregoing calculation
only to the extent it is less than $30,000,000, to (b) Consolidated EBITDA for
the four-Fiscal Quarter period ending on such date, as adjusted pursuant to
Schedule 1.1(a) for any such period ending prior to the first anniversary of
the Closing Date.

 

“Share Purchase
Agreement” means the Share Purchase Agreement dated November 4, 2002
entered into among Seller, Vivendi Universal, S.A., a société anonyme
organized and existing under the laws of France and VAC, as purchaser.

 

“Share Purchase
Agreement Proceeds” as defined in Section 2.14(f).

 

“Solvency
Certificate” means a Solvency Certificate of the chief financial
officer of Holding substantially in the form of Exhibit D.

 

“Solvent”
means, that, as of the date of determination, each of (i) the fair value of the
assets of each of Holding (individually), Holding and its Subsidiaries on a
consolidated basis, Company (individually) and Company and its Subsidiaries on
a consolidated basis, at a fair valuation, will exceed the debts and
liabilities, direct, subordinated, contingent or otherwise, of each of Holding
(individually), Holding and its Subsidiaries on a consolidated basis, Company
(individually) and Company and its Subsidiaries on a consolidated basis; (ii)
the present fair saleable value of the property of each of Holding
(individually), Holding and its Subsidiaries on a consolidated basis, Company
(individually) and Company and its Subsidiaries on a consolidated basis will be
greater than the amount that will be required to pay the probable liability of
each of Holding (individually), Holding and its Subsidiaries on a consolidated
basis, Company (individually) and Company and its Subsidiaries on a
consolidated basis on their debts and other liabilities, direct, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured and (iii) each of Holding (individually), Holding and its
Subsidiaries on a consolidated basis, Company (individually) and Company and
its Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, direct, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) each of Holding
(individually), Holding and its Subsidiaries on a consolidated basis, the
Company (individually) and the Company and its Subsidiaries on a consolidated
basis will not have unreasonably small capital with which to conduct the
businesses in which they are engaged as such businesses are now conducted and
are proposed to be conducted following the Closing Date.  For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the amount that,
in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No. 5).

 

“Sponsor”
means, each of Thomas H. Lee Equity Fund V L.P., Bain Capital Integral Investors,
L.L.C. and Blackstone Capital Partners III Merchant Banking Fund L.P..

 

“Sponsor Equity”
means the Capital Stock of Holding purchased by Sponsors on or prior to the
Closing Date in satisfaction of the requirements of Section 3.1(d).

 

35

 

“Sponsors Monitoring
Agreement” means the Management Agreement entered into as of
December 30, 2002 by the Borrower, Holding, the Sponsors and certain affiliates
of the Sponsors, as amended, waived and modified from time to time in
accordance with Section 6.14.

 

“Standby Letter of
Credit” shall mean an irrevocable standby letter of credit under
which a Fronting Bank agrees to make payments in Dollars for the account of
Company, on behalf of Company or any of its Subsidiaries.

 

“Stockholders
Agreement” means the Stockholders Agreement dated as of December 30,
2002 among the Company, Holding and certain stockholders of Holding, as
amended, waived and modified from time to time in accordance with Section 6.14.

 

“Subordinated
Indebtedness” means (i) the Bridge Facility and any Permitted
Refinancing Indebtedness the proceeds of which are used for refinance amounts
owed under the Bridge Facility and (ii) Indebtedness incurred pursuant to
Section 6.1(t).

 

“Subsidiary”
means, with respect to any Person, any corporation, partnership, limited
liability company, association, Joint Venture or other business entity of which
more than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof; provided,
in determining the percentage of ownership interests of any Person controlled
by another Person, no ownership interest in the nature of a “qualifying share”
of the former Person shall be deemed to be outstanding; provided that,
unless otherwise expressly provided therein, with respect to Company, an
Unrestricted Subsidiary shall not constitute a Subsidiary of Company for
purposes of this Agreement.

 

“Swing Line Lender”
means CIBC in its capacity as Swing Line Lender hereunder, together with its
permitted successors and assigns in such capacity.

 

“Swing Line Loan”
means a Loan made by Swing Line Lender to Company pursuant to Section 2.3.

 

“Swing Line Note”
means a promissory note in the form of Exhibit B-3, as it may be amended,
supplemented or otherwise modified from time to time.

 

“Swing Line Sublimit”
means the lesser of (i) $10,000,000, and (ii) the aggregate unused amount of
Revolving Commitments then in effect.

 

“Systems
Establishment Expenses” means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities) by HM and its
Subsidiaries on or after the Closing Date in establishing financial, employee,
information technology and other systems of Company and the Subsidiaries,
including costs of the transition and integration of any such systems acquired
in the Acquisition, as a direct result of the establishment of HM Group as a
standalone business following the Acquisition; provided that (i) no
Systems Establishment 

 

36

 

Expense may be paid or accrued after December 31, 2004 and (ii) the
aggregate of all Systems Establishment Expenses shall not exceed $10,000,000.

 

“Tax”
means any present or future tax, levy, impost, duty, assessment, charge, fee,
deduction or withholding of any nature and whatever called, by whomsoever, on
whomsoever and wherever imposed, levied, collected, withheld or assessed; provided,
“Tax on the overall net income” of a Person shall be construed as a reference
to a tax imposed by the jurisdiction in which that Person is organized or in
which that Person’s applicable principal office (and/or, in the case of a
Lender, its lending office) is located or in which that Person (and/or, in the
case of a Lender, its lending office) is deemed to be doing business on all or
part of the net income, profits or gains (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case of a
Lender, its applicable lending office).

 

“Term Loan B”
means the Term Loan B made by a Lender to Company pursuant to Section 2.1(a).

 

“Term Loan B
Commitment” means the commitment of a Lender to make or otherwise
fund a Term Loan B and “Term Loan B
Commitments” means such commitments of all Lenders in the
aggregate.  The aggregate amount of the
Term Loan B Commitments as of the Closing Date is $400,000,000.

 

“Term Loan B
Commitment Termination Date” means the earlier of (i) January 20,
2003 if no Term Loan B has been made on or before such date and (ii) the last
day of the Bond Redemption Period.

 

“Term Loan B
Exposure” means, with respect to any Lender, as of any date of
determination, the outstanding principal amount of the Term Loan B of such
Lender; provided, at any time prior to the making of the Term Loan B,
the Term Loan B Exposure of any Lender shall be equal to such Lender’s Term
Loan B Commitment.

 

“Term Loan B
Maturity Date” means the earlier of (i) December 30, 2010 and (ii)
the date that all Term Loan B shall become due and payable in full hereunder,
whether by acceleration or otherwise.

 

“Term Loan B Note”
means a promissory note in the form of Exhibit B-l, as it may be
amended, supplemented or otherwise modified from time to time.

 

“Terminated Lender”
as defined in Section 2.23.

 

“Total Debt”
shall mean, with respect to any Person and its Subsidiaries on a consolidated
basis at any time (without duplication), all Indebtedness consisting of Capital
Leases Indebtedness for borrowed money and Indebtedness in respect of the
deferred purchase price of property or services of such person and its
Subsidiaries on a consolidated basis at such time.

 

“Total Leverage
Ratio” means, as of the last day of any Fiscal Quarter, the ratio of
(a) the sum of: (i) all Indebtedness for borrowed money of Company and its
Subsidiaries 

 

37

 

(other than the aggregate principal amount of all Revolving Loans
outstanding on such date) plus (ii) the average daily aggregate principal
amount of all Revolving Loans and Letters of Credit (but in the case of Letters
of Credit, only to the extent the aggregate principal face amount of such
Letters of Credit exceeds $35,000,000) outstanding during the four-Fiscal
Quarter period ending on such date plus (iii) to the extent not otherwise
included in subclause (a)(i) or (a)(ii) of this definition, all Indebtedness of
Company and its Subsidiaries outstanding on such date that would (or would be
required to) appear on the consolidated balance sheet of Company and its
Subsidiaries minus, subject to the following proviso, an amount, if any,
equal to (x) the sum of the aggregate amount of Cash and Permitted Investments
of Company and its Subsidiaries not subject to a Lien (other than the Liens, if
any, under the Credit Documents and customary setoff rights) as of the close of
business on each day on which no Revolving Loans are outstanding during the
four-Fiscal Quarter period ending on such date divided by (y) 365; provided
that, such amount shall be subtracted for purposes of the foregoing calculation
only to the extent it is less than $30,000,000; to (b) Consolidated EBITDA for
the four-Fiscal Quarter period ending on such date, as adjusted pursuant to
Schedule 1.1(a) for any period ending prior to the first anniversary of the
Closing Date.

 

“Total Utilization
of Revolving Commitments” means, as at any date of determination,
the sum of (i) the aggregate principal amount of all outstanding Revolving
Loans (other than Revolving Loans made for the purpose of repaying any Refunded
Swing Line Loans or reimbursing Fronting Bank for any amount drawn under any
Letter of Credit, but not yet so applied), (ii) the aggregate principal amount
of all outstanding Swing Line Loans, and (iii) the Letter of Credit Usage.

 

“Transaction Costs”
means the fees, costs and expenses payable by Holding, Company or any of
Company’s Subsidiaries in connection with Acquisition and the transactions
(other than the Debt Tenders) contemplated by the Credit Documents and the
Related Agreements which shall not exceed $150,000,000.

 

“Type of Loan”
means (i) with respect to either Term Loans or Revolving Loans, a Base Rate
Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a
Base Rate Loan.

 

“UCC”
means the Uniform Commercial Code (or any similar or equivalent legislation) as
in effect in any applicable jurisdiction.

 

“Unrestricted
Subsidiary” means (i) each Subsidiary (with such term defined for
purposes of this definition without giving effect to the last provision in the
definition of such term) of Company that shall be designated an “Unrestricted
Subsidiary” pursuant to and in compliance with Section 6.17 and (ii) each
Subsidiary of an Unrestricted Subsidiary.

 

“VAC” as
defined in the preamble.

 

“Wholly-Owned
Subsidiary” of any person means a Subsidiary of such person, at
least 99% of the Capital Stock of which (other than directors’ qualifying
shares) are owned by such person or another Wholly-Owned Subsidiary.

 

38

 

1.2.                            Terms Generally.  The definitions in Section 1.1 shall apply
equally to both 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”.  All references herein to
Sections, Exhibits and Schedules shall be deemed references to Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require.  Except as otherwise expressly
provided herein, (a) any reference in this Agreement to any Credit Document
shall mean such document as amended, restated, supplemented or otherwise
modified from time to time and (b) all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that for purposes of determining
compliance with the covenants contained in Sections 2.14(e) and Section 6 all
accounting terms herein shall be interpreted and all accounting determinations
hereunder (in each case, unless otherwise provided for or defined herein) shall
be made in accordance with GAAP as in effect on the date of this Agreement and
applied on a basis consistent with the application used in the financial
statements referred to in Section 4.7; and provided further, that
if Company notifies the Administrative Agent that Company wishes to amend any
covenant in Sections 2.14 or Section 6 or any related definition to eliminate
the effect of any change in GAAP occurring after the date of this Agreement on
the operation of such covenant (or if the Administrative Agent notifies Company
that the Required Lenders wish to amend Section 2.14 or Section 6 or any
related definition for such purpose), then (i) Company and the Administrative
Agent shall negotiate in good faith to agree upon an appropriate amendment to
such covenant and (ii) Company’s compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective until such covenant is amended in a manner
satisfactory to Company and the Required Lenders.  For the purposes of determining compliance under Sections 6.1,
6.2, 6.6, 6.7 and 6.8 with respect to any amount in a currency other than
Dollars, such amount shall be deemed to equal the Dollar equivalent thereof at
the time such amount was incurred or expended, as the case may be.

 

SECTION 2.                            LOANS

 

2.1.                            Term Loan B.

 

(a)                                  Term
Loan B Commitment.  Subject to the
terms and conditions hereof, each Lender severally agrees to make, on or prior
to the Term Loan B Commitment Termination Date, Term Loans B to Company in an
aggregate amount not to exceed such Lender’s Pro Rata Share of the Term Loan B
Commitments.  Company may make one borrowing
under the Term Loan B Commitment on the Closing Date in an aggregate amount not
to exceed $175,000,000.  In addition, on
or after the Closing Date and on or prior to the Term Loan B Commitment
Termination Date, Company may make up to two additional borrowings under the
Term Loan B Commitment (such additional Term Loan B, “Delayed Draw
Term Loans”) in an aggregate amount not to exceed $225,000,000.  Any amounts borrowed under this Section 2.1
(a) and subsequently repaid or prepaid may not be reborrowed.  Subject to Sections 2.12, 2.13(a) and 2.14,
all amounts owed hereunder with respect to the Term Loan B shall be paid in
full no later than the Term Loan B Maturity Date.  Each Lender’s Term Loan B Commitment shall terminate immediately
and without further action upon the full funding of such Lender’s Term Loan B
Commitment.

 

39

 

(b)                                 Borrowing
Mechanics for Term Loan B.

 

(i)                                     Loans shall be
made in an aggregate minimum amount of $2,500,000 and integral multiples of
$1,000,000 in excess thereof (when aggregated for all Lenders in connection
with a single Credit Extension).

 

(ii)                                  Whenever Company
desires that Lenders make Term Loans B, Company shall deliver to Administrative
Agent a fully executed and delivered Funding Notice no later than 12:00 Noon
(New York City time) at least three Business Days in advance of the proposed
Credit Date in the case of a Eurodollar Rate Loan, and at least one Business
Day in advance of the proposed Credit Date in the case of a Term Loan B that is
a Base Rate Loan.  Except as otherwise
provided herein, a Funding Notice for a Term Loan B shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to make a borrowing in accordance therewith.

 

(iii)                               Notice of receipt of
each Funding Notice in respect of Term Loan B, together with the amount of each
Lender’s Pro Rata Share thereof, if any, together with the applicable interest
rate, shall be provided by Administrative Agent to each applicable Lender by
telefacsimile with reasonable promptness.

 

(iv)                              Each Lender shall make
the amount of its Term Loan B available to Administrative Agent not later than
12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer
of same day funds in Dollars, at the Administrative Agent’s Principal
Office.  Except as provided herein, upon
satisfaction or waiver of the conditions precedent specified herein,
Administrative Agent shall make the proceeds of such Revolving Loans available
to Company on the applicable Credit Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Term Loan B received by
Administrative Agent from Lenders to be credited to the account of Company at
the Administrative Agent’s Principal Office or such other account as may be designated
in writing to Administrative Agent by Company.

 

2.2.         Revolving Loans.

 

(a)                                  Revolving
Commitment.  Subject to the terms
and conditions hereof, each Lender severally agrees to make, during the
Revolving Commitment Period, Revolving Loans to Company in the aggregate amount
up to but not exceeding such Lender’s Pro Rata Share of the Revolving Loan
Commitments; provided that, after giving effect to the making of any
Revolving Loans, in no event shall the Total Utilization of Revolving Loan
Commitments exceed the Revolving Loan Commitments then in effect.  Amounts borrowed pursuant to this Section
2.2(a) may be repaid and reborrowed during the Revolving Commitment Period; provided
further that, Revolving Loans in excess of $50,000,000 shall not be made
on the Closing Date.  Each Lender’s
Revolving Commitment shall expire on the Revolving Commitment Termination Date
and all Revolving Loans and all other amounts owed hereunder with respect to
the Revolving Loans and the Revolving Loan Commitments shall be paid in full no
later than such date.

 

40

 

(b)                                 Borrowing
Mechanics for Revolving Loans.

 

(i)                                     Except pursuant to
Section 2.4, Revolving Loans shall be made in an aggregate minimum amount of
$2,500,000 and integral multiples of $1,000,000 in excess thereof (when
aggregated for all Lenders in connection with a single Credit Extension).

 

(ii)                                  Whenever Company
desires that Lenders make Revolving Loans, Company shall deliver to
Administrative Agent a fully executed and delivered Funding Notice no later
than 12:00 Noon (New York City time) at least three Business Days in advance of
the proposed Credit Date in the case of a Eurodollar Rate Loan, and at least
one Business Day in advance of the proposed Credit Date in the case of a
Revolving Loan that is a Base Rate Loan. 
Except as otherwise provided herein, a Funding Notice for a Revolving
Loan shall be irrevocable on and after the related Interest Rate Determination
Date, and Company shall be bound to make a borrowing in accordance therewith.

 

(iii)                               Notice of receipt of
each Funding Notice in respect of Revolving Loans, together with the amount of
each Lender’s Pro Rata Share thereof, if any, together with the applicable
interest rate, shall be provided by Administrative Agent to each applicable
Lender by telefacsimile with reasonable promptness.

 

(iv)                              Each Lender shall make
the amount of its Revolving Loan available to Administrative Agent not later
than 12:00 p.m. (New York City time) on the applicable Credit Date by wire
transfer of same day funds in Dollars, at the Administrative Agent’s Principal
Office.  Except as provided herein, upon
satisfaction or waiver of the conditions precedent specified herein,
Administrative Agent shall make the proceeds of such Revolving Loans available
to Company on the applicable Credit Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Revolving Loans received by
Administrative Agent from Lenders to be credited to the account of Company at
the Administrative Agent’s Principal Office or such other account as may be
designated in writing to Administrative Agent by Company.

 

2.3.         Swing Line Loans.

 

(a)                                  Swing
Line Loan Commitments.  During the
Revolving Commitment Period, subject to the terms and conditions hereof, Swing
Line Lender hereby agrees to make Swing Line Loans to Company in the aggregate
amount up to but not exceeding the Swing Line Sublimit; provided that,
after giving effect to the making of any Swing Line Loan, in no event shall the
Total Utilization of Revolving Commitments exceed the Revolving Commitments
then in effect.  Amounts borrowed
pursuant to this Section 2.4 may be repaid and reborrowed during the Revolving
Commitment Period.  Swing Line Lender’s
Revolving Commitment shall expire on the Revolving Commitment Termination Date
and all Swing Line Loans and all other amounts owed hereunder with respect to
the Swing Line Loans and the Revolving Commitments shall be paid in full no
later than such date.

 

41

 

(b)                                 Borrowing
Mechanics for Swing Line Loans.

 

(i)                                     Swing Line Loans
shall be made in an aggregate minimum amount of $1,000,000 and integral
multiples of $500,000 in excess of that amount.

 

(ii)                                  Whenever Company
desires that Swing Line Lender make a Swing Line Loan, Company shall deliver to
Administrative Agent a Funding Notice no later than 1:00 p.m. (New York City
time) on the proposed Credit Date.

 

(iii)                               Swing Line Lender shall
make the amount of its Swing Line Loan available to Company in immediately
available funds on the applicable Credit Date by wire transfer of same day
funds in Dollars, at the Administrative Agent’s Principal Office.  Except as provided herein, upon satisfaction
or waiver of the conditions precedent specified herein, Administrative Agent
shall make the proceeds of such Swing Line Loans available to Company on the
applicable Credit Date by causing an amount of same day funds in Dollars equal
to the proceeds of all such Swing Line Loans received by Administrative Agent from
Swing Line Lender to be credited to the account of Company at the
Administrative Agent’s Principal Office, or to such other account as may be
designated in writing to Administrative Agent by Company.

 

(iv)                              With respect to any Swing
Line Loans which have not been voluntarily prepaid by Company pursuant to
Section 2.13, Swing Line Lender may at any time in its sole and absolute
discretion, deliver to Administrative Agent (with a copy to Company), no later
than 11:00 a.m. (New York City time) at least one (1) Business Day in advance
of the proposed Credit Date, a notice (which shall be deemed to be a Funding
Notice given by Company) requesting that each Lender holding a Revolving
Commitment make Revolving Loans that are Base Rate Loans to Company on such Credit
Date in an amount equal to the amount of such Swing Line Loans (the “Refunded Swing Line Loans”) outstanding on the date such
notice is given which the Swing Line Lender requests Lenders to prepay.  Anything contained in this Agreement to the
contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the
Lenders other than Swing Line Lender shall be immediately delivered by the
Administrative Agent to Swing Line Lender (and not to Company) and applied to
repay a corresponding portion of the Refunded Swing Line Loans and (2) on the
day such Revolving Loans are made, Swing Line Lender’s Pro Rata Share of the
Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a
Revolving Loan made by Swing Line Lender to Company, and such portion of the
Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing
Line Loans and shall no longer be due under the Swing Line Note of Swing Line
Lender but shall instead constitute part of Swing Line Lender’s outstanding Revolving
Loans to Company and shall be due under the Revolving Loan Note issued by
Company to Swing Line Lender.  Company
hereby authorizes Administrative Agent and Swing Line Lender to charge
Company’s accounts with Administrative Agent and Swing Line Lender (up to the
amount available in each such account) in order to immediately pay Swing Line
Lender the amount of the Refunded Swing Line Loans to the extent the proceeds
of such Revolving Loans made by Lenders, including the Revolving Loan deemed to
be made by the Swing Line Lender, are not sufficient to repay in full the
Refunded Swing Line Loans.  If any
portion of any such 

 

42

 

amount paid (or deemed to be paid) to Swing Line Lender should be
recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders in the manner contemplated
by Section 2.17.

 

(v)                                 If for any reason
Revolving Loans are not made pursuant to Section 2.3(b)(iv) in an amount
sufficient to repay any amounts owed to Swing Line Lender in respect of any
outstanding Swing Line Loans on or before the third Business Day after demand
for payment thereof by Swing Line Lender, each Lender holding a Revolving
Commitment shall be deemed to, and hereby agrees to, have purchased a
participation in such outstanding Swing Line Loans, and in an amount equal to
its Pro Rata Share of the applicable unpaid amount together with accrued
interest thereon.  Upon one (1) Business
Day’s notice from Swing Line Lender, each Lender holding a Revolving Commitment
shall deliver to Swing Line Lender an amount equal to its respective participation
in the applicable unpaid amount in same day funds at the Principal Office of
Swing Line Lender.  In order to evidence
such participation each Lender holding a Revolving Commitment agrees to enter
into a participation agreement at the request of Swing Line Lender in form and
substance reasonably satisfactory to Swing Line Lender.  In the event any Lender holding a Revolving
Commitment fails to make available to Swing Line Lender the amount of such
Lender’s participation as provided in this paragraph, Swing Line Lender shall
be entitled to recover such amount on demand from such Lender together with
interest thereon for three Business Days at the rate customarily used by Swing
Line Lender for the correction of errors among banks and thereafter at the Base
Rate, as applicable.

 

(vi)                              Notwithstanding anything
contained herein to the contrary, (1) each Lender’s obligation to make
Revolving Loans for the purpose of repaying any Refunded Swing Line Loans
pursuant to the second preceding paragraph and each Lender’s obligation to
purchase a participation in any unpaid Swing Line Loans pursuant to the
immediately preceding paragraph shall be absolute and unconditional and shall
not be affected by any circumstance, including without limitation (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may
have against Swing Line Lender, any Credit Party or any other Person for any
reason whatsoever; (B) the occurrence or continuation of a Default or Event of
Default; (C) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Credit Party; (D) any
breach of this Agreement or any other Credit Document by any party thereto; or
(E) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided that such obligations of each Lender
are subject to the condition that Swing Line Lender believed in good faith that
all conditions under Section 3.3 to the making of the applicable Refunded Swing
Line Loans or other unpaid Swing Line Loans, were satisfied at the time such
Refunded Swing Line Loans or unpaid Swing Line Loans were made, or the
satisfaction of any such condition not satisfied had been waived by Requisite
Lenders prior to or at the time such Refunded Swing Line Loans or other unpaid
Swing Line Loans were made; and (2) Swing Line Lender shall not be obligated to
make any Swing Line Loans (A) if it has elected not to do so after the
occurrence and during the continuation of a Default or Event of Default or (B)
at a time when a Funding Default exists unless Swing Line Lender has 

 

43

 

entered into arrangements satisfactory to it and Company to eliminate
Swing Line Lender’s risk with respect to the Defaulting Lender’s participation
in such Swing Ling Loan, including by cash collateralizing such Defaulting
Lender’s Pro Rata Share of the outstanding Swing Line Loans.

 

2.4.                            Issuance of Letters of Credit and
Purchase of Participations Therein.

 

(a)                                  Letters
of Credit.  During the Revolving
Commitment Period, subject to the terms and conditions hereof, each Fronting
Bank agrees to issue Letters of Credit for the account of Company in the
aggregate amount (for all Fronting Banks) up to but not exceeding the Letter of
Credit Sublimit; provided, (i) each Letter of Credit shall be
denominated in Dollars; (ii) the stated amount of each Letter of Credit shall
not be less than $1,000,000 or such lesser amount as is acceptable to the
applicable Fronting Bank; (iii) after giving effect to such issuance, in no
event shall the Total Utilization of Revolving Commitments exceed the Revolving
Commitments then in effect; (iv) after giving effect to such issuance, in no
event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit
then in effect; (v) in no event shall any Standby Letter of Credit have an
expiration date later than the earlier of (1) five Business Days prior to the
Revolving Commitment Termination Date and (2) the date which is one year from
the date of issuance of such Standby Letter of Credit; and (vi) in no event
shall any Commercial Letter of Credit (x) have an expiration date later than
the earlier of (1) five Business Days prior to the Revolving Commitment
Termination Date and (2) the date which is 180 days from the date of issuance
of such Commercial Letter of Credit or (b) be issued if such Commercial Letter
of Credit is otherwise unacceptable to the applicable Fronting Bank in its
reasonable discretion.  Subject to the
foregoing, a Fronting Bank may agree that a standby Letter of Credit will
automatically be extended for one or more successive periods not to exceed one
year each, unless such Fronting Bank elects not to extend for any such
additional period; provided, such Fronting Bank shall not extend any
such Letter of Credit if it has received written notice that an Event of
Default has occurred and is continuing at the time such Fronting Bank must
elect to allow such extension; provided, further, in the event a
Funding Default exists, such Fronting Bank shall not be required to issue any
Letter of Credit unless such Fronting Bank has entered into arrangements
satisfactory to it and Company to eliminate such Fronting Bank’s risk with
respect to the participation in Letters of Credit of the Defaulting Lender,
including by cash collateralizing such Defaulting Lender’s Pro Rata Share of
the Letter of Credit Usage.

 

(b)                                 Notice
of Issuance.  Whenever Company
desires the issuance of a Letter of Credit, it shall deliver to Administrative
Agent an Issuance Notice no later than 12:00 p.m. (New York City time) at least
five Business Days, or in each case such shorter period as may be agreed to by
a Fronting Bank in any particular instance, in advance of the proposed date of
issuance.  Upon satisfaction or waiver
of the conditions set forth in Section 3.3, a Fronting Bank shall issue the
requested Letter of Credit only in accordance with such Fronting Bank’s
standard operating procedures.  Upon the
issuance of any Letter of Credit or amendment or modification to a Letter of
Credit, such Fronting Bank shall promptly notify each Lender and the
Administrative Agent of such issuance and the amount of such Lender’s
respective participation in such Letter of Credit pursuant to Section 2.4(e).

 

(c)                                  Responsibility
of a Fronting Bank With Respect to Requests for Drawings and Payments.  In determining whether to honor any drawing
under any Letter of Credit by the 

 

44

 

beneficiary thereof, a Fronting Bank shall be
responsible only to examine the documents delivered under such Letter of Credit
with reasonable care so as to ascertain whether they appear on their face to be
in accordance with the terms and conditions of such Letter of Credit.  As between Company and any Fronting Bank,
Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by any Fronting Bank, by the respective beneficiaries
of such Letters of Credit.  In
furtherance and not in limitation of the foregoing, a Fronting Bank shall not
be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the
application for and issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate, -
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such 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; (iii)
failure of the beneficiary of any such Letter of Credit to comply fully with
any conditions required in order to draw upon such Letter of Credit; (iv)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be
in cipher; (v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any such Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (viii) any consequences
arising from causes beyond the control of the Fronting Bank, including any
Governmental Acts; none of the above shall affect or impair, or prevent the
vesting of, any of a Fronting Bank’s rights or powers hereunder.  Without limiting the foregoing and in
furtherance thereof, any action taken or omitted by a Fronting Bank under or in
connection with the Letters of Credit or any documents and certificates
delivered thereunder, if taken or omitted in good faith (and without gross negligence
or willful misconduct and in accordance with the standard of care specified in
the UCC with respect to Letter of Credit), shall not give rise to any liability
on the part of such Fronting Bank to Company. 
Notwithstanding anything to the contrary contained in this Section
2.4(c), Company shall retain any and all rights it may have against a Fronting
Bank for any liability arising solely out of the gross negligence or willful
misconduct of such Fronting Bank or failure to use the standard of care specified
in the UCC with respect to Letters of Credit.

 

(d)                                 Reimbursement
by Company of Amounts Drawn or Paid Under Letters of Credit.  In the event a Fronting Bank has determined
to honor a drawing under a Letter of Credit, it shall immediately notify Company
and Administrative Agent, and Company shall reimburse such Fronting Bank on or
before the Business Day immediately following the date on which such drawing is
honored (the “Reimbursement Date”) in an amount
in Dollars and in same day funds equal to the amount of such honored drawing; provided,
anything contained herein to the contrary notwithstanding, (i) unless Company
shall have notified Administrative Agent and such Fronting Bank prior to 10:00
a.m. (New York City time) on the date such drawing is honored that Company
intends to reimburse such Fronting Bank for the amount of such honored drawing
with funds other than the proceeds of Revolving Loans, Company shall be deemed
to have given a timely Funding Notice to Administrative Agent requesting Lenders
to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in
an amount in Dollars equal to the amount of such honored drawing, and (ii)
subject to satisfaction or waiver of the conditions specified in Section 3.3,
Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base
Rate Loans in the amount of such honored drawing, the proceeds of which shall
be 

 

45

 

applied directly by Administrative Agent to
reimburse such Fronting Bank for the amount of such honored drawing; and provided
further, if for any reason proceeds of Revolving Loans are not received
by such Fronting Bank on the Reimbursement Date in an amount equal to the
amount of such honored drawing, Company shall reimburse such Fronting Bank, on
demand, in an amount in same day funds equal to the excess of the amount of
such honored drawing over the aggregate amount of such Revolving Loans, if any,
which are so received.  Nothing in this
Section 2.4(d) shall be deemed to relieve any Lender from its obligation to
make Revolving Loans on the terms and conditions set forth herein, and Company
shall retain any and all rights it may have against any Lender resulting from
the failure of such Lender to make such Revolving Loans under this Section
2.4(d).

 

(e)                                  Lenders’
Purchase of Participations in Letters of Credit.  Immediately upon the issuance of each Letter of Credit, each
Lender having a Revolving Commitment shall be deemed to have purchased, and
hereby agrees to irrevocably purchase, from the applicable Fronting Bank a
participation in such Letter of Credit and any drawings honored thereunder in
an amount equal to such Lender’s Pro Rata Share (with respect to the Revolving
Loan Commitments) of the maximum amount which is or at any time may become
available to be drawn thereunder.  In
the event that Company shall fail for any reason to reimburse the applicable
Fronting Bank as provided in Section 2.4(d), such Fronting Bank shall promptly
notify each Lender of the unreimbursed amount of such honored drawing and of
such Lender’s respective participation therein based on such Lender’s Pro Rata
Share of the Revolving Loan Commitments. 
Each Lender shall make available to a Fronting Bank an amount equal to
its respective participation, in Dollars and in same day funds, at the office
of such Fronting Bank specified in such notice, not later than 12:00 p.m. (New
York City time) on the first business day (under the laws of the jurisdiction
in which such office of such Fronting Bank is located) after the date notified
by such Fronting Bank.  In the event
that any Lender fails to make available to a Fronting Bank on such business day
the amount of such Lender’s participation in such Letter of Credit as provided
in this Section 2.4(e), the applicable Fronting Bank shall be entitled to
recover such amount on demand from such Lender together with interest thereon
for three Business Days at the rate customarily used by such Fronting Bank for
the correction of errors among banks and thereafter at the Base Rate.  Nothing in this Section 2.4(e) shall be
deemed to prejudice the right of any Lender to recover from a Fronting Bank any
amounts made available by such Lender to such Fronting Bank pursuant to this Section
in the event that it is determined that the payment with respect to a Letter of
Credit in respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Fronting Bank.  In the event a Fronting Bank shall have been
reimbursed by other Lenders pursuant to this Section 2.4(e) for all or any
portion of any drawing honored by such Fronting Bank under a Letter of Credit,
such Fronting Bank shall distribute to each Lender which has paid all amounts
payable by it under this Section 2.4(e) with respect to such honored drawing
such Lender’s Pro Rata Share of all payments subsequently received by such
Fronting Bank from Company in reimbursement of such honored drawing when such
payments are received.  Any such
distribution shall be made to a Lender at its primary address set forth below
its name on Appendix A or at such other address as such Lender may
request.

 

(f)                                    Obligations
Absolute.  The obligation of Company
to reimburse a Fronting Bank for drawings honored under the Letters of Credit
issued by it and to repay any Revolving Loans made by Lenders pursuant to
Section 2.4(d) and the obligations of Lenders 

 

46

 

under Section 2.4(e) shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms hereof
under all circumstances including any of the following circumstances: (i) any
lack of validity or enforceability of any Letter of Credit; (ii) the existence
of any claim, set-off, defense or other right which Company or any Lender may
have at any time against a beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such transferee may be acting), a Fronting
Bank, Lender or any other Person or, in the case of a Lender, against Company,
whether in connection herewith, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Company or
one of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured); (iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; (iv)
payment by a Fronting Bank under any Letter of Credit against presentation of a
draft or other document which does not substantially comply with the terms of
such Letter of Credit; (v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Holding or
any of its Subsidiaries; (vi) any breach hereof or any other Credit Document by
any party thereto; (vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing; or (viii) the fact that an
Event of Default or a Default shall have occurred and be continuing; provided,
in each case, that payment by a Fronting Bank under the applicable Letter of
Credit shall not have constituted gross negligence or willful misconduct of
such Fronting Bank or failure to use the standard of care specified in the UCC
with respect to such Letters of Credit under the circumstances in question.

 

2.5.         Pro Rata Shares; Availability of Funds.

 

(a)                                  Pro
Rata Shares.  All Loans shall be
made, and all participations purchased, by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being understood that
no Lender shall be responsible for any default by any other Lender in such
other Lender’s obligation to make a Loan requested hereunder or purchase a
participation required hereby nor shall any Term Loan B Commitment or any
Revolving Commitment of any Lender be increased or decreased as a result of a
default by any other Lender in such other Lender’s obligation to make a Loan
requested hereunder or purchase a participation required hereby.

 

(b)                                 Availability
of Funds.  Unless Administrative
Agent shall have been notified by any Lender prior to the applicable Credit
Date that such Lender does not intend to make available to Administrative Agent
the amount of such Lender’s Loan requested on such Credit Date, Administrative
Agent may assume that such Lender has made such amount available to
Administrative Agent on such Credit Date and Administrative Agent may, in its
sole discretion, but shall not be obligated to, make available to Company a
corresponding amount on such Credit Date. 
If such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Credit Date until the date such amount
is paid to Administrative Agent, at the customary rate set by Administrative
Agent for the correction of errors among banks for three Business Days and
thereafter at the Base Rate.  If such
Lender does not pay such corresponding amount forthwith upon Administrative
Agent’s demand therefor, Administrative Agent shall promptly notify Company and
Company shall immediately pay such corresponding amount to Administrative 

 

47

 

Agent together with interest thereon, for
each day from such Credit Date until the date such amount is paid to
Administrative Agent, at the rate payable hereunder for Base Rate Loans for
such Class of Loans.  Nothing in this
Section 2.5(b) shall be deemed to relieve any Lender from its obligation to
fulfill its Term Loan B Commitment, Revolving Commitment, or New Revolving
Commitment thereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.

 

2.6.                            Use of Proceeds. 
The proceeds of the Term Loan B made to Company shall be applied by
Company to (a) finance in part funding of the consideration for, and the
payment of agreed fees and other expenses in connection with, the Acquisition
and the financing thereof, (b) refinance HM Existing Indebtedness and (c) in
the case of the Delayed Draw Term Loans, to finance the Debt Tenders.  The proceeds of the Revolving Loans, Swing
Line Loans and any Letters of Credit shall be applied by Company for working
capital and general corporate purposes of HM and its Subsidiaries and to pay
Transaction Costs in connection with the Acquisition and the financing thereof,
and costs, expenses and premiums in connection with the Debt Tender Process; provided,
that, (i) no more than $50,000,000 aggregate principal amount of
Revolving Loans may be drawn as of the Closing Date, and (ii) in no event will
the proceeds of Revolving Loans or any Letter of Credit be used for the
purposes of redeeming, repurchasing, defeasing or otherwise retiring the 2011
HM Bonds.  No part of the proceeds of
any Credit Extension will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or carry Margin Stock
or to extend credit to others for the purpose of purchasing or carrying Margin
Stock or to refund indebtedness originally incurred for such purpose, or (ii)
for any purpose which entails a violation of, or which is inconsistent with,
the provisions of the Regulations of the Board, including Regulation U or X.

 

2.7.         Evidence of Debt; Register; Lenders’
Books and Records; Notes.

 

(a)                                  Lenders’
Evidence of Debt.  Each Lender shall
maintain on its internal records an account or accounts evidencing the
Indebtedness of Company to such Lender, including the amounts of the Loans made
by it and each repayment and prepayment in respect thereof.  Any such recordation shall be conclusive and
binding on Company, absent manifest error; provided, failure to make any
such recordation, or any error in such recordation, shall not affect any
Lender’s Revolving Commitments or Company’s Obligations in respect of any
applicable Loans; and provided further, in the event of any
inconsistency between the Register and any Lender’s records, the recordations
in the Register shall govern.

 

(b)                                 Register.  Administrative Agent shall maintain at its
Principal Office a register for the recordation of the names and addresses of
Lenders and the Revolving Commitments and Loans of each Lender from time to
time (the “Register”).  Administrative Agent shall record in the
Register the Revolving Commitments and the Loans, and each repayment or
prepayment in respect of the principal amount of the Loans, and any such
recordation shall be conclusive and binding on Company and each Lender, absent
manifest error; provided, failure to make any such recordation, or any
error in such recordation, shall not affect any Lender’s Revolving Commitments
or Company’s Obligations in respect of any Loan.  Company hereby designates CIBC to serve as Company’s agent solely
for purposes of maintaining the Register as provided in this Section 2.7, and
Company hereby agrees that, to the 

 

48

 

extent CIBC serves in such capacity, CIBC and
its officers, directors, employees, agents and affiliates shall constitute “Indemnitees”.

 

(c)                                  Notes.  If so requested by any Lender by written
notice to Company (with a copy to Administrative Agent) at least two Business
Days prior to the Closing Date, or at any time thereafter, Company shall
execute and deliver to such Lender (and/or, if applicable and if so specified
in such notice, to any Person who is an assignee of such Lender pursuant to
Section 10.6) on the Closing Date (or, if such notice is delivered after the
Closing Date, promptly after Company’s receipt of such notice) a Note or Notes
to evidence such Lender’s Loans.

 

2.8.         Interest on
Loans.

 

(a)                                  Except
as otherwise set forth herein, each Loan shall bear interest on the unpaid
principal amount thereof from the date made through repayment (whether by
acceleration or otherwise) thereof as follows:

 

Term Loan B:

 

(i)                                     if a Base Rate
Loan, at the Base Rate plus 2.75% per annum; or

 

(ii)                                  if a Eurodollar Rate
Loan, at the Adjusted Eurodollar Rate plus 3.75% per annum;

 

Revolving Loans:

 

(i)                                     if
a Base Rate Loan, at the Base Rate plus the Applicable Margin: or

 

(ii)                                  if
a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable
Margin; and 

 

Swing Line Loans:

 

(iii)                               at
the Base Rate plus the Applicable Margin;

 

(b)                                 The
basis for determining the rate of interest with respect to any Loan (except a
Swing Line Loan which can be made and maintained as Base Rate Loans only), and
the Interest Period with respect to any Eurodollar Rate Loan, shall be selected
by Company and notified to Administrative Agent and Lenders pursuant to the
applicable Funding Notice or Conversion/Continuation Notice, as the case may
be; provided, (i) the initial Term Loan B and Revolving Loans shall be
made as Base Rate Loans and (ii) until the date that Joint Lead Arrangers
notify Company that the primary syndication of the Loans and Commitments has
been completed, as determined by Agents, outstanding Loans shall be maintained
as either (1) Eurodollar Rate Loans having an Interest Period of no longer than
one month (or such shorter periods as may be agreed to by Administrative Agent
and Company) or (2) Base Rate Loans.  If
on any day a Loan is outstanding with respect to which a Funding Notice or
Conversion/Continuation Notice has not been delivered to Administrative Agent
in accordance 

 

49

 

with the terms hereof specifying the
applicable basis for determining the rate of interest, then for that day such
Loan shall be a Base Rate Loan.

 

(c)                                  In
connection with Eurodollar Rate Loans there shall be no more than twenty (20)
Interest Periods outstanding at any time. 
In the event Company fails to specify between a Base Rate Loan or a
Eurodollar Rate Loan in the applicable Funding Notice or
Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate
Loan) will be automatically converted into a Base Rate Loan on the last day of
the then-current Interest Period for such Loan (or if outstanding as a Base
Rate Loan will remain as, or (if not then outstanding) will be made as, a Base
Rate Loan).  In the event Company fails
to specify an Interest Period for any Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, Company shall be deemed to
have selected an Interest Period of one month. 
As soon as practicable after 10:00 a.m. (New York City time) on each
Interest Rate Determination Date, Administrative Agent shall determine (which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the Eurodollar Rate
Loans for which an interest rate is then being determined for the applicable
Interest Period and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to Company and each Lender.

 

(d)                                 Interest
payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base
Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and
(ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in
each case for the actual number of days elapsed in the period during which it
accrues.  In computing interest on any
Loan, the date of the making of such Loan or the first day of an Interest
Period applicable to such Loan or, with respect to a Base Rate Loan being
converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided,
if a Loan is repaid on the same day on which it is made, one day’s interest
shall be paid on that Loan.

 

(e)                                  Except
as otherwise set forth herein, interest on each Loan shall be payable in
arrears on and to (i) each Interest Payment Date applicable to that Loan; (ii)
any prepayment of that Loan, whether voluntary or mandatory, to the extent
accrued on the amount being prepaid; and (iii) at maturity, including final
maturity; provided, however, with respect to any voluntary prepayment of
a Base Rate Loan, accrued interest shall instead be payable on the applicable
Interest Payment Date.

 

(f)                                    Company
agrees to pay to the Fronting Banks, with respect to drawings honored under any
Letter of Credit, interest on the amount paid by the applicable Fronting Bank
in respect of each such honored drawing from the date such drawing is honored
to but excluding the date such amount is reimbursed by or on behalf of Company
at a rate equal to (i) from the period from the date such drawing is honored to
but excluding the applicable Reimbursement Date, the rate of interest otherwise
payable hereunder with respect to Revolving Loans that are Base Rate Loans, and
(ii) thereafter at a rate which is 2% per annum in excess of the rate of interest
otherwise payable hereunder with respect to Revolving Loans that are Base Rate
Loans.

 

50

 

(g)                                 Interest
payable pursuant to Section 2.8(f) shall be computed on the basis of a
365/366-day year for the actual number of days elapsed in the period during
which it accrues, and shall be payable in arrears through the Reimbursement
Date, and thereafter on demand or, if no demand is made, on the date on which
the related drawing under a Letter of Credit is reimbursed in full.  Promptly upon receipt by a Fronting Bank of
any payment of interest pursuant to Section 2.8(f), such Fronting Bank shall
distribute to each Lender, out of the interest received by such Fronting Bank in
respect of the period from the date such drawing is honored to but excluding
the date on which such Fronting Bank is reimbursed for the amount of such
drawing (including any such reimbursement out of the proceeds of any Revolving
Loans), the amount that such Lender would have been entitled to receive in
respect of the letter of credit fee that would have been payable in respect of
such Letter of Credit for such period if no drawing had been honored under such
Letter of Credit.  In the event a
Fronting Bank shall have been reimbursed by Lenders for all or any portion of
such honored drawing, such Fronting Bank shall distribute to each Lender which
has paid all amounts payable by it under Section 2.4(e) with respect to such
honored drawing such Lender’s Pro Rata Share of any interest received by such
Fronting Bank in respect of that portion of such honored drawing so reimbursed
by Lenders for the period from the date on which such Fronting Bank was so
reimbursed by Lenders to but excluding the date on which such portion of such
honored drawing is reimbursed by Company.

 

2.9.                            Conversion/Continuation.

 

(a)                                  Subject
to Section 2.18 and, if an Event of Default shall have occurred and then be
continuing, so long as Administrative Agent has not suspended the rights set
forth in this Section 2.9(a) by notice in writing to Company, Company shall
have the option:

 

(i)                                     to convert at any
time all or any part of any Loan equal to $2,500,000 and integral multiples of
$1,000,000 in excess of that amount from one Type of Loan to another Type of
Loan; provided, a Eurodollar Rate Loan may only be converted on the
expiration of the Interest Period applicable to such Eurodollar Rate Loan
unless Company shall pay all amounts due under Section 2.18 in connection with
any such conversion; or

 

(ii)                                  upon the expiration
of any Interest Period applicable to any Eurodollar Rate Loan, to continue all
or any portion of such Loan equal to $2,500,000 and integral multiples of
$1,000,000 in excess of that amount as a Eurodollar Rate Loan.

 

(b)                                 Company
shall deliver a Conversion/Continuation Notice to Administrative Agent no later
than 10:00 a.m.  (New York City time) at
least three Business Days in advance of the proposed conversion or continuation
date.  Except as otherwise provided
herein, a Conversion/Continuation Notice for conversion to, or continuation of,
any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance therewith.

 

2.10.                     Default Interest. 
Upon the occurrence and during the continuance of an Event of Default
pursuant to Section 8.1(a), the outstanding principal amount of all Loans not
paid when due and, to the extent permitted by applicable law, any interest
payments on the Loans or any 

 

51

 

fees or other amounts owed hereunder not paid when due, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable on
demand at a rate that is 2% per annum in excess of the highest interest rate
payable hereunder with respect to the applicable Loans (or, in the case of any
such fees and other amounts, at a rate which is 2% per annum in excess of the
interest rate otherwise payable hereunder for Base Rate Loans); provided,
in the case of Eurodollar Rate Loans, upon the expiration of the Interest
Period in effect at the time any such increase in interest rate is effective
such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 2% per annum in
excess of the interest rate otherwise payable hereunder for Base Rate
Loans.  Payment or acceptance of the
increased rates of interest provided for in this Section 2.10 is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.

 

2.11.       Fees.

 

(a)                                  Company
agrees to pay:

 

(i)                                     to Lenders having
Term Loan B Exposure a commitment fee equal to (1) the average daily unused
Commitments of such Lender since the Closing Date or, if later, the last date
of payment of such commitment fee pursuant to Section 2.11(c), multiplied by
(2) the Commitment Fee Percentage;

 

(ii)                                  to Lenders having
Revolving Exposure, a Commitment Fee equal to (1) the average of the daily
difference between (a) the Revolving Commitments, and (b) the sum of (x) the
aggregate principal amount of outstanding Revolving Loans (but not any
outstanding Swing Line Loans) plus (y) the Letter of Credit Usage multiplied by
the Commitment Fee Percentage; and

 

(iii)                               to Lenders having
Revolving Exposure, letter of credit fees equal to (1) the Applicable Margin
for Revolving Loans that are Eurodollar Rate Loans, times (2) the average
aggregate daily maximum amount available to be drawn under all such Letters of
Credit (regardless of whether any conditions for drawing could then be met and
determined as of the close of business on any date of determination).  The fees referred to in this Section 2.11(a)
shall be paid to the Administrative Agent at its Principal Office and upon
receipt Administrative Agent shall promptly distribute to each Lender its Pro
Rata Share thereof.

 

(b)                                 Company
agrees to pay directly to each Fronting Bank, for its own account, the
following fees:

 

(i)                                     a fronting fee
equal to 0.25%, times the average aggregate daily maximum amount available to
be drawn under all Letters of Credit issued by such Fronting Bank (determined
as of the close of business on any date of determination) in which
participations have been purchased by other Lenders pursuant to Section 2.4(c);
and

 

52

 

(ii)                                  such documentary and
processing charges for any issuance, amendment, transfer or payment of a Letter
of Credit issued by such Fronting Bank as are in accordance with such Fronting
Bank’s standard schedule for such charges and as in effect at the time of such
issuance, amendment, transfer or payment, as the case may be.

 

(c)                                  All
fees referred to in Section 2.11(a) and 2.11(b)(i) shall be calculated on the
basis of a 360-day year and the actual number of days elapsed and shall be
payable (i) quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing on the first such date to occur after the
Closing Date, (ii) with respect to Section 2.11(a)(i) and the Term Loan B
Commitment, on the Term Loan B Commitment Termination Date and (iii) with
respect to Section 2.11(a)(i) and (ii) and the Revolving Commitments, on the
Revolving Commitment Termination Date.

 

(d)                                 In
addition to any of the foregoing fees, Company agrees to pay to Agents such
other fees in the amounts and at the times separately agreed upon.

 

2.12.       Scheduled Payments/Commitment
Reductions.

 

Commencing on March 31, 2004, Company shall repay the
principal amounts of the Term Loan B in amounts equal to 0.25% of the aggregate
amount of such Term Loan B outstanding as of March 31, 2004 in consecutive
quarterly installments (each, an “Installment”)
on the last day of each Fiscal Quarter (each, an “Installment Date”). 
Notwithstanding the foregoing, (x) such Installments shall be reduced in
connection with any voluntary or mandatory prepayments of the Term Loan B made
after the first anniversary of the Closing Date in accordance with Sections
2.13, 2.14 and 2.15, as applicable and (y) the Term Loan B, together with all
other amounts owed hereunder with respect thereto, shall, in any event, be paid
in full no later than the Term Loan B Maturity Date, respectively.

 

2.13.       Voluntary Prepayments/Commitment
Reductions.

 

(a)                                  Voluntary
Prepayments.

 

(i)                                     Any time and from
time to time:

 

(1)                                  with respect to Term
Loan B, Company may prepay any such Loans on any Business Day in whole or in
part, in an aggregate minimum amount of $2,500,000 and integral multiples of
$1,000,000 in excess of that amount; and

 

(2)                                  with respect to
Revolving Loans, Company may prepay any such Loans on any Business Day in whole
or in part in an aggregate minimum amount of $1,000,000 and integral multiples
of $1,000,000 in excess of that amount.

 

(3)                                  with respect to Swing
Line Loans, Company may prepay any such Loans on any Business Day in whole or
in part in an aggregate minimum amount of $500,000, and in integral multiples
of $100,000 in excess of that amount.

 

53

 

(ii)                                  All such prepayments
shall be made:

 

(1)                                  upon
written or telephonic notice by noon. (New York City time) on any Business Day
in the case of Base Rate Loans; and

 

(2)                                  upon
not less than three Business Days’ prior written or telephonic notice in the
case of Eurodollar Rate Loans;

 

(3)                                  upon
written or telephonic notice by noon (New York City time) on the date of
prepayment, in the case of Swing Line Loans;

 

in each case given to Administrative Agent or Swing Line Lender, as the
case may be, by 12:00 p.m. (New York City time) on the date required and, if
given by telephone, promptly confirmed in writing to Administrative Agent (and
Administrative Agent will promptly transmit such telephonic or original notice
for Term Loan B or Revolving Loans, as the case may be, by telefacsimile or
telephone to each Lender) or Swing Line Lender, as the case may be.  Upon the giving of any such notice, the
principal amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein.

 

(b)                                 Voluntary
Commitment Reductions.

 

(i)                                     Company may, upon
not less than three Business Days’ prior written or telephonic notice confirmed
in writing to Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or telephone to
each applicable Lender), at any time and from time to time terminate in whole
or permanently reduce in part, without premium or penalty, the Revolving
Commitments in an amount up to the amount by which the Revolving Commitments
exceed the Total Utilization of Revolving Commitments at the time of such
proposed termination or reduction; provided, any such partial reduction
of the Revolving Commitments shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $1,000,000 in excess of that amount.

 

(ii)                                  Company’s notice to
Administrative Agent shall designate the date (which shall be a Business Day)
of such termination or reduction and the amount of any partial reduction, and
such termination or reduction of the Revolving Commitments shall be effective
on the date specified in Company’s notice and shall reduce the Revolving
Commitment of each Lender proportionately to its Pro Rata Share thereof.

 

2.14.       Mandatory Prepayments/Commitment
Reductions.

 

(a)                                  Asset
Sales.  No later than the third
Business Day following the date of receipt by Holding or any of its
Subsidiaries of any Net Asset Sale Proceeds, Company shall prepay the Loans and
reduce Commitments in accordance with Section 2.15 in an aggregate amount equal
to such Net Asset Sale Proceeds; provided, so long as no Event of
Default shall have occurred and be continuing, Company shall have the option,
directly or through one or more of its Subsidiaries, to invest Net Asset Sale
Proceeds within two hundred and seventy (270) days of receipt thereof in a
manner required or useful to the business of Company, including to fund
Permitted Business Acquisitions.

 

54

 

(b)                                 Insurance/Condemnation
Proceeds.  No later than the third
Business Day following the date of receipt by Holding or any of its
Subsidiaries, or Administrative Agent as loss payee, of cumulative Net
Insurance/Condemnation Proceeds in excess of $10,000,000 in any Fiscal Year,
Company shall prepay the Loans and reduce Commitments in accordance with
Section 2.15 in an aggregate amount equal to such Net Insurance/Condemnation
Proceeds; provided, so long as no Event of Default shall have occurred
and be continuing, and Company shall have the option, directly or through one
or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds
within two hundred and seventy (270) days of receipt thereof in a manner
required or useful to the business of the HM Group, including the repair,
restoration or replacement of the applicable assets thereof.

 

(c)                                  Issuance
of Equity Securities.  On the third
Business Day following receipt by Holding of any net Cash proceeds (other than
the proceeds of (i) Designated Capital Contributions, (ii) Permitted Cure
Securities, and (iii) equity issued to management or employees of any member of
the HM Group) from the issuance of any of its Capital Stock, Holding shall
contribute such proceeds to Company and Company shall prepay the Loans and
reduce Commitments in accordance with Section 2.15 in an aggregate amount equal
to 75% of such proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, including reasonable
legal fees and expenses; provided that, if as of the date such
prepayment is required to be made the Total Leverage Ratio (determined for such
by reference to the most recent Compliance Certificate delivered pursuant to
Section 5.1 (d) after giving pro forma effect to such prepayment) shall be
3.00:1.00 or less, Company shall only be required to make the prepayments
and/or reductions otherwise required hereby in an amount equal to 50% of such
net Cash proceeds.

 

(d)                                 Issuance
of Debt.  On the date of receipt by
Holding or any of its Subsidiaries of any net Cash proceeds from the incurrence
of any Indebtedness (other than with respect to any Indebtedness permitted to
be incurred pursuant to Section 6.1 from time to time), Holding or the
applicable Subsidiary shall contribute such proceeds to Company and Company
shall prepay the Loans and reduce Commitments in accordance with Section 2.15 in
an aggregate amount equal to 100% of such proceeds, net of underwriting
discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses.

 

(e)                                  Excess
Cash Flow.  In the event that there
shall be Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year
2003), Company shall, no later than ninety-five days after the end of such
Fiscal Year, prepay the Loans and reduce Commitments in accordance with Section
2.15 in an aggregate amount equal to 75% of such Excess Cash Flow; provided,
(i) if the Total Leverage Ratio as of the last day of the last Fiscal Quarter
of such Fiscal Year (determined by reference to the Compliance Certificate
delivered pursuant to Section 5.1 (d) calculating the Total Leverage Ratio as
of the last day of the last Fiscal Quarter of such Fiscal Year and giving pro
forma effect to such prepayment) shall be 3.00:1.00 or less, Company shall only
be required to make the prepayments and/or reductions otherwise required hereby
in an amount equal to 25% of such Excess Cash Flow and (ii) if the Total
Leverage Ratio (determined by reference to the Compliance Certificate delivered
pursuant to Section 5.1 (d) calculating the Total Leverage Ratio as of the last
day of the last Fiscal Quarter of such Fiscal Year and giving pro forma effect
to such prepayment) shall be less than 3.50:1.00 but greater than 3.00:1.00, 

 

55

 

Company shall only be required to make the
prepayments and/or reductions otherwise required hereby in an amount equal to
50% of such Excess Cash Flow.

 

(f)                                    Share
Purchase Agreement. 
(i)  For so long as any amounts are outstanding under the
Bridge Facility, no later than the third Business Day following the date of receipt
by Holding or any of its Subsidiaries of any net Cash proceeds in excess of
$10,000,000 in any Fiscal Year (after deduction of reasonable costs and
expenses incurred in the recovery of amounts claimed) from any reduction of
purchase price or warranty or other claims under the Share Purchase Agreement
other than as a result of the Adjusted Purchase Price Mechanism (“Share Purchase Agreement Proceeds”), the recipient, if other
than Company, shall contribute such proceeds to Company and Company shall prepay
the Term Loans B in an aggregate amount equal to such Share Purchase Agreement
Proceeds; provided, so long as no Default or Event of Default shall have
occurred and be continuing, Company shall have the option, directly or through
one or more of its Subsidiaries, to invest Share Purchase Agreement Proceeds
within 270 days of receipt thereof to make required payments to third parties,
to repair or replace relevant assets or to meet liabilities in relation
thereto; and

 

(ii)                                  no later than the
third Business Day following request of the Requisite Lenders after
notification by the Company within three Business Days of the date of receipt
by Holding or any of its Subsidiaries of any net Cash proceeds pursuant to the
Adjusted Purchase Price Mechanism;

 

(A)                              prior
to the earlier of (1) the Bridge Refinancing Date and (2) the issuance of the
exchange notes contemplated by the Bridge Facility, Company shall prepay the
Term Loan B in an aggregate amount equal to the EBITDA Purchase Price
Adjustment multiplied by the percentage obtained by dividing (1) the aggregate
Term Loan B Exposures of all Lenders, by (2) the sum of (x) the aggregate Term
Loan B Exposures of all Lenders, plus (y) the consideration paid in respect of
the Sponsor Equity at the Closing Date, plus (z) the aggregate principal amount
of outstanding Indebtedness under the Bridge Facility Documents; and

 

(B)                                following
the earlier to occur of (1) the Bridge Refinancing Date and (2) the issuance of
the exchange notes contemplated by the Bridge Facility, Company shall prepay
the Term Loan B in an aggregate amount equal to the EBITDA Purchase Price
Adjustment multiplied by the percentage obtained by dividing (1) the sum of (x)
the aggregate Term Loan B Exposures of all Lenders, plus (y) the aggregate
principal amount of outstanding Indebtedness under the Bridge Facility
Documents immediately prior to such earlier date, by (2) the sum of (x) the
aggregate Term Loan B Exposures of all Lenders, plus (y) the consideration paid
in respect of the Sponsors Equity at the Closing Date, plus (z) the aggregate
principal amount of outstanding Indebtedness under the Bridge Facility
Documents immediately prior to such earlier date.

 

(g)                                 Clean
Down Requirement.  Company shall
make prepayments of Revolving Loans to the extent necessary to cause (i) during
each of the first two Fiscal Years following the Closing Date, for a period no
shorter than ten consecutive Business Days, the Total 

 

56

 

Utilization of Revolving Commitment not to
exceed $75,000,000 and (ii) during each Fiscal Year thereafter, for a period no
shorter than ten consecutive Business Days, the Total Utilization of Revolving
Commitment not to exceed $50,000,000.

 

(h)                                 Subordinated
Indebtedness.  In the event that Company
shall otherwise be required to make any mandatory prepayment of Indebtedness
under the Bridge Facility (other than Permitted Refinancing Indebtedness) or
any Permitted Refinancing Indebtedness, the Company shall prepay the Loans and
reduce the Commitments in accordance with Section 2.15 in an aggregate amount
equal to the amount of such mandatory prepayment.

 

2.15.       Application of Prepayments/Reductions.

 

(a)                                  Application
of Voluntary Prepayments by Type of Loans. 
Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied
as specified by Company in the applicable notice of prepayment; provided,
in the event Company fails to specify the Loans to which any such prepayment
shall be applied, such prepayment shall be applied to repay the Term Loan B on
a pro rata basis.  The amount of
any voluntary prepayments of the Term Loan B shall be further applied to reduce
first the two immediately succeeding scheduled Installments on the Tern
Loan B and second, to reduce, on a pro rata basis the remaining scheduled
Installments on the Term Loan B.

 

(b)                                 Application
of Mandatory Prepayments by Type of Loans. 
Any amount required to be paid pursuant to Sections 2.14(a) through
2.14(f) and 2.14(h) shall be applied as follows:

 

first,
to prepay Tern Loan B, and shall be further applied on a pro rata basis
to the remaining scheduled Installments of the Term Loan B;

 

second,
to repay outstanding Swing Line Loans to the full extent thereof;

 

third,
to prepay the Revolving Loans to the full extent thereof and to further
permanently reduce the Revolving Commitments by the amount of such prepayment;
and

 

fourth,
to cash collateralize Letters of Credit and to further permanently reduce the
Revolving Commitments by the amount of such cash collateralization.

 

(c)                                  Application
of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans.  Considering each Class of Loans being
prepaid separately, any prepayment thereof shall be applied first to Base Rate
Loans to the full extent thereof before application to Eurodollar Rate Loans,
in each case in a manner which minimizes the amount of any payments that would
otherwise be required to be made by Company pursuant to Section 2.18(c).

 

(d)                                 Application
of Certain Proceeds.  In the event
the amount of any prepayment required to be made above under this Section 2.15
shall exceed the aggregate principal amount of the Base Rate Loans outstanding
under the respective Class required to be prepaid (the amount of any such
excess being called the “Excess Amount”),
Company shall have the right, in lieu of making such prepayment in full, to
prepay all the outstanding applicable 

 

57

 

Base Rate Loans and to deposit an amount
equal to the Excess Amount with the Collateral Trustee in a cash collateral
account maintained (pursuant to documentation reasonably satisfactory to the
Administrative Agent) by and in the sole dominion and control of the Collateral
Trustee.  Any amounts so deposited shall
be held by the Collateral Trustee as collateral for the Obligations and applied
to the prepayment of the applicable Eurodollar Rate Loans at the end of the
current Interest Periods applicable thereto. 
On any Business Day on which (i) collected amounts remain on deposit in
or to the credit of such cash collateral account after giving effect to the
payments made on such day pursuant to this Section 2.15(d) and (ii) Company
shall have delivered to the Collateral Trustee a written request or a
telephonic request (which shall be promptly confirmed in writing) that such
remaining collected amounts be invested in the Permitted Investments specified
in such request, the Collateral Trustee shall use its reasonable efforts to
invest such remaining collected amounts in such Permitted Investments; provided,
however, that the Collateral Trustee shall have continuous dominion and
full control over any such investments (and over any interest that accrues
thereon) to the same extent that it has dominion and control over such cash
collateral account and no Permitted Investment shall mature after the end of
the Interest Period for which it is to be applied.  Company shall not have the right to withdraw any amount from such
cash collateral account until the applicable Eurodollar Rate Loans and accrued
interest thereon are paid in full or if a Default or Event of Default then
exists or would result.

 

2.16.                     General Provisions Regarding Payments.

 

(a)                                  All
payments by Company of principal, interest, fees and other Obligations shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent not
later than 1:00 p.m. (New York City time) on the date due at the Administrative
Agent’s Principal Office for the account of Lenders; funds received by
Administrative Agent after that time on such due date shall be deemed to have
been paid by Company on the next succeeding Business Day.

 

(b)                                 All
payments in respect of the principal amount of any Loan (other than voluntary
prepayments of Revolving Loans) shall include payment of accrued interest on
the principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is due
and payable with respect to such Loan) shall be applied to the payment of
interest before application to principal.

 

(c)                                  Administrative
Agent shall promptly distribute to each Lender at such address as such Lender
shall indicate in writing, such Lender’s applicable Pro Rata Share of all
payments and prepayments of principal and interest due hereunder, together with
all other amounts due thereto, including, without limitation, all fees payable
with respect thereto, to the extent received by Administrative Agent.

 

(d)                                 Notwithstanding
the foregoing provisions hereof, if any Conversion/ Continuation Notice is
withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate
Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans,
Administrative Agent shall give effect thereto in apportioning payments
received thereafter.

 

58

 

(e)                                  Subject
to the provisos set forth in the definition of “Interest Period”, whenever any
payment to be made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the payment
of interest hereunder or of the Revolving Commitment fees hereunder.

 

(f)                                    Administrative
Agent may deem any payment by or on behalf of Company hereunder that is not
made in same day funds prior to 2:00 p.m. (New York City time) to be a
non-conforming payment.

 

(g)                                 If
an Event of Default shall have occurred and not otherwise been waived, and the
maturity of the Obligations shall have been accelerated pursuant to Section
8.1, all payments or proceeds received by Agents hereunder in respect of any of
the Obligations, shall be applied in accordance with the application
arrangements described in Section 6.5 of the Pledge and Security and Collateral
Trust Agreement.

 

2.17.                     Ratable Sharing. 
Lenders hereby agree among themselves that, except with respect to (x)
any payment made by Company pursuant to and in accordance with the express
terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in Letters or Credit to any assignee or participant, if
any of them shall, whether by voluntary payment (other than a voluntary
prepayment of Loans made and applied in accordance with the terms hereof),
through the exercise of any right of set-off or banker’s lien, by counterclaim
or cross action or by the enforcement of any right under the Credit Documents
or otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to such Lender hereunder
or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender)
which is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (a) notify Administrative Agent and each
other Lender of the receipt of such payment and (b) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided,
if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Lender upon the bankruptcy
or reorganization of Company or otherwise, those purchases shall be rescinded
and the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without
interest.  Company expressly consents to
the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker’s lien, set-off or
counterclaim with respect to any and all monies owing by Company to that holder
with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.

 

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2.18.       Making or Maintaining Eurodollar Rate
Loans.

 

(a)                                  Inability
to Determine Applicable Interest Rate. 
In the event that Administrative Agent shall have determined (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans, that by reason of circumstances affecting the London interbank
market adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of
Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice
(by telefacsimile or by telephone confirmed in writing) to Company and each
Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Administrative Agent
notifies Company and Lenders that the circumstances giving rise to such notice
no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice
given by Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.

 

(b)                                 Illegality
or Impracticability of Eurodollar Rate Loans.  In the event that on any date any Lender shall have determined
(which determination shall be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with Company and
Administrative Agent) that the making, maintaining or continuation of its
Eurodollar Rate Loans has become unlawful as a result of compliance by such
Lender in good faith with any law, treaty, governmental rule, regulation,
guideline or order (or would conflict with any such treaty, governmental rule,
regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful), then, and in any such
event, such Lender shall be an “Affected Lender”
and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other
Lender).  Thereafter (1) the obligation
of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar
Rate Loans shall be suspended until such notice shall be withdrawn by the
Affected Lender, (2) to the extent such determination by the Affected Lender
relates to a Eurodollar Rate Loan then being requested by Company pursuant to a
Funding Notice or a Conversion/Continuation Notice, the Affected Lender shall
make such Loan as (or continue such Loan as or convert such Loan to, as the
case may be) a Base Rate Loan, (3) the Affected Lender’s obligation to maintain
its outstanding Eurodollar Rate Loans (the “Affected
Loans”) shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (4) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination.  Notwithstanding the foregoing, to the extent
a determination by an Affected Lender as described above relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Funding
Notice or a Conversion/Continuation Notice, Company shall have the option,
subject to the provisions of 2.18(c), to rescind such Funding Notice or
Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile
or by telephone confirmed in writing) to Administrative Agent of such
rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Administrative
Agent shall promptly transmit to each other Lender).  Except as provided in the immediately preceding sentence, nothing
in this Section 2.18(b) shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans to,
Eurodollar Rate Loans in accordance with the terms hereof.

 

60

 

(c)                                  Compensation
for Breakage or Non-Commencement of Interest Periods.  Company shall compensate each Lender, upon
written request by such Lender (which request shall set forth the basis for
requesting such amounts and a calculation of the requested amount in reasonable
detail), for all reasonable losses, expenses and liabilities (including any
interest paid by such Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Rate Loans and any loss, expense or liability sustained by
such Lender in connection with the liquidation or re-employment of such funds
but excluding loss of anticipated profits) which such Lender may sustain: (i)
if for any reason (other than a default by such Lender) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Funding
Notice or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Conversion/Continuation Notice or a telephonic request for
conversion or continuation; (ii) if any prepayment or other principal payment
or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to
the last day of an Interest Period applicable to that Loan; or (iii) if any
prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by Company.

 

(d)                                 Booking
of Eurodollar Rate Loans.  Any Lender
may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of
any of its branch offices or the office of an Affiliate of such Lender.

 

(e)                                  Assumptions
Concerning Funding of Eurodollar Rate Loans.  Calculation of all amounts payable to a Lender under this Section
2.18 and under Section 2.19 shall be made as though such Lender had actually
funded each of its relevant Eurodollar Rate Loans through the purchase of a
Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i)
of the definition of Adjusted Eurodollar Rate in an amount equal to the amount
of such Eurodollar Rate Loan and having a maturity comparable to the relevant
Interest Period and through the transfer of such Eurodollar deposit from an
offshore office of such Lender to a domestic office of such Lender in the
United States of America; provided, however, each Lender may fund
each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing
assumptions shall be utilized only for the purposes of calculating amounts
payable under this Section 2.18 and under Section 2.19.

 

2.19.       Increased
Costs; Capital Adequacy.

 

(a)                                  Compensation
For Increased Costs and Taxes. 
Subject to the provisions of Section 2.20 (which shall be controlling
with respect to the matters covered thereby), in the event that any Lender
(which term shall include any Fronting Banks for purposes of this Section
2.19(a)) shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law): (i) subjects such Lender (or its applicable
lending office) to any additional Tax (other than any Tax on the overall net
income of such Lender) with respect to this Agreement or any of the other
Credit Documents or 

 

61

 

any of its obligations hereunder or
thereunder or any payments to such Lender (or its applicable lending office),
in each case with regard to Eurodollar Loans and/or Letters of Credit
hereunder; (ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against assets
held by, or deposits or other liabilities in or for the account of, or advances
or loans by, or other credit extended by, or any other acquisition of funds by,
any office of such Lender (other than any such reserve or other requirements
with respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than
with respect to a Tax matter) on or affecting such Lender (or its applicable
lending office) or its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Eurodollar Loans hereunder or
issuing or participating in Letters of Credit or to reduce any amount received
or receivable by such Lender (or its applicable lending office), in each case
with respect thereto by an amount deemed by such Lender to be material; then,
in any such case, Company shall promptly pay to such Lender, upon receipt of
the statement referred to in the next sentence, such additional amount or
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder.  Such Lender shall deliver to Company (with a
copy to Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Lender
under this Section 2.19(a), which statement shall be conclusive and binding
upon all parties hereto absent manifest error.

 

(b)                                 Capital
Adequacy Adjustment.  In the event
that any Lender (which term shall include any Fronting Banks for purposes of
this Section 2.19(b)) shall have determined that the adoption, effectiveness,
phase-in or applicability after the Closing Date of any law, rule or regulation
(or any provision thereof) regarding capital adequacy, or any change therein or
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation controlling
such Lender as a consequence of, or with reference to, such Lender’s Loans or
Commitments or Letters of Credit, or participations therein or other
obligations hereunder with respect to the Loans or the Letters of Credit to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of
the statement referred to in the next sentence, Company shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction.  Such Lender shall deliver to Company (with a
copy to Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to Lender under
this Section 2.19(b), which statement shall be conclusive and binding upon all
parties hereto absent manifest error.

 

62

 

(c)                                  Failure
to Notify.  Failure on the part of
any Lender to demand compensation from Company for any additional amounts owed
to the Lender under Sections 2.19(a) and 2.19(b) shall not constitute a waiver
of such Lender’s right to demand compensation with respect to such period or
any other period; provided that Company shall not be under any
obligation to compensate any Lender under paragraph (b) above with respect to
increased costs or reductions with respect to any period prior to the date that
is six months prior to such request if such Lender knew or could reasonably
have been expected to be aware of the circumstances giving rise to such
increased costs or reductions and of the fact that such circumstances would in
fact result in a claim for increased compensation by reason of such increased
costs or reductions and provided further, that the foregoing
limitation shall not apply to any increased costs or reductions arising out of
the retroactive application of any law, treaty or governmental rule, regulation
or order within such six month period.

 

2.20.       Taxes;
Withholding, etc.

 

(a)                                  Payments
to Be Free and Clear.  All sums
payable by any Credit Party hereunder and under the other Credit Documents
shall (except to the extent required by law) be paid free and clear of, and
without any deduction or withholding on account of, any Tax (other than a Tax
on the overall net income of any Lender) imposed, levied, collected, withheld
or assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of any Credit Party or by
any federation or organization of which the United States of America or any
such jurisdiction is a member at the time of payment excluding in the case of
each Lender, each Fronting Bank and Administrative Agent, taxes that would not
be imposed but for a connection between such Lender, such Fronting Bank or
Administrative Agent (as the case may be) and the jurisdiction imposing such
tax, other than a connection arising solely by virtue of the activities of such
Lender, such Fronting Bank or Administrative Agent (as the case may be)
pursuant to or in respect of this Agreement or under any other Credit
Documents, including entering into, lending money or extending credit pursuant
to, receiving payments under, or enforcing, this Agreement or any other Credit
Document.

 

Company will indemnify each Lender, each Fronting Bank
and Administrative Agent for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 2.20) paid by
such Lender, such Fronting Bank or Administrative Agent, as the case may be,
and any liability (including penalties, interest and expenses including
reasonable attorney’s fees and expenses) arising therefrom or with respect
thereto whether or not such Taxes were correctly or legally asserted.  A certificate as to the amount of such
payment or liability prepared by a Lender (or transferee), such Fronting Bank
or Administrative Agent, absent manifest error, shall be final, conclusive and
binding for all purposes; provided that if Company reasonably believes
that such Taxes were not correctly or legally asserted, such Lender, such
Fronting Bank or Administrative Agent, as the case may be shall use reasonable
efforts to cooperate with Company to obtain a refund of such Taxes.  Such indemnification shall be made within 10
days after the date of any Lender, any Fronting Bank or Administrative Agent,
as the case may be, makes written demand therefor.  If a Lender, a Fronting Bank or Administrative Agent shall become
aware that it is entitled to receive a refund in respect of Taxes, it shall
promptly notify Company of the availability of such refund and shall, within 30
days after receipt of a request by Company, pursue or timely claim such refund
at Company’s 

 

63

 

expense.  If any Lender, any
Fronting Bank or Administrative Agent receives a refund in respect of any Taxes
for which such Lender, such Fronting Bank or Administrative Agent has received
payment from Company hereunder, it shall promptly repay such refund (plus any
interest received) to Company (but only to the extent of indemnity payments
made, or additional amounts paid, by Company under this Section 2.20 with
respect to the Taxes giving rise to such refund); provided that Company,
upon request of such Lender, such Fronting Bank or Administrative Agent, agrees
to return such refund (plus any
penalties, interest or other charges required to be paid) to such Lender, such
Fronting Bank or Administrative Agent in the event such Lender, such Fronting
Bank or Administrative Agent is required to repay such refund to the relevant
taxing authority.

 

(b)                                 Withholding
of Taxes.  If any Credit Party or
any other Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by any Credit Party to
Administrative Agent or any Lender (which term shall include any Fronting Banks
for purposes of this Section 2.20(b)) under any of the Credit Documents: (i)
Company shall notify Administrative Agent of any such requirement or any change
in any such requirement as soon as Company becomes aware of it; (ii) Company
shall pay any such Tax before the date on which penalties attach thereto, such
payment to be made (if the liability to pay is imposed on any Credit Party) for
its own account or (if that liability is imposed on Administrative Agent or
such Lender, as the case may be) on behalf of and in the name of Administrative
Agent or such Lender; (iii) the sum payable by such Credit Party in respect of
which the relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Administrative Agent or such Lender, as the
case may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or made;
and (iv) within thirty (30) days after paying any sum from which it is required
by law to make any deduction or withholding, and within thirty (30) days after
the due date of payment of any Tax which it is required by clause (ii) above to
pay, Company shall deliver to Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority; provided, no such
additional amount shall be required to be paid to any Lender under clause (iii)
above except to the extent that any change after the date hereof (in the case
of each Lender listed on the signature pages hereof on the Closing Date) or
after the effective date of the Assignment Agreement pursuant to which such
Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date hereof or at the date of such
Assignment Agreement, as the case may be, in respect of payments to such
Lender.

 

(c)                                  Evidence
of Exemption From U.S. Withholding Tax. 
Each Lender that is not a United States Person (as such term is defined
in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income
tax purposes (a “Non-US Lender”)
shall deliver to Administrative Agent for transmission to Company, on or prior
to the Closing Date (in the case of each Lender listed on the signature pages
hereof on the Closing Date) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the determination of
Company or Administrative Agent (each in the reasonable exercise of its
discretion), (i) two original copies of 

 

64

 

Internal Revenue Service Form W-8BEN or
W-8ECI (or any successor forms), properly completed and duly executed by such
Lender, and such other documentation required under the Internal Revenue Code
and reasonably requested by Company to establish that such Lender is not
subject to deduction or withholding of United States federal income tax with
respect to any payments to such Lender of principal, interest, fees or other
amounts payable under any of the Credit Documents, or (ii) if such Lender is
not a “bank” or other Person described in Section 881(c)(3) of the Internal
Revenue Code and cannot deliver either Internal Revenue Service Form W-8BEN or
W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status together
with two original copies of Internal Revenue Service Form W-8BEN (or any
successor form), properly completed and duly executed by such Lender, and such
other documentation required under the Internal Revenue Code and reasonably
requested by Company to establish that such Lender is not subject to deduction
or withholding of United States federal income tax with respect to any payments
to such Lender of interest payable under any of the Credit Documents.  Each Lender required to deliver any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters pursuant to this Section 2.20(c) hereby agrees, from time
to time after the initial delivery by such Lender of such forms, certificates
or other evidence, whenever a lapse in time or change in circumstances renders
such forms, certificates or other evidence obsolete or inaccurate in any
material respect, that such Lender shall promptly deliver to Administrative
Agent for transmission to Company two new original copies of Internal Revenue
Service Form W-8BEN or W-8ECI , or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8BEN, as the case may be,
properly completed and duly executed by such Lender, and such other
documentation required under the Internal Revenue Code and reasonably requested
by Company to confirm or establish that such Lender is not subject to deduction
or withholding of United States federal income tax with respect to payments to
such Lender under the Credit Documents, or notify Administrative Agent and
Company of its inability to deliver any such forms, certificates or other
evidence.  Company shall not be required
to pay any additional amount to any Non-US Lender under Section 2.20(b)(iii) if
such Lender shall have failed (1) to deliver the forms, certificates or other
evidence referred to in the second sentence of this Section 2.20(c), or (2) to
notify Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence, as the case may be; provided, if
such Lender shall have satisfied the requirements of the first sentence of this
Section 2.20(c) on the Closing Date or on the date of the Assignment Agreement
pursuant to which it became a Lender, as applicable, nothing in this last
sentence of Section 2.20(c) shall relieve Company of its obligation to pay any
additional amounts pursuant to Section 2.19(a) in the event that, as a result
of any change in any applicable law, treaty or governmental rule, regulation or
order, or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence at a subsequent date establishing the fact that
such Lender is not subject to withholding as described herein.

 

(d)                                 Within
30 days after the date of any payment of Taxes withheld by Company in respect
of any payment to any Lender, any Fronting Bank or Administrative Agent, Company
will furnish to Administrative Agent, at its address referred to in Appendix
A, the original or a certified copy of a receipt evidencing payment
thereof.

 

(e)                                  Any
Fronting Bank and any Lender claiming any additional amounts payable pursuant
to this Section 2.20 shall use reasonable efforts (consistent with legal and

 

65

 

regulatory restrictions) to file any certificate or document requested
in writing by Company or to change the jurisdiction of its applicable lending
office, if the making of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts which would be payable or may
thereafter accrue and would not, in the sole determination of such Fronting
Bank or such Lender, be otherwise disadvantageous to such Fronting Bank or such
Lender.

 

2.21.                     Obligation to Mitigate.  Each Lender (which term shall include each
Fronting Bank for purposes of this Section 2.21) agrees that, as promptly as
practicable after the officer of such Lender responsible for administering its
Loans or Letters of Credit, as the case may be, becomes aware of the occurrence
of an event or the existence of a condition that would cause such Lender to
become an Affected Lender or that would entitle such Lender to receive payments
under Section 2.18, 2.19 or 2.20, it will, to the extent not inconsistent with
the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts to (a) make, issue, fund or maintain its
Credit Extensions, including any Affected Loans, through another office of such
Lender, or (b) take such other measures as such Lender may deem reasonable, if
as a result thereof the circumstances which would cause such Lender to be an
Affected Lender would cease to exist or the additional amounts which would
otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19
or 2.20 would be materially reduced and if, as determined by such Lender in its
sole discretion, the making, issuing, funding or maintaining of such Revolving
Commitments, Loans or Letters of Credit through such other office or in
accordance with such other measures, as the case may be, would not otherwise
adversely affect such Revolving Commitments, Loans or Letters of Credit or the
interests of such Lender; provided, such Lender will not be obligated to
utilize such other office pursuant to this Section 2.21 unless Company agrees
to pay all incremental expenses incurred by such Lender as a result of
utilizing such other office as described in clause (i) above.  A certificate as to the amount of any such
expenses payable by Company pursuant to this Section 2.21 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such
Lender to Company (with a copy to Administrative Agent) shall be conclusive
absent manifest error.

 

2.22.                     Defaulting Lenders.  Anything contained herein to the contrary notwithstanding, in the
event that any Lender, at the direction or request of any regulatory agency or
authority or otherwise, defaults (a “Defaulting
Lender”) in its obligation to fund (a “Funding Default”) any Revolving Loan or its portion of any
unreimbursed payment under Section 2.4(e) (a “Defaulted
Loan”), then (a) during any Default Period with respect to such
Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender”
for purposes of voting on any matters (including the granting of any consents
or waivers) with respect to any of the Credit Documents; (b) to the extent
permitted by applicable law, until such time as the Default Excess with respect
to such Defaulting Lender shall have been reduced to zero, (i) any voluntary
prepayment of the Revolving Loans shall, if Company so directs at the time of
making such voluntary prepayment, be applied to the Revolving Loans of other
Lenders as if such Defaulting Lender had no Revolving Loans outstanding and the
Revolving Exposure of such Defaulting Lender were zero, and (ii) any mandatory
prepayment of the Revolving Loans shall, if Company so directs at the time of
making such mandatory prepayment, be applied to the Revolving Loans of other
Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such
Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it
being understood and agreed that Company shall be entitled to retain any
portion of any mandatory prepayment of the Revolving Loans that is not paid to
such Defaulting Lender solely as a result of the operation of the 

 

66

 

provisions of this clause (b); (c) such Defaulting Lender’s Revolving
Commitment and outstanding Revolving Loans and such Defaulting Lender’s Pro
Rata Share of the Letter of Credit Usage shall be excluded for purposes of
calculating the Revolving Commitment fee payable to Lenders in respect of any
day during any Default Period with respect to such Defaulting Lender, and such
Defaulting Lender shall not be entitled to receive any Revolving Commitment fee
pursuant to Section 2.11 with respect to such Defaulting Lender’s Revolving
Commitment in respect of any Default Period with respect to such Defaulting
Lender; and (d) the Total Utilization of Revolving Commitments as at any date
of determination shall be calculated as if such Defaulting Lender had funded
all Defaulted Loans of such Defaulting Lender. 
No Revolving Commitment of any Lender shall be increased or otherwise
affected, and, except as otherwise expressly provided in this Section 2.22, performance
by Company of its obligations hereunder and the other Credit Documents shall
not be excused or otherwise modified as a result of any Funding Default or the
operation of this Section 2.22.  The
rights and remedies against a Defaulting Lender under this Section 2.22 are in
addition to other rights and remedies which Company may have against such
Defaulting Lender with respect to any Funding Default and which Administrative
Agent or any Lender may have against such Defaulting Lender with respect to any
Funding Default.

 

2.23.                     Removal or Replacement of a Lender.  Anything contained herein to the contrary
notwithstanding, in the event that: (a) any Lender (an “Increased-Cost Lender”) shall give notice
to Company that such Lender is an Affected Lender or that such Lender is
entitled to receive payments under Section 2.17, 2.18 or 2.19, the
circumstances which have caused such Lender to be an Affected Lender or which
entitle such Lender to receive such payments shall remain in effect, and such
Lender shall fail to withdraw such notice within five Business Days after
Company’s request for such withdrawal; or (b) any Lender shall become a
Defaulting Lender, the Default Period for such Defaulting Lender shall remain
in effect, and such Defaulting Lender shall fail to cure the default as a
result of which it has become a Defaulting Lender within five Business Days
after Company’s request that it cure such default; or (c) in connection with
any proposed amendment, modification, termination, waiver or consent with
respect to any of the provisions hereof as contemplated by Section 10.5(b), the
consent of Requisite Lenders shall have been obtained but the consent of one or
more of such other Lenders (each a “Non-Consenting
Lender”) whose consent is required shall not have been obtained;
then, with respect to each such Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the “Terminated
Lender”), Company may, by giving written notice to Administrative
Agent and any Terminated Lender of its election to do so, elect to cause such
Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to
assign its outstanding Loans and its Revolving Commitments, if any, in full to
one or more Eligible Assignees (each a “Replacement
Lender”) in accordance with the provisions of Section 10.6 and Terminated
Lender shall pay any fees payable thereunder in connection with such
assignment; provided, (1) on the date of such assignment, the
Replacement Lender shall pay to Terminated Lender an amount equal to the sum of
(A) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Terminated Lender, (B) an amount equal to all
unreimbursed drawings that have been funded by such Terminated Lender, together
with all then unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid fees owing to such
Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment,
Company shall pay any amounts payable to such Terminated Lender pursuant to
Section 2.18(c), 2.19 or 2.20 or otherwise as if it were a prepayment; and (3)
in the event such Terminated Lender is a 

 

67

 

Non-Consenting Lender, each Replacement Lender shall consent, at the
time of such assignment, to each matter in respect of which such Terminated
Lender was a Non-Consenting Lender; provided, Company may not make such
election with respect to any Terminated Lender that is also a Fronting Bank
unless, prior to the effectiveness of such election, Company shall have caused
each outstanding Letter of Credit issued thereby to be cancelled.  Upon the prepayment of all amounts owing to
any Terminated Lender and the termination of such Terminated Lender’s Revolving
Commitments, if any, such Terminated Lender shall no longer constitute a
“Lender” for purposes hereof, provided, any rights of such Terminated
Lender to indemnification hereunder shall survive as to such Terminated Lender.

 

2.24.       Increase in Revolving Commitments.  Company may by
written notice to Administrative Agent and Syndication Agent elect to request
an increase to the existing Revolving Commitments (any such increase, the “New Revolving Commitments”), by an amount not in excess of
$25,000,000 in the aggregate or a lesser amount in integral multiples of
$1,000,000.  Such notice shall specify
(A) the date (an “Increased Amount Date”)
on which Company proposes that the New Revolving Commitments be made available,
which shall be a date not less than 10 Business Days after the date on which
such notice is delivered to the Administrative Agent and (B) the identity of
each Lender or Person that meets the requirements of an Eligible Assignee
(each, a “New Revolving Lender”) to whom Company
proposes all or any portion of such New Revolving Commitments be allocated and
the amounts of such allocations; provided that, any Lender approached to
provide all or a portion of the New Revolving Commitments may elect or decline,
in its sole discretion, to provide a New Revolving Commitment.  Such New Revolving Commitments shall become
effective, as of such Increased Amount Date; provided that (1) no
Default or Event of Default shall exist on such Increased Amount Date before or
after giving effect to such New Revolving Commitments; (2) such increase in the
Revolving Commitments shall be evidenced by one or more Joinder Agreements
executed and delivered to Administrative Agent by each New Revolving Lender,
and each shall be recorded in the Register, each of which shall be subject to
the requirements set forth in Section 2.20(c); (3) Company shall make any
payments required pursuant to Section 2.18(c) in connection with the provisions
of the New Revolving Commitments; and (4) Company shall deliver or cause to be
delivered any legal opinions or other documents reasonably requested by
Administrative Agent in connection with any such transaction.

 

On any Increased Amount Date on which New Revolving
Commitments are effected, subject to the satisfaction of the foregoing terms
and conditions, (a) each of the existing Revolving Lenders shall assign to each
of the New Revolving Lenders, and each of the New Revolving Lenders shall
purchase from each of the existing Revolving Lenders, at the principal amount
thereof, such interests in the Revolving Loans and Letters of Credit
outstanding on such Increased Amount Date as shall be necessary in order that,
after giving effect to all such assignments and purchases, such Revolving Loans
and Letters of Credit will be held by existing Revolving Lenders and New
Revolving Lenders ratably in accordance with their Revolving Loan Commitments
after giving effect to the addition of such New Revolving Commitments to the
Revolving Loan Commitments, (b) each New Revolving Commitment shall be deemed
for all purposes a Revolving Commitment and each Loan made thereunder shall be
deemed, for all purposes, a Revolving Loan and (c) each New Revolving Lender
shall become a Lender with respect to the Revolving Loan Commitments and all
matters relating thereto.

 

68

 

The Administrative Agent
shall notify the Lenders promptly upon receipt of Company’s notice of an
Increased Amount Date and, in respect thereof, the New Revolving Commitments
and the New Revolving Lenders.

 

SECTION 3.         CONDITIONS
PRECEDENT

 

3.1.         Closing Date Loans. 
The obligation of any Lender to make Loans on
the Closing Date is subject to the satisfaction, or waiver in accordance with
Section 10.5, of the following conditions on or before the Closing Date:

 

(a)           Credit Documents.  Administrative Agent shall have received
copies of each Credit Document executed and delivered by each applicable Credit
Party.

 

(b)           Organizational Documents;
Incumbency.  Joint Lead Arrangers
shall have received (i) copies of each Organizational Document executed and
delivered by each Credit Party, as applicable, and, to the extent applicable,
certified as of a recent date by the appropriate governmental official, each
dated the Closing Date or a recent date prior thereto; (ii) signature and
incumbency certificates of the officers of such Person executing the Credit
Documents to which it is a party; (iii) resolutions of the board of directors
or similar governing body of each Credit Party approving and authorizing the
execution, delivery and performance of this Agreement, the other Credit
Documents and any Related Agreements to which it is a party as of the Closing
Date, certified as of the Closing Date by its secretary or an assistant
secretary as being in full force and effect without modification or amendment;
(iv) a good standing certificate from the applicable Governmental Authority of
each Credit Party’s jurisdiction of incorporation, organization or formation
and in each jurisdiction in which it is qualified as a foreign corporation or
other entity to do business, each dated a recent date prior to the Closing
Date; and (v) such other customary documents as Joint Lead Arrangers may
reasonably request.

 

(c)           Organizational and Capital
Structure.  The organizational
structure and capital structure of Holding and its Subsidiaries, after giving
effect to the Acquisition, shall be reasonably satisfactory to Joint Lead
Arrangers.

 

(d)           Capitalization of Company and HM
Group. 
(i)  Simultaneously with the first borrowings hereunder,
Sponsors shall have made a contribution of Sponsor Equity in an amount equal to
not less than $615,000,000 and Company shall have received the proceeds
thereof, and (ii) simultaneously with the first borrowings hereunder, Company
shall have borrowed $500,000,000 under the Bridge Facility which together with
the Sponsor Equity and the proceeds of the Loans made hereunder on the Closing
Date shall be sufficient to consummate the Acquisition and the transactions
contemplated in connection therewith and pay all Transaction Costs.

 

(e)           Consummation of Related Transactions.

 

(i)            All material conditions precedent to
the execution and delivery of each Acquisition Documents and Bridge Facility
Documents shall have been satisfied or the fulfillment of any such conditions
shall have been waived with the consent of Joint Lead Arrangers and each of
such agreements shall have become effective in accordance with its terms;

 

69

 

(ii)           Joint Lead Arrangers shall each have
received a fully executed or conformed copy of each agreement referred to in
sub-clause (i) above.  Each such
agreement shall be in full force and effect, in the case of the Bridge Facility
Document only shall include terms and provisions reasonably satisfactory to
Joint Lead Arrangers and no provision thereof shall have been modified or
waived in any respect determined by either of the Joint Lead Arrangers to be
material and adverse to the Lenders, in each case without the consent of Joint
Lead Arrangers; and

 

(iii)          Since the date of execution thereof,
there shall have been no amendment, restatement, or other modification or
waiver of the terms and conditions of the Share Purchase Agreement which, in
the opinion of the Joint Lead Arrangers, is in any manner adverse to the
Lenders without the prior written consent of the Joint Lead Arrangers.

 

(f)            Existing Indebtedness.  Holding shall have delivered to Joint Lead
Arrangers and Administrative Agent a certificate executed by an Authorized
Officer of Holding as of the Closing Date certifying (i) the balance of
Existing Indebtedness, pension liabilities and retention liabilities of HM and
the HM Group and affirming the total amount of Indebtedness not refinanced as
of the Closing Date (including leasing), with evidence of any such discharge
not to remain outstanding following the consummation of the Acquisition and
(ii) that upon consummation of the Acquisition, the HM Group shall not have (x)
Indebtedness outstanding other than Permitted Indebtedness, (y) any material
off-balance sheet liabilities (other than exceptions agreed to by the Joint
Lead Arrangers) or (z) be subject to any Liens other than Permitted Liens.

 

(g)           Sources and Uses Certificate.  Company shall have delivered to Joint Lead
Arrangers a certificate from an Authorized Officer of Company itemizing the
sources and uses of funds for the Acquisition, the Debt Tenders and the other
transactions contemplated hereby and the fees and expenses associated
therewith, in form and substance reasonably satisfactory to Joint Lead
Arrangers.

 

(h)           Governmental Authorizations and
Consents.  Each Credit Party shall
have obtained all Governmental Authorizations and all consents of other
Persons, in each case that are necessary in connection with the transactions
contemplated by the Credit Documents and the Related Agreements and each of the
foregoing shall be in full force.  All
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on the transactions contemplated by the
Credit Documents or the Related Agreements or the financing thereof and no
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired.

 

(i)            Personal Property Collateral.  In order to create in favor of Collateral
Trustee, for the benefit of Secured Parties (including, prior to the HM Release
Date, the holders of the HM Bonds) a valid, perfected First Priority security
interest in the personal property Collateral, Collateral Trustee shall have
received (subject to the provisions of Section 5.17(b))

 

70

 

(to the extent a Lien can be perfected by a
UCC filing, possession of instruments or filings in the United States Patent
and Trademark Office and United States Copyright Office):

 

(i)            evidence satisfactory to Collateral
Trustee of: (a) the execution and delivery of and compliance by each Credit
Party with its obligations under each Collateral Document to which it is a
party (including, without limitation, its obligations to execute and deliver
UCC financing statements, originals of securities, instruments and chattel
paper including, without limitation, a pledge of stock of first-tier Excluded
Subsidiaries) and (b) the execution and delivery of UCC financing statements
and recordations with the United States Patent and Trademark Office and the United
States Copyright Office;

 

(ii)           A completed Collateral Questionnaire
dated the Closing Date and executed by an Authorized Officer of each Credit
Party, together with all attachments contemplated thereby, including the
results of a recent search, by a Person satisfactory to Collateral Trustee, of
all effective UCC financing statements (or equivalent filings, including
recordations of liens in applicable intellectual property registries) made with
respect to any personal or mixed property of any Credit Party in the
jurisdictions specified in the Collateral Questionnaire, together with copies
of all such filings disclosed by such search; and

 

(iii)          customary opinions of counsel (which
counsel shall be reasonably satisfactory to Collateral Trustee) with respect to
the creation and perfection of the security interests in favor of Collateral
Trustee in such Collateral and such other matters governed by the laws of each
jurisdiction in which any Credit Party is located, in each case in form and
substance reasonably satisfactory to Collateral Trustee.

 

(j)            Financial Statements; Projections.  Lenders shall have received from Holding (i)
the Historical Financial Statements, (ii) pro forma consolidated balance sheets
of Holding and its Subsidiaries as at September 30, 2002, and pro forma
consolidated statement of income reflecting the consummation of the
transactions contemplated by this Agreement, the Related Agreements, and any
other transactions contemplated thereby, which pro forma financial statement
shall be in form and substance satisfactory to Joint Lead Arrangers, and (iii)
the Projections.

 

(k)           Evidence of Insurance.  Joint Lead Arrangers and Administrative
Agent shall have received (i) a certificate from Company’s insurance broker or
other evidence satisfactory to it that all insurance required to be maintained
pursuant to Section 5.5 is in full force and effect and that Collateral
Trustee, for the benefit of Secured Parties has been named as additional
insured and loss payee thereunder to the extent required under Section 5.5, and
(ii) a certified schedule executed by an Authorized Officer of Company
summarizing in reasonable detail all insurance maintained by the HM Group.

 

(l)            Opinions of Counsel to Credit
Parties.  Lenders and their
respective counsel shall have received originally executed copies of the
favorable written opinions of Simpson Thacher & Bartlett, counsel for
Credit Parties, and as to such other matters as Joint

 

71

 

Lead Arrangers may reasonably request, dated
as of the Closing Date and otherwise in form and substance reasonably
satisfactory to Joint Lead Arrangers.

 

(m)          Opinions of Counsel to Joint Lead
Arrangers.  Lenders shall have
received originally executed copies of one or more favorable written opinions
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Joint Lead
Arrangers, dated as of the Closing Date, in form and substance reasonably
satisfactory to Joint Lead Arrangers.

 

(n)           Fees.  Company shall have paid (or
contemporaneously with the first borrowing hereunder will pay) to Agents the
fees payable on the Closing Date referred to in Section 2.11(d).

 

(o)           Solvency Certificate and Opinion.  On the Closing Date, Joint Lead Arrangers
shall have received (i) a Solvency Certificate from the Chief Financial Officer
of HM and (ii) an opinion from an independent valuation consultant reasonably
satisfactory to Joint Lead Arrangers, each dated the Closing Date and addressed
to Administrative Agent, Joint Lead Arrangers and Lenders, and in form, scope
and substance reasonably satisfactory to Joint Lead Arrangers, with appropriate
attachments and demonstrating that after giving effect to the Acquisition and
the consummation of all transactions contemplated thereby, Company and its
Subsidiaries are and will be solvent.

 

(p)           Closing Date Certificate.  Holding and Company shall have delivered to
Joint Lead Arrangers an originally executed Closing Date Certificate, together
with all attachments thereto.

 

(q)           Litigation Schedule.  Holding and Company shall have delivered to
the Joint Lead Arrangers a schedule certified by an Authorized Officer setting
out in reasonable detail any action, suit, investigation, litigation or
proceeding or other legal or regulatory developments, pending or threatened in
any court or before any arbitrator or Governmental Authority that singly or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(r)            Funding Notice.  Administrative Agent shall have received a
fully executed Funding Notice in accordance with the requirements of Sections
2.1 (b) and 2.2(b), as applicable.

 

(s)           Major Default.  No Major Default shall have occurred and be
continuing.

 

(t)            BNP Preferred Securities.  The BNP Preferred Securities shall have been
redeemed by Seller.

 

Each Lender, by
delivering its signature page to this Agreement and funding a Loan on the
Closing Date, shall be deemed to have acknowledged receipt of, and consented to
and approved, each Credit Document and each other document required to be
approved by any Agent, Requisite Lenders or Lenders, as applicable on the
Closing Date.

 

72

 

3.2.         Delayed Draw Term Loans.  The obligation of
each Lender to make any Delayed Draw Term Loans, on any Credit Date, is subject
to the satisfaction, or waiver in accordance with Section 10.5, of the
following conditions precedent:

 

(a)           Term Loan B shall have been made on
the Closing Date;

 

(b)           Administrative Agent shall have
received a fully executed and delivered Funding Notice;

 

(c)           After making any Delayed Draw Term
Loans requested on such Credit Date, (i) the aggregate principal amount of
Delayed Draw Term Loans then outstanding shall not exceed $225,000,000, and
(ii) the aggregate principal amount of all Term Loan B then outstanding shall
not exceed the Term Loan B Commitments then in effect;

 

(d)           As of such Credit Date, no Major
Default shall have occurred and be continuing; and

 

(e)           As of such Credit Date, Company shall
have provided Joint Lead Arrangers such information, as either may reasonably
request, confirming the use of proceeds of any Loan in accordance with Section
2.6.

 

3.3.         Revolving Loans, Swing Line Loans, and
Letters of Credit.  The obligation of each Lender to make any Revolving Loan, the
Swing Line Lender to make any Swing Line Loan or a Fronting Bank to issue any
Letter of Credit, on any Credit Date, other than the Closing Date is subject to
the satisfaction, or waiver in accordance with Section 10.5, of the following
conditions precedent:

 

(a)           Term Loan B shall have been made on
the Closing Date;

 

(b)           Administrative Agent shall have
received a fully executed and delivered Funding Notice or Issuance Notice, as
the case may be;

 

(c)           After making the Credit Extensions
requested on such Credit Date, the Total Utilization of Revolving Commitments
shall not exceed the Revolving Commitments then in effect;

 

(d)           As of such Credit Date, the
representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects on and as of that
Credit Date to the same extent as though made on and as of that date, except to
the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects on and as of such earlier date;

 

(e)           As of such Credit Date, no Default or
Event of Default shall have occurred and be continuing or would result from the
consummation of the applicable Credit Extension; and

 

73

 

(f)            On or before the date of issuance of
any Letter of Credit, Administrative Agent shall have received all other
information required by the applicable Issuance Notice, and such other
documents or information as the applicable Fronting Bank may reasonably require
in connection with the issuance of such Letter of Credit.

 

3.4.         Notices.  Any Notice shall be
executed by an Authorized Officer in a writing delivered to Administrative
Agent.  In lieu of delivering a Notice,
Company may give Administrative Agent telephonic notice by the required time of
any proposed borrowing, conversion/continuation or issuance of a Letter of
Credit, as the case may be; provided each such notice shall be promptly
confirmed in writing by delivery of the applicable Notice to Administrative
Agent on or before the applicable date of borrowing, continuation/conversion or
issuance.  Neither Administrative Agent
nor any Lender shall incur any liability to Company in acting upon any
telephonic notice referred to above that Administrative Agent believes in good
faith to have been given by a duly authorized officer or other person
authorized on behalf of Company or for otherwise acting in good faith.

 

SECTION 4.         REPRESENTATIONS AND WARRANTIES

 

In order to induce Lenders and the Fronting Banks to
enter into this Agreement and to make each Credit Extension to be made thereby,
each Credit Party represents and warrants to each Lender and the Fronting
Banks, on the Closing Date and on each Credit Date, that the following
statements are true and correct (it being understood and agreed that the
representations and warranties made on the Closing Date are deemed to be made
concurrently with the execution and delivery of the Related Agreements and
consummation of the transactions contemplated thereby):

 

4.1.         Organization; Requisite Power and
Authority; Qualification.  Each
of Holding and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, (b) has all
requisite power and authority to own and operate its properties, to carry on
its business as now conducted and as proposed to be conducted, to enter into
the Credit Documents to which it is a party and to carry out the transactions
contemplated thereby, and (c) is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations in each case in clauses (a)-(c), except
where the failure to do so has not had, and could not be reasonably expected to
have, a Material Adverse Effect.

 

4.2.         Capital Stock and Ownership.  The Capital Stock of each of Holding and its
Subsidiaries has been duly authorized and validly issued and is fully paid and
non-assessable.  Except as set forth on
Schedule 4.2, as of the date hereof, there is no existing option, warrant,
call, right, commitment or other agreement to which Holding or any of its
Subsidiaries is a party requiring, and there is no membership interest or other
Capital Stock of Holding or any of its Subsidiaries outstanding which upon
conversion or exchange would require, the issuance by Holding or any of its
Subsidiaries of any additional membership interests or other Capital Stock of
Holding or any of its Subsidiaries or other Securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase, a
membership interest or other Capital Stock of Holding or any of its
Subsidiaries.  Schedule 4.2 correctly
sets forth the ownership interest of

 

74

 

Holding and each of its Subsidiaries in their
respective Subsidiaries as of the Closing Date both before and after giving
effect to the Acquisition.

 

4.3.         Due Authorization. 
The execution, delivery and performance of the
Credit Documents have been duly authorized by all necessary action on the part
of each Credit Party that is a party thereto.

 

4.4.         No
Conflict.  The
execution, delivery and performance by Credit Parties of the Credit Documents
to which they are parties and the consummation of the transactions contemplated
by the Credit Documents do not and will not (a) violate any provision of any
law or any governmental rule or regulation applicable to Holding or any of its
Subsidiaries, any of the Organizational Documents of Holding or any of its
Subsidiaries, or any order, judgment or decree of any court or other agency of
government binding on Holding or any of its Subsidiaries except to the extent
such violation could not be reasonably expected to have a Material Adverse
Effect; (b) conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any Contractual Obligation of Holding
or any of its Subsidiaries except to the extent such conflict, breach or
default could not reasonably be expected to have a Material Adverse Effect; (c)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of Holding or any of its Subsidiaries (other than any
Liens created under any of the Credit Documents in favor of Collateral Agent,
on behalf of Secured Parties and, prior to the HM Release Date, the holders of
the outstanding HM Bonds or Permitted Liens); or (d) require any approval of
stockholders, members or partners or any approval or consent of any Person
under any Contractual Obligation of Holding or any of its Subsidiaries, except
for such approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lenders and except for any such approvals or
consents the failure of which to obtain will not have a Material Adverse
Effect.

 

4.5.         Governmental Consents.  The execution, delivery and performance by
Credit Parties of the Credit Documents to which they are parties and the
consummation of the transactions contemplated by the Credit Documents do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any Governmental Authority except as
otherwise set forth in any Related Agreement, and except for (a) filings and
recordings with respect to the Collateral to be made, (b) otherwise delivered
to Collateral Trustee for filing and/or recordation, (c) such as have been made
or obtained are in full force and effect, or (d) such actions, consents, and
approvals the failure to obtain or make which could not reasonably be expected
to result in a Material Adverse Effect.

 

4.6.         Binding Obligation. 
Each Credit Document has been duly executed and
delivered by each Credit Party that is a party thereto and is the legally valid
and binding obligation of such Credit Party, enforceable against such Credit
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles relating to
enforceability and an implied covenant of good faith and fair dealing.

 

4.7.         Historical Financial Statements.  The Historical
Financial Statements were prepared in conformity with GAAP and fairly present,
in all material respects, the financial position, on a consolidated basis, of
the Persons described in such financial statements as at the

 

75

 

respective dates thereof and the results of operations and cash flows,
on a consolidated basis, of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.  As of the Closing Date, neither Holding nor
any of its Subsidiaries has any contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment that is not
reflected in the Historical Financial Statements or the notes thereto and which
could reasonably be expected to have a Material Adverse Effect.

 

4.8.         Projections.  On and as of the
Closing Date, the Projections of Holding and its Subsidiaries for Fiscal Year
2002 through and including Fiscal Year 2010 (the “Projections”)
are based on good faith estimates and assumptions made by the management of
Holding; provided, the Projections are not to be viewed as facts and
that actual results during the period or periods covered by the Projections may
differ from such Projections and that the differences may be material.

 

4.9.         No Material Adverse Change.  Since December 31,
2001, no event, circumstance or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.

 

4.10.       No Restricted Junior Payments.  Since the Closing
Date, neither Holding nor any of its Subsidiaries has declared, ordered, paid
or made, or set apart any sum or property for, any Restricted Junior Payment or
agreed to do so except as permitted pursuant to 6.4.

 

4.11.       Adverse Proceedings, etc.  There are no
Adverse Proceedings, individually or in the aggregate, that could reasonably be
expected to have a Material Adverse Effect. 
Neither Holding nor any of its Subsidiaries (a) is in violation of any
applicable laws (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, or
(b) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

4.12.       Payment of Taxes. 
Except as otherwise permitted under Section 5.3, all material tax
returns and reports of Holding and its Subsidiaries required to be filed by any
of them have been timely filed, and all material taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon Holding and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises which are due and payable have been
paid when due and payable.  Holding
knows of no proposed tax assessment against Holding or any of its Subsidiaries
which is not being actively contested by Holding or such Subsidiary in good
faith and by appropriate proceedings and which would reasonably be expected to have
a Material Adverse Effect; provided, such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have
been made or provided therefor.

 

76

 

4.13.       Properties.

 

(a)           Title.  Each of Holding and its Subsidiaries has (i)
good, valid and marketable title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of leasehold
interests in real or personal property), (iii) valid easements or other limited
property interests (in the case of certain interests in real property) and (iv)
good title to (in the case of all other personal property), all of their
respective properties and assets reflected in their respective Historical Financial
Statements referred to in Section 4.7 and in the most recent financial
statements delivered pursuant to Section 5.1, except for (i) assets disposed of
since the date of such financial statements in the ordinary course of business
or as otherwise permitted under Section 6.8, (ii) except for minor defects in
title that do not interfere with the ability of each of Holding and its
Subsidiaries to conduct its business as currently conducted or to utilize such
properties and assets for their intended purposes and (iii) where the failure
to have such title in the aggregate could not reasonably be expected to have a
Material Adverse Effect.  Except as
permitted by this Agreement, all such properties and assets are free and clear
of Liens.

 

(b)           Real Estate.  As of the Closing Date, Schedule 4.13(b)
contains a true, accurate and complete list of (i) all Real Estate Assets, and
(ii) all leases, subleases or assignments of leases (together with all
amendments, modifications, supplements, renewals or extensions of any thereof)
affecting each Real Estate Asset of any Credit Party, regardless of whether
such Credit Party is the landlord or tenant (whether directly or as an assignee
or successor in interest) under such lease, sublease or assignment.  Each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and Holding does not
have knowledge of any default that has occurred and is continuing thereunder.

 

(c)           As of the Closing Date, neither of
Holding nor any of its Subsidiaries has received any notice of, or has any
knowledge of, any pending or contemplated condemnation proceeding affecting any
of the Real Estate Assets or any sale or disposition thereof in lieu of
condemnation that remains unresolved as of the Closing Date.

 

(d)           Neither Holding nor any of its
Subsidiaries is obligated on the Closing Date under any right of first refusal,
option or other contractual right to sell, assign or otherwise dispose of any
Material Real Estate or any interest therein, except as set forth on Schedule
4.13(d).

 

(e)           Intellectual Property.  Except as set forth on Schedule 4.13(e),
each of Holding and its Subsidiaries owns, possesses or otherwise has the right
to use, or could obtain such ownership, possession or right to use, on terms not
materially adverse to it, all patents, trademarks, service marks, trade names,
copyrights, licenses and rights with respect thereto material to the present
conduct of its business, without any known conflict with the rights of others,
and free from any burdensome restrictions, except where such conflicts and
restrictions could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

77

 

4.14.       Environmental Matters.  Except as set forth in Schedule 4.14:

 

(a)           There has not been a Release or
threatened Release of Hazardous Materials at, on, under or around the
Properties in amounts or concentrations which (i) constitute or constituted a
violation of Environmental Laws, except as could not reasonably be expected to
have a Material Adverse Effect, or (ii) would reasonably be expected to give
rise to an Environmental Claim that, in any such case or in the aggregate, is
reasonably likely to result in a Material Adverse Effect;

 

(b)           The Properties and all operations of
Holding, Company and their Subsidiaries are in compliance, and in all prior
periods have been in compliance, with all Environmental Laws, and all necessary
Environmental Permits have been obtained and are in effect, except to the
extent that such non-compliance or failure to obtain any necessary permits, in
the aggregate, are not reasonably likely to result in a Material Adverse
Effect;

 

(c)           None of Holding, Company or any of
their Subsidiaries has received any Environmental Claim in connection with the
Properties or the operations of Holding, Company or its Subsidiaries or with
regard to any person whose liabilities for environmental matters Holding,
Company or any of their Subsidiaries has retained or assumed, in whole or in
part, contractually, by operation of law or otherwise, which, in either such
case or in the aggregate, is reasonably likely to result in a Material Adverse
Effect;

 

(d)           Hazardous Materials have not been
transported from the Properties, nor have Hazardous Materials been generated,
treated, stored or disposed of at, on, under or around any of the Properties in
a manner that could reasonably give rise to liability under any Environmental
Law, nor have any of Holding, Company or any of their Subsidiaries retained or
assumed any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, which, in each case, individually or in the aggregate, is reasonably
likely to result in a Material Adverse Effect; and

 

(e)           No Lien in favor of any Governmental
Authority for (i) any liability under any Environmental Law or (ii) damages
arising from or costs incurred by such Governmental Authority in response to a
Release or threatened Release of Hazardous Materials into the environment has
been recorded with respect to the Properties.

 

4.15.       No
Defaults.  Neither
Holding nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any of its Contractual Obligations, and no condition exists which,
with the giving of notice or the lapse of time or both, could constitute such a
default, except where the consequences, direct or indirect, of such default or
defaults, if any, could not reasonably be expected to have a Material Adverse
Effect.

 

4.16.       [Reserved]

 

4.17.       Governmental Regulation.  Neither Holding nor any of its Subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or

 

78

 

any portion of the Obligations
unenforceable.  Neither Holding nor any
of its Subsidiaries is a “registered investment company” or a company
“controlled” by a “registered investment company” or a “principal underwriter”
of a “registered investment company” as such terms are defined in the
Investment Company Act of 1940.

 

4.18.       Margin
Stock.  Neither
Holding nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. 
No part of the proceeds of the Loans made to such Credit Party will be
used to purchase or carry any such margin stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock or for any
purpose that violates, or is inconsistent with, the provisions of Regulation T,
Regulation U or Regulation X.

 

4.19.       Employee Matters. 
Neither Holding nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have
a Material Adverse Effect.  There is (a)
no unfair labor practice complaint pending against Holding or any of its
Subsidiaries, or to the best knowledge of Holding and Company, threatened
against any of them before the National Labor Relations Board and no grievance
or arbitration proceeding arising out of or under any collective bargaining
agreement that is so pending against Holding or any of its Subsidiaries or to
the best knowledge of Holding and Company, threatened against any of them, (b)
no strike or work stoppage in existence or threatened involving Holding or any
of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect, and (c) to the best knowledge of Holding and Company, no union
representation question existing with respect to the employees of Holding or
any of its Subsidiaries and, to the best knowledge of Holding and Company, no
union organization activity that is taking place, except (with respect to any
matter specified in clause (a), (b) or (c) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse Effect.

 

4.20.       Employee Benefit Plans.  Holding, each of its Subsidiaries and each
of their respective ERISA Affiliates are in compliance with all applicable
provisions and requirements of ERISA and the Internal Revenue Code and the
regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan except for such noncompliance which, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  Each Employee Benefit Plan
which is intended to qualify under Section 401 (a) of the Internal Revenue Code
has received a favorable determination letter from the Internal Revenue Service
indicating that such Employee Benefit Plan is so qualified and, to the
knowledge of Holding, and nothing has occurred subsequent to the issuance of
such determination letter which would reasonably be expected to cause such
Employee Benefit Plan to lose its qualified status.  No liability to the PBGC (other than required premium payments),
the Internal Revenue Service, any Employee Benefit Plan or any trust
established under Title IV of ERISA (other than routine claims for benefits)
has been or is expected to be incurred by Holding, any of its Subsidiaries or,
to the knowledge of Holding, any of their ERISA Affiliates and no ERISA Event
has occurred or is reasonably expected to occur other than any such liability
or events that in each case could reasonably be expected to result in a
Material Adverse Effect.  Except to the
extent required under Section 4980B of the Internal Revenue Code or similar
state or local laws, or as individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of

 

79

 

insurance or otherwise) for any retired or
former employee of Holding, any of its Subsidiaries or any of their respective
ERISA Affiliates.  The present value of
the aggregate benefit liabilities under each Pension Plan sponsored, maintained
or contributed to by Holding, any of its Subsidiaries or any of their ERISA
Affiliates, (determined as of the end of the most recent plan year on the basis
of the actuarial assumptions specified for funding purposes in the most recent
actuarial valuation for such Pension Plan), did not exceed the aggregate
current value of the assets of such Pension Plan by an amount which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  As of the most
recent valuation date for each Multiemployer Plan for which the actuarial
report is available, the potential liability of Holding, its Subsidiaries and
their respective ERISA Affiliates for a complete withdrawal from such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated
with such potential liability for a complete withdrawal from all Multiemployer
Plans, based on information available pursuant to Section 4221(e) of ERISA does
not exceed an amount which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.  Holding, each of its Subsidiaries and, to the knowledge of
Holding, each of their ERISA Affiliates have complied with the requirements of
Section 515 of ERISA with respect to each Multiemployer Plan and are not in
“default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan, except as, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.  To the extent that any breach of any of the
representations or warranties in this Section 4.20 relates to a period, event
or action prior to the consummation of the Acquisition in respect of which
Holding, its Subsidiaries and any of its ERISA Affiliates are indemnified to
the extent of the breach pursuant to the Share Purchase Agreement, there shall
be deemed to be no breach thereof.

 

4.21.       Certain
Fees.  No
broker’s or finder’s fee or commission will be payable with respect hereto or
any of the transactions contemplated hereby.

 

4.22.       Solvency.  As of the Closing Date, each Credit Party is
Solvent.

 

4.23.       Subordination, Designation of the
Credit Documents as “Designated Senior Indebtedness”; Etc.  (a)  (i) The subordination
provisions contained in documents governing the Subordinated Indebtedness are
enforceable against Holding, Company and any of its Subsidiaries party thereto
and the holders of such Indebtedness, and (ii) all Obligations of the Credit
Parties (to the extent they are obligors with respect to Subordinated
Indebtedness) hereunder and in the other Credit Documents are within the
definitions of “Designated Senior Indebtedness” and “Senior Indebtedness”
included in the respective subordination provisions.  In addition, Company hereby designates the Obligations under this
Agreement as “Designated Senior indebtedness” for the purposes of the
definition of “Designated Senior Indebtedness” contained in the documents
governing the Subordinated Indebtedness.

 

(b)           All incurrences of Loans and
issuances of Letters of Credit as permitted under this Agreement are, and when
incurred or issued will be, permitted under (and shall give rise to no breach
or violation of either of) the HM Bonds, the Bridge Facility Documents and any
Permitted Refinancing Indebtedness of the Bridge Facility.

 

4.24.       Disclosure.  The written information, reports, financial
statements, exhibits and schedules furnished by or on behalf of Holding and/or
its Subsidiaries to any Agent or Lender for

 

80

 

use in connection with the transactions
contemplated hereby, but excluding the Projections referred to in Section 4.8
and any other projections and pro forma financial information, when taken as a
whole, did not contain, and as they may be amended, supplemented or modified
from time to time, will not contain, as of the Closing Date any material
misstatement of fact and did not omit, and as they may be amended, supplemented
or modified from time to time, will not omit, to state as of the Closing Date
any untrue statement of a material fact or omits to state a material fact
(known to Holding or Company, in the case of any document not furnished by
either of them) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made.  Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Holding or Company to be reasonable at the
time made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results.

 

SECTION 5.         AFFIRMATIVE
COVENANTS

 

Each Credit Party covenants and agrees that so long as
any Commitment is in effect and until payment in full of all Obligations and
cancellation or expiration of all Letters of Credit each Credit Party shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 5.

 

5.1.         Financial Statements and Other Reports.  Company will deliver to Administrative Agent
and Lenders (commencing with the month ending January 31, 2003):

 

(a)           Monthly Reports.  As soon as available, and in any event
within thirty (30) days after the end of each month ending prior to the Bridge
Refinancing Date, (x) the consolidated balance sheet of Holding and its
Subsidiaries as at the end of such month and the related consolidated
statements of income, stockholders’ equity, cash flows of Holding and its
Subsidiaries for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of the
previous Fiscal Year, the corresponding figures from the Financial Plan for the
current Fiscal Year and, in the case of the balance sheet only, the
corresponding figures for the last month of the immediately preceding Fiscal
Year and (y) on a division by division basis (for the major divisions with
respect to which information is provided in periodic reports filed by Company
with the SEC, or if no such reports are filed, with respect to the “K-12”,
“College” and “Other” divisions), a summary of the portion of revenues,
Consolidated Capital Expenditures and Consolidated EBITDA attributable to each
such division for such month, all in reasonable detail;

 

(b)           Quarterly Financial Statements.  As soon as available, and in any event
within forty-five (45) days after the end of the first three Fiscal Quarters of
each Fiscal Year, (x) the consolidated balance sheet of Holding and its
Subsidiaries as at the end of such Fiscal Quarter and the related consolidated
statements of income, stockholders’ equity, cash flows and income of Holding
and its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous 

 

81

 

Fiscal Year, the corresponding figures from
the Financial Plan for the current Fiscal Year and, in the case of the balance
sheet only, the corresponding figures for the last Fiscal Quarter of the
immediately preceding Fiscal Year, and (y) on a division by division basis (for
the major divisions with respect to which information is provided in periodic
reports filed by Company with the SEC, or if no such reports are filed, with
respect to the “K-12”, “College” and “Other” divisions), a summary of the
portion of revenues, Consolidated Capital Expenditures and Consolidated EBITDA
attributable to each such division for such Fiscal Quarter all in reasonable
detail, together with a Financial Officer Certification and a Narrative Report
with respect thereto;

 

(c)           Annual Financial Statements.  As soon as available, and in any event
within 120 days after the Closing Date in the case of the Fiscal Year 2002 and
ninety (90) days after the end of each Fiscal Year beginning with the Fiscal
Year 2003, (x) the consolidated balance sheet of Holding and its Subsidiaries
as at the end of such Fiscal Year and the related consolidated statements of
income, stockholders’ equity, and cash flows of Holding and its Subsidiaries
for such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year, the corresponding figures
from the Financial Plan for the Fiscal Year covered by such financial
statements and, in the case of the balance sheet only, the corresponding
figures for the last Fiscal Quarter of the immediately preceding Fiscal Year,
in reasonable detail, together with a Financial Officer Certification and a
Narrative Report with respect thereto; (y) with respect to such consolidated
financial statements a report thereon of Ernst & Young, Pricewaterhouse
Coopers or such other independent certified public accountants of recognized
national standing selected by Holding and reasonably satisfactory to Joint Lead
Arrangers (which report shall be unqualified as to going concern and scope of
audit, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of Holding
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards), together with a
written statement by such independent certified public accountants stating (1)
that while their audit examination was not directed primarily toward obtaining
knowledge of non-compliance, it did include a review of the financial covenants
contained in Section 6.7 of this Agreement, and (2) whether, in connection
therewith, any condition or event that constitutes a Default or an Event of
Default insofar as such condition or event relates to accounting matters in
respect of Section 6.7 has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof and (z) on a division by division basis (for the major
divisions with respect to which information is provided in periodic reports
filed by Company with the SEC, or if no such reports are filed, with respect to
the “K-12”, “College” and “Other” divisions), a summary of the portion of
revenues, Consolidated Capital Expenditures and Consolidated EBITDA
attributable to each such division for such Fiscal Year in reasonable detail
together with a Financial Officer Certification with respect thereto.

 

(d)           Compliance Certificate.  Together with each delivery of financial
statements of Holding and its Subsidiaries pursuant to Sections 5.1(b) (other
than the last Fiscal Quarter of any Fiscal Year) and 5.1(c), a duly executed
and completed Compliance Certificate;

 

82

 

(e)           Statements of Reconciliation after
Change in Accounting Principles. 
If, as a result of any change in accounting principles and policies from
those used in the preparation of the Historical Financial Statements, the
consolidated financial statements of Holding and its Subsidiaries delivered
pursuant to Section 5.1 (b) or 5.1 (c) will differ in any material respect from
the consolidated financial statements that would have been delivered pursuant
to such subdivisions had no such change in accounting principles and policies
been made, then, together with the first delivery of such financial statements
after such change, one or more statements of reconciliation by a financial
officer of Holding or Company for all such prior financial statements in form
and substance satisfactory to Administrative Agent;

 

(f)            Notice of Default.  Promptly upon any officer of Holding or
Company obtaining knowledge (i) of any condition or event that constitutes a
Default or an Event of Default; or (ii) of the occurrence of any event or
change that has caused or evidences, in any case or in the aggregate, a
Material Adverse Effect, a certificate of one of its Authorized Officers
specifying the nature and period of existence of such condition, event or
change or specifying the notice given and action taken by any such Person and
the nature of such claimed Event of Default, Default, default, event or
condition, and what action Company has taken, is taking and proposes to take
with respect thereto;

 

(g)           Notice of Litigation.  Promptly upon any officer of Holding or
Company obtaining knowledge of (i) the institution of, or written threat of,
any Adverse Proceeding not previously disclosed in writing by Company to
Lenders, or (ii) any material development in any Adverse Proceeding that, in
the case of either (i) or (ii) if adversely determined, could be reasonably
expected to have a Material Adverse Effect, or seeks to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated hereby, written notice thereof
together with such other information as may be reasonably requested by a Lender
to enable it to evaluate such matters;

 

(h)           ERISA.  (i)  Promptly upon becoming aware
of the occurrence of or forthcoming occurrence of any ERISA Event which may
result in a material liability, a written notice specifying the nature thereof,
what action Holding, any of its Subsidiaries or any of their respective ERISA
Affiliates has taken, is taking or proposes to take with respect thereto and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto; and (ii) upon the
reasonable request of the Lenders, copies of (1) each Schedule B (Actuarial
Information) to the most recent annual report (Form 5500 Series) filed by
Holding, any of its Subsidiaries or any of their respective ERISA Affiliates with
the Internal Revenue Service with respect to each Pension Plan; (2) all notices
received by Holding, any of its Subsidiaries or any of their respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning such ERISA Event; and
(3) copies of such other documents or governmental reports or filings relating
to any Employee Benefit Plan as Administrative Agent shall reasonably request;

 

(i)            Financial Plan.  As soon as practicable and in any event no
later than thirty (30) days prior to the beginning of each Fiscal Year, a
consolidated plan and financial forecast for such Fiscal Year (a “Financial Plan”), including (i) a forecasted consolidated
balance sheet and forecasted consolidated statements of income and cash flows
of Holding and its Subsidiaries for such Fiscal Year, together with an
explanation of the assumptions on which such forecasts

 

83

 

are based, and (ii) forecasted consolidated
statements of income and cash flows of Holding and its Subsidiaries for each
month of such Fiscal Year;

 

(j)            Environmental Reports and Audits.  As soon as practicable following receipt
thereof, copies of all material and non-privileged environmental audits and
reports, if any, with respect to environmental matters at any Property or which
relate to any environmental liabilities of Holding or its Subsidiaries which,
in any such case, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect;

 

(k)           Information Regarding Collateral.  (a) Each Credit Party will furnish to the
Collateral Trustee prompt written notice of any change (i) in its name, (ii) in
its jurisdiction of organization or (iii) in its Federal Taxpayer
Identification Number.  Each Credit
Party agrees not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the UCC or otherwise that are
required in order for the Collateral Trustee to continue at all times following
such change to have a valid, legal and perfected security interest in all the
Collateral and for the Collateral at all times following such change to have a
valid, legal and perfected security interest as contemplated in the Collateral
Documents.  Company also agrees promptly
to notify the Collateral Trustee if any material portion of the Collateral is
damaged or destroyed; and

 

(l)            Other Information.  (a) Promptly upon their becoming available,
copies of (i) all financial statements, reports, notices and proxy statements
sent or made available generally by Holding to its public security holders
acting in such capacity or by any Subsidiary of Holding to its security holders
other than Holding or another Subsidiary of Holding, (ii) all regular and
periodic reports and all registration statements and prospectuses, if any,
filed by Holding or any of its Subsidiaries with any securities exchange or
with the Securities and Exchange Commission or any governmental or private
regulatory authority, (iii) all press releases and other statements made
available generally by Holding or any of its Subsidiaries to the public
concerning material developments in the business of Holding or any of its
Subsidiaries, and (b) such other information and data with respect to Holding
or any of its Subsidiaries as from time to time may be reasonably requested by
Administrative Agent or any Lender (acting through the Administrative Agent).

 

5.2.         Existence.  Except as otherwise
permitted under Section 6.8 and except for the liquidation or dissolution of
Subsidiaries of Holding (other than Company) if the assets of such entities to
the extent they exceed estimated liabilities are acquired by Holding or a
Wholly-Owned Subsidiary of Holding in such liquidation or dissolution, provided
that subsidiaries of Holding that are Guarantors may not be liquidated into
Subsidiaries of Holding that are not Guarantors and Domestic Subsidiaries of
Holding may not be liquidated into Foreign Subsidiaries of Holding, each Credit
Party will, and will cause each of its Subsidiaries to, at all times preserve and
keep in full force and effect (a) its existence; provided, no Credit
Party or any of its Subsidiaries shall be required to preserve any such
existence, if such Person’s board of directors (or similar governing body)
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to Lenders and (b)
all rights and franchises, licenses and permits material to its business except
to the extent that failure to do so could not reasonable be expected to have a
Material Adverse Effect.

 

84

 

5.3.         Payment of Taxes and Claims.  Each Credit Party
will, and will cause each of its Subsidiaries to, pay all material Taxes
imposed upon it or any of its properties or assets or in respect of any of its
income, businesses or franchises before any penalty or fine accrues thereon,
and all claims (including claims for labor, services, materials and supplies)
for sums that have become due and payable and that by law have or may become a
Lien upon any of its properties or assets, prior to the time when any penalty
or fine shall be incurred with respect thereto; provided, no such Tax or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as adequate
reserve or other appropriate provision, as shall be required in conformity with
GAAP shall have been made therefor.  No
Credit Party will, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income Tax return with any Person
(other than Holding or any of its Subsidiaries).

 

5.4.         Maintenance of Properties.  Each Credit Party
will, and will cause each of its Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business of Holding and
its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof; in each case in this
paragraph except where the failure to do so, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.

 

5.5.         Insurance.  Holding will
maintain or cause to be maintained, with financially sound and reputable
insurers, such public liability insurance, third party property damage
insurance, business interruption insurance and casualty insurance with respect
to liabilities, losses or damage in respect of the assets, properties and
businesses of Holding and its Subsidiaries as may customarily be carried or
maintained under similar circumstances by Persons of established reputation
engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for such Persons.  Without limiting the generality of the foregoing,
Holding will maintain or cause to be maintained (a) flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in
compliance with any applicable regulations of the Board of Governors of the
Federal Reserve System, and (b) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all
times carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses.  Each such policy of insurance shall (i) name Collateral Trustee,
on behalf of Secured Parties as an additional insured thereunder as its
interests may appear and (ii) in the case of each casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and
substance to Administrative Agent, that names Collateral Trustee, on behalf of
Lenders as the loss payee thereunder with respect to assets included as
Collateral and provides for at least thirty (30) days’ prior written notice to
Collateral Trustee of any modification or cancellation of such policy.

 

5.6.         Inspections.  Each Credit Party
will, and will cause each of its Subsidiaries to, permit any authorized
representatives designated by any Lender to inspect any of the properties of
any Credit Party and any of its respective Subsidiaries, to inspect, copy and
take extracts from

 

85

 

its and their financial and accounting
records, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants (subject to (x)
reasonable requirements of confidentiality, including requirements imposed by
law or by contract, (y) the right of Company to have officers participate in
any such discussions with such independent public accountants and (z) so long
as no Event of Default shall have occurred and be continuing, any such
inspections by Lenders being coordinated by Administrative Agent and limited to
one time during any twelve consecutive month period) all upon reasonable prior
notice and at such reasonable times during normal business hours and as often
as may reasonably be requested.

 

5.7.         [Reserved]

 

5.8.         Use
of Proceeds.  Company shall use the proceeds of
the Loans and request the issuance of Letters of Credit only for the purposes
set forth in Section 2.6 of this Agreement.

 

5.9.         Compliance with Laws.  Each Credit Party will comply, and shall
cause each of its Subsidiaries and make all commercially reasonable efforts to
cause all other Persons, if any, on or occupying any Properties to, comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including all Environmental Laws), noncompliance with
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

5.10.       Subsidiaries.

 

(a)           HM Release Date Actions.  In the event that any Person, (i) is a
Wholly–Owned Domestic Subsidiary of Company on the HM Release Date, or
(ii) becomes a Wholly–Owned Domestic Subsidiary of Company at any time
after the HM Release Date, Company shall (a) promptly cause such Domestic
Subsidiary to become a Guarantor hereunder and a Grantor under the Pledge and
Security and Collateral Trust Agreement by executing and delivering to
Administrative Agent and Collateral Trustee a Counterpart Agreement, and (b)
take all such actions and execute and deliver, or cause to be executed and
delivered, all such documents, instruments, agreements, and certificates as are
similar to those described in Sections 3.1(b), 3.1(i), 3.1(k) and 3.1(l).  In the event that any Person (i) is a
Foreign Subsidiary of Company on the HM Release Date or (ii) becomes a Foreign
Subsidiary of Company at any time after the HM Release Date, and the ownership
interests of such Foreign Subsidiary are owned by Company or by any
Wholly-Owned Domestic Subsidiary thereof, Company shall, or shall cause such
Domestic Subsidiary to, deliver, all such documents, instruments, agreements,
and certificates as are similar to those described in Sections 3.1(b), and
Company shall take, or shall cause such Wholly-Owned Domestic Subsidiary to
take, all of the actions referred to in Section 3.1(i) necessary to grant and
to perfect a First Priority Lien in favor of Collateral Trustee, for the
benefit of Secured Parties, under the Pledge and Security and Collateral Trust
Agreement in 65% of such ownership interests. 
With respect to each such Person that becomes a Subsidiary, Company
shall promptly send to Administrative Agent written notice setting forth with
respect to such Person (i) the date on which such Person became a Subsidiary of
Company, and (ii) all of the data required to be set forth in Schedule 4.2 with
respect to all Subsidiaries of Company; provided, such written notice
shall be deemed to supplement Schedule 4.2 for all purposes hereof.  Notwithstanding the foregoing, no Credit
Party other than Holding and Company shall have any obligation to comply with
this Section 5.10 prior to the date falling 30 days after the

 

86

 

HM Release Date and notwithstanding anything
to the contrary contained above, Holding and its Subsidiaries will not be
required to (i) cause any Subsidiary acquired after the Closing Date to pledge
any property pursuant to this Section or to execute any Credit Document
pursuant to this Section 5.10 if, and to the extent that, and for so long as,
doing so would violate a contractual obligation applicable to the respective
Subsidiary which existed at the time of the acquisition thereof and which was
not created (or modified) in anticipation of the acquisition of such Subsidiary
or (ii) take any actions pursuant to this Section 5.10 with respect to assets
acquired after the Closing Date, to the extent that, and for so long as, taking
such actions would violate a contractual obligation applicable to the assets so
acquired which existed at the time of the acquisition thereof and which was not
created (or modified) in anticipation of the acquisition of such assets.

 

(b)           Maximum Attributable EBITDA.  Prior to the HM Release Date, Holding and
Company shall not permit, for any four Fiscal Quarter Period, the portion of
Consolidated EBITDA attributable to Subsidiaries of Company (including Excluded
Subsidiaries) to exceed 15% of total Consolidated EBITDA for such period.

 

5.11.       [Reserved]

 

5.12.       Material Real Estate Assets.

 

(a)           HM Release Date Material Real
Estate Assets.  Within 30 days of
the HM Release Date, in order to create in favor of Collateral Trustee, for the
benefit of Secured Parties, a legal, valid, enforceable and, subject to any
filing or recording referred to herein, perfected, First Priority Lien on all
Material Real Estate Assets, Collateral Trustee shall have received from each
new Credit Party becoming a party hereto after the HM Release Date in
accordance with the requirements of Section 5.10:

 

(i)            fully executed and notarized
Mortgages, in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Material Real Estate Asset (each, a
“HM Release Date Mortgaged
Property”);

 

(ii)           an opinion of counsel (which counsel
shall be reasonably satisfactory to Collateral Trustee) in each state in which
a HM Release Date Mortgaged Property is located with respect to the
enforceability of the form(s) of Mortgages to be recorded in such state and
such other matters relating to the execution, delivery and enforceability of
the Mortgages, as Collateral Trustee may reasonably request, in each case in
form and substance reasonably satisfactory to Collateral Trustee;

 

(iii)          (a) ALTA mortgagee title insurance
policies or unconditional commitments therefor issued by one or more title
companies reasonably satisfactory to Collateral Trustee with respect to each HM
Release Date Mortgaged Property (each, a “Title Policy”), in amounts not less than the fair market
value of each HM Release Date Mortgaged Property, together with a title report
issued by a title company with respect thereto, dated a date reasonably
satisfactory to the Collateral Trustee and copies of all recorded documents
listed as exceptions to title or otherwise referred to therein, and (b)
evidence satisfactory to Collateral Trustee that such Credit Party has paid to
the title

 

87

 

company or to the appropriate governmental
authorities all expenses and premiums of the title company and all other sums
required in connection with the issuance of each Title Policy and all recording
and stamp taxes (including mortgage recording and intangible taxes) payable in
connection with recording the Mortgages for each HM Release Date Mortgaged Property
in the appropriate real estate records;

 

(iv)          evidence of flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in
compliance with any applicable regulations of the Board of Governors of the
Federal Reserve System, in form and substance reasonably satisfactory to
Collateral Trustee; and

 

(v)           ALTA surveys of all HM Release Date
Mortgaged Properties certified to Collateral Trustee and dated a date reasonably
satisfactory to the Administrative Agent.

 

(b)           Additional Real Estate Assets.  In the event that any Credit Party acquires
a Material Real Estate Asset and such interest has not otherwise been made
subject to the Lien of the Collateral Documents in favor of Collateral Trustee,
for the benefit of Secured Parties, then such Credit Party, contemporaneously
with acquiring such Material Real Estate Asset, shall take all such actions and
execute and deliver, or cause to be executed and delivered, all such mortgages,
documents, instruments, agreements, opinions and certificates similar to those
described in Sections 5.12(a) with respect to each such Material Real Estate
Asset that Collateral Trustee shall reasonably request to create in favor of
Collateral Trustee, for the benefit of Secured Parties, a legal, valid,
enforceable and subject to any filing and/or recording referred to herein,
perfected Lien on such Material Real Estate Assets.  In addition to the foregoing, Company shall, at the request of Requisite
Lenders, deliver, from time to time, to Collateral Trustee such appraisals as
are required by law or regulation of Real Estate Assets with respect to which
Collateral Trustee has been granted a Lien. 
Notwithstanding the foregoing, no Credit Party other than Holding and
Company shall have any obligation to comply with this Section 5.12 prior to the
date falling 30 days after the HM Release Date and notwithstanding anything to
the contrary contained above, Holding and its Subsidiaries will not be required
to cause any Subsidiary to pledge any property acquired after the Closing Date
pursuant to this Section or to execute any Credit Document pursuant to this
Section if, and to the extent that, and for so long as, doing so would violate
a contractual obligation applicable to the respective Material Real Estate
Asset which existed at the time of the acquisition thereof and which was not
created (or modified) in anticipation of such acquisition.

 

5.13.       [Reserved]

 

5.14.       Further Assurances. 
At any time or from time to time upon the
request of Administrative Agent, each Credit Party will, at its expense,
promptly execute, acknowledge and deliver such further documents and do such
other acts and things as Administrative Agent or Collateral Trustee may reasonably
request in order to effect fully the purposes of the Credit Documents.  In furtherance and not in limitation of the
foregoing, to the extent not prohibited under any outstanding HM Bonds, each
Credit Party shall take such actions as Administrative Agent or Collateral
Trustee may reasonably request from time to time to ensure that the 

 

88

 

Obligations are guaranteed by the Guarantors
and are secured by substantially all of the assets of Holding, and its Subsidiaries
and all of the outstanding Capital Stock of Company and its Subsidiaries
(subject to limitations contained in the Credit Documents with respect to
Foreign Subsidiaries).

 

5.15.       Debt Tender Process.  As soon as practicable after the Closing
Date (if it has not already done so), Company shall cause tender offers to be
made for the 2004 HM Bonds and 2006 HM Bonds in accordance with customary debt
tender procedures (including obtaining “exit consents” necessary to eliminate
the covenants with respect to the granting of Liens and incurrences of
Indebtedness under the HM Indenture), taking into account prevailing market
conditions, such that the Debt Tenders will close on or prior to the end of the
Bond Redemption Period; provided, that in the event the aggregate amount 2004
HM Bonds and 2006 HM Bonds not repurchased or redeemed pursuant to such Debt
Tender exceeds $10,000,000, Company will cause the total remaining amount of
2004 HM Bonds and 2006 HM Bonds to be promptly defeased in accordance with the
provisions of the HM Indenture.

 

5.16.       No Other “Designated Senior
Indebtedness”.  No
Credit Party shall designate, or permit the designation of, any Indebtedness
(other than under this Agreement or other Credit Documents) as “Designated
Senior Indebtedness” for the purposes of the definition of the same or the
subordination provisions contained in the documents governing Subordinated
Indebtedness without the consent of Administrative Agent.

 

5.17.       Post-Closing Date Obligations.

 

Merger of Certain HM Domestic Subsidiaries.  On or prior to the Consolidation Date, all
material Domestic Subsidiaries (including, without limitation, Great Source
Education Group, Inc. and McDougal Littell, Inc., but expressly excluding The
Riverside Publishing Co., Promissor, Inc. and Classwell Learning Group, Inc.)
shall have been merged with and into Company with Company being the surviving
entity.

 

SECTION 6.         NEGATIVE
COVENANTS

 

Each Credit Party covenants and agrees that, so long
as any Commitment is in effect and until payment in full of all Obligations and
cancellation or expiration of all Letters of Credit, such Credit Party shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.

 

6.1.         Indebtedness.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, create, incur, assume or
guaranty, or otherwise become or remain liable with respect to any Indebtedness
(each of the following, “Permitted Indebtedness”), except:

 

(a)           the Obligations;

 

(b)           (i)  Indebtedness of any
Guarantor Subsidiary to Company or to any other Guarantor Subsidiary or of
Company to any Guarantor Subsidiary;

 

(c)           Indebtedness incurred by Company or
any of its Subsidiaries arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or

 

89

 

from guaranties or letters of credit, surety
bonds or performance bonds securing the performance of Company or any such
Subsidiary pursuant to such agreements, in connection with Permitted
Acquisitions or permitted dispositions of any business or assets of Company or
any of its Subsidiaries;

 

(d)           Indebtedness which may be deemed to
exist pursuant to any guaranties, performance, surety, statutory, appeal or
similar obligations incurred in the ordinary course of business;

 

(e)           Indebtedness in respect of netting
services, overdraft protections and otherwise in connection with deposit
accounts;

 

(f)            guaranties in the ordinary course of
business of the obligations of suppliers, customers, franchisees and licensees
of Company and its Subsidiaries;

 

(g)           Indebtedness described in Schedule
6.1 and renewals and extensions thereof expressly provided for in the
agreements evidencing any such Indebtedness as the same are in effect on the
date of this Agreement, and Permitted Refinancing Indebtedness used to
refinance amounts owed thereunder;

 

(h)           Indebtedness outstanding under the
Bridge Facility Documents and Permitted Refinancing Indebtedness used to
refinance amounts owed thereunder;

 

(i)            Indebtedness of Company pursuant to
Hedge Agreements;

 

(j)            Indebtedness of Company evidenced by
Other Hedge Agreements entered into pursuant to Section 6.6(m);

 

(k)           Indebtedness owed to (including
obligations in respect of letters of credit for the benefit of) any person
providing worker’s compensation, health, disability or other employee benefits
or property, casualty or liability insurance to Company or any Subsidiary of
Company, pursuant to reimbursement or indemnification obligations to such person;

 

(l)            Indebtedness of Company or its
Subsidiaries in respect of performance bonds, bid bonds, appeal bonds, surety
bonds and similar obligations and trade-related letters of credit, in each case
provided in the ordinary course of business, including those incurred to secure
health, safety and environmental obligations in the ordinary course of business
and any extension, renewal or refinancing thereof to the extent that the amount
of refinancing Indebtedness is not greater than the amount of Indebtedness
being refinanced;

 

(m)          Indebtedness arising from the honoring
by a bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of business,
provided that such Indebtedness is extinguished within two Business Days
of its incurrence;

 

(n)           Indebtedness with respect to Capital
Leases, mortgage financings and purchase money Indebtedness incurred by Company
or any Subsidiary of Company prior to or within 270 days after the acquisition
or improvement of the respective asset permitted under this

 

90

 

Agreement in order to finance such
acquisition or improvement (including any Indebtedness acquired in connection
with a Permitted Business Acquisition); provided, any such Indebtedness
(i) shall be secured only by the assets acquired or improved in connection with
the incurrence of such Indebtedness, and (ii) shall constitute not less than
75% of the aggregate consideration paid with respect to such asset, and
extensions, renewals and refinancings thereof, in an aggregate principal amount
which, when aggregated with the principal amount of all other Indebtedness then
outstanding and incurred pursuant to this clause (n), is not in excess of
$25,000,000 outstanding at any time, provided that any such refinancing
Indebtedness shall not be (i) Indebtedness of an obligor that was not an
obligor with respect to the Indebtedness being extended, renewed or refinanced,
(ii) in a principal amount which exceeds the Indebtedness being renewed,
extended or refinanced or (iii) additionally secured;

 

(o)           Indebtedness of Company or any
Subsidiary of Company supported by a Letter of Credit in a principal amount not
in excess of the stated amount of such Letter of Credit;

 

(p)           Indebtedness of a Subsidiary of
Company (other than an Excluded Subsidiary) to Company permitted to be incurred
as an Investment pursuant to Section 6.6(i);

 

(q)           Indebtedness permitted to be provided
by Company or any of its Subsidiaries as an Investment pursuant to Section
6.6(k);

 

(r)            Indebtedness of a Subsidiary of
Company acquired after the date hereof and Indebtedness of a corporation merged
or consolidated with or into Company or a Subsidiary of Company after the date
hereof and Indebtedness assumed in connection with the acquisition of assets,
which Indebtedness in each case exists at the time of such acquisition, merger,
consolidation or conversion into a Subsidiary of Company and is not created in
contemplation of such event and where such acquisition, merger or consolidation
is permitted by this Agreement, provided that the aggregate principal
amount of Indebtedness under this clause (r) (including the amount of any
Permitted Refinancing Indebtedness incurred pursuant to the last parenthetical
of this clause (r)) shall not at any time outstanding exceed $25,000,000 for
Company and all of its Subsidiaries (it being understood and agreed that
Permitted Refinancing Indebtedness incurred to refinance Indebtedness otherwise
permitted under this clause (r), or refinancings thereof previously effected
pursuant to this parenthetical, shall be permitted);

 

(s)           obligations in respect of Capital
Leases incurred by Company or any Subsidiary in respect of any Sale and
Lease-Back transaction that is permitted under Section 6.10;

 

(t)            additional unsecured subordinated
Indebtedness of Company in an aggregate principal amount not to exceed
$125,000,000 outstanding at any time; provided that, (i) no amortization
shall be required with respect to such Indebtedness prior to six months after
the final maturity date of the Term Loan B, (ii) such Indebtedness is
subordinated in right of payment to the obligations under this agreement on
terms at least as favorable to the Lenders as those contained in the
documentation governing the Bridge Facility or any Permitted Refinancing
Indebtedness related thereto, (iii) other terms and provisions, taken as a
whole, of such Indebtedness are no less favorable than the terms and
provisions, taken as a whole, (including, subordination provisions) of the
Bridge Facility or any Permitted Refinancing

 

91

 

Indebtedness related thereto in the
reasonable judgment of Joint Lead Arrangers and (iv) at the time of the
incurrence of such Indebtedness, the Total Leverage Ratio calculated as of the
last day of the most recently ended Fiscal Quarter, determined on a Pro Forma
Basis giving effect to the incurrence of such Indebtedness, is no greater than
the maximum Total Leverage Ratio permitted as of such date pursuant to Section
6.7 less 0.50;

 

(u)           other Indebtedness of Company and its
Subsidiaries, not to exceed $50,000,000 outstanding at any time, less the
amount of Indebtedness outstanding under Section 6.1(n), provided that
only up to $35,000,000 of which may be secured by Liens in accordance with
Section 6.2(o) and the balance shall be unsecured;

 

(v)           Indebtedness under a Receivables
Facility; and

 

(w)          all premiums (if any), interest
(including post-petition interest), fees, expenses, indemnities, charges and
additional or contingent interest on obligations described in clauses (a)
through (v) above.

 

Notwithstanding the
foregoing provisions of this Section 6.1, at no time prior to the HM Release
Date shall Subsidiaries of HM, including for this purpose all Excluded
Subsidiaries, be obligated with respect to Indebtedness for borrowed money in
excess of $5,000,000 that matures at, or is extendible or receivable at the
option of the obligor, to a date more than twelve months after the date of
creation of such Indebtedness.

 

In addition,
notwithstanding the foregoing provisions of this Section 6.1, until completion
of the merger required by Section 5.17(a), no Credit Party shall permit
MacDougall Littell Inc. or Great Source Group, Inc. to create, incur, assume or
guaranty, or otherwise become liable with respect to any Indebtedness except
Indebtedness outstanding on the Closing Date and described in Schedule 6.1.

 

6.2.         Liens.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any
kind, except the following (collectively, “Permitted Liens”):

 

(a)           Liens in favor of Collateral Trustee
for the benefit of Secured Parties (including, prior to the HM Release Date,
the holders of the outstanding HM Bonds) granted pursuant to any Credit
Document;

 

(b)           statutory Liens of landlords, banks
(and rights of set-off), of carriers, warehousemen, mechanics, repairmen,
workmen and materialmen, and other Liens imposed by law (other than any such
Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue
Code or by ERISA), in each case incurred in the ordinary course of business (i)
for amounts not yet overdue or (ii) for amounts that are overdue and that (in
the case of any such amounts overdue for a period in excess of ten days) are
being contested in good faith by appropriate proceedings, so long as such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made for any such contested amounts;

 

(c)           Liens incurred in the ordinary course
of business in connection with workers’ compensation, unemployment insurance
and other types of social security, or to secure

 

92

 

the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts, trade
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money or other
Indebtedness), so long as no foreclosure, sale or similar proceedings have been
commenced with respect to any portion of the Collateral on account thereof,

 

(d)           covenants, conditions, easements,
rights-of-way, restrictions, encroachments, encumbrances and other
imperfections or irregularities in title, in each case which do not or will not
interfere in any material respect with the ordinary conduct of the business of
Holding or any of its Subsidiaries;

 

(e)           any interest or title of a lessor or
sublessor under any lease of property permitted hereunder;

 

(f)            Liens solely on any cash earnest
money deposits made by Holding or any of its Subsidiaries in connection with
any letter of intent or purchase agreement permitted hereunder;

 

(g)           purported Liens evidenced by the
filing of precautionary UCC financing statements relating solely to operating
leases of personal property entered into in the ordinary course of business;

 

(h)           Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;

 

(i)            licenses of patents, trademarks,
copyrights, trade secrets, service marks, tradenames and any other intellectual
property rights granted by Holding or any of its Subsidiaries in the ordinary
course of business and not interfering in any material respect with the conduct
of the business of Holding or such Subsidiary;

 

(j)            Liens described in Schedule 6.2 or
on a title report delivered pursuant to Section 5.12; and

 

(k)           construction liens arising in the
ordinary course of business, including liens for work performed for which
payment has not been made, securing obligations that are not due and payable or
are being contested in good faith by appropriate proceedings and in respect of
which, if applicable, Company or the relevant Subsidiary thereof shall have set
aside on its books reserves as shall be required by GAAP;

 

(l)            Liens for taxes, assessments or
other governmental charges or levies not yet delinquent, or which are for less
than $2,000,000 in the aggregate, or which are being contested in good faith by
appropriate proceedings or for property taxes on property that Holding or one
of its Subsidiaries has determined to abandon if the sole recourse for such
tax, assessment, charge, levy or claim is to such property;

 

(m)          deposits to secure the performance of
bids, trade contracts (other than for Indebtedness), leases (other than Capital
Leases), statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature made or incurred in the ordinary course

 

93

 

of business, including those incurred to
secure health, safety and environmental obligations in the ordinary course of
business;

 

(n)           zoning restrictions, easements,
trackage rights, leases (other than Capital Leases), licenses, special
assessments, rights-of-way, restrictions on use of real property and other
similar encumbrances incurred in the ordinary course of business which,
individually or in the aggregate, do not materially detract from the value of
the property subject thereto or materially interfere with the ordinary conduct
of the business of Holding or any of its Subsidiaries;

 

(o)           purchase money security interests in
equipment or other property or improvements thereto hereafter acquired (or, in
the case of improvements, constructed) by Company or any Subsidiary of Company
(including the interests of vendors and lessors under conditional sale and
title retention agreements), provided that (i) such security interests
secure Indebtedness permitted by Section 6.1(n) and secured Indebtedness
permitted to be incurred by Section 6.1(u), (ii) such security interests are
incurred, and the Indebtedness secured thereby is created, within 270 days
after such acquisition (or construction), (iii) the Indebtedness secured
thereby does not exceed 100% of the cost of such equipment or other property or
improvements at the time of such acquisition (or construction), including
transaction costs incurred by Company or any Subsidiary of Company in
connection with such acquisition (or construction), (iv) such expenditures are
permitted by this Agreement and (v) such security interests do not apply to any
other property or assets of Company or any Subsidiary of Company (other than to
accessions to such equipment or other property or improvements and provided
that individual financings of equipment provided by a single lender may be
cross-collateralized to other financings of equipment provided solely by such
lender);

 

(p)           Liens arising out of operating lease
or Capital Lease transactions permitted under Section 6.1 (n) and transactions
permitted by Section 6.10, so long as such Liens attach only to the property
sold and being leased in such transaction and any accessions thereto or
proceeds thereof and related property;

 

(q)           Liens securing judgments for the
payment of money in an aggregate amount not in excess of $5,000,000 (except to
the extent covered by insurance and the Administrative Agent shall be
reasonably satisfied with the credit of such insurer), unless such judgments
shall remain undischarged for a period of more than 30 consecutive days during
which execution shall not be effectively stayed;

 

(r)            Liens that are contractual rights of
setoff (i) relating to the establishment of depository relations with banks not
given in connection with the issuance of Indebtedness or (ii) pertaining to
pooled deposit and/or sweep accounts of Company and/or any Subsidiary of
Company to permit satisfaction of overdraft or similar obligations incurred in
the ordinary course of business of Company and the Subsidiaries of Company;

 

(s)           any Lien on any property or asset of
Company or a Subsidiary of Company securing Indebtedness (or Permitted
Refinancing Indebtedness, in which case any such Lien shall be permitted
subject to compliance with clause (iv) of the definition of Permitted
Refinancing Indebtedness contained herein) permitted by Section 6.1(r), provided
that such Lien

 

94

 

does not apply to any other property or
assets of Holding, Company or any of their Subsidiaries not securing such
Indebtedness at the date of the acquisition of such property or asset (other
than after acquired property subjected to a Lien securing Indebtedness and
other obligations incurred prior to such date and permitted hereunder which
contains a requirement for the pledging of after acquired property, it being
agreed that such after acquired property shall not include property of Holding,
Company and their Subsidiaries, other than any such acquired Subsidiary of
Company, that would have been included but for such acquisition);

 

(t)            the replacement, extension or
renewal of any Lien permitted above; provided that such replacement,
extension or renewal Lien shall not cover any property other than the property
that was subject to such Lien prior to such replacement, extension or renewal;
and provided further, that the Indebtedness and other obligations
secured by such replacement, extension or renewal Lien are permitted by this
Agreement; and

 

(u)           other Liens not securing Indebtedness
for borrowed money with respect to property or assets not constituting
Collateral for the Obligations with an aggregate fair market value (valued at
the time of creation thereof) of not more than $3,000,000 at any time.

 

Notwithstanding the
foregoing provisions of this Section 6.2, until completion of the mergers
required by Section 5.17(a), no Credit Party shall permit MacDougall Littell
Inc. or Great Source Education Group, Inc. to create, incur or assume any Lien
with respect to any of their assets of any kind, nor otherwise permit to exist
any such Lien not existing on the Closing Date and described on Schedule 6.2.

 

6.3.         No Further Negative Pledges.  Except with respect
to (a) specific property encumbered to secure payment of particular
Indebtedness or obligations or to be sold pursuant to an executed agreement
with respect to a permitted Asset Sale or subject to a Permitted Lien, (b)
restrictions contained in the Credit Documents, the HM Bonds and the
Subordinated Indebtedness and (c) restrictions by reason of customary
provisions restricting assignments, subletting or other transfers contained in
leases, licenses and similar agreements entered into in the ordinary course of
business (provided that such restrictions are limited to the property or assets
secured by such Liens or the property or assets subject to such leases,
licenses or similar agreements, as the case may be), no Credit Party nor any of
its Subsidiaries (other than a Receivables Subsidiary) shall enter into any
agreement prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.

 

6.4.         Restricted Junior Payments.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, declare, order, pay,
make or set apart, or agree to declare, order, pay, make or set apart, any sum
for any Restricted Junior Payment except that (a) Company (and in the case of
Permitted Holding Debt, Holding) may make regularly scheduled payments of
interest in respect of Subordinated Indebtedness in accordance with the terms
of, and only to the extent required by, and subject to the subordination
provisions contained in, the indenture or other agreement pursuant to which
such Subordinated Indebtedness was issued; (b) Company may refinance the Bridge
Facility with the proceeds of Permitted Refinancing Indebtedness; (c) Company
may make Restricted Junior Payments to Holding (i) to permit Holding to pay any
income tax payable by Holding and (ii) so long as no Event of Default shall
have occurred and be continuing or shall be caused thereby, in an aggregate
amount not to exceed $5,000,000 in any Fiscal Year, to the

 

95

 

extent necessary to permit Holding to pay
general administrative costs and expenses, and other fees and expenses in
connection with the maintenance of its existence; (d) so long as no Event of
Default shall have occurred and be continuing or shall be caused thereby,
Holding may purchase or redeem (and Company may declare and pay dividends or
make other distributions to Holding the proceeds of which are to be used by
Holding to so purchase or redeem) Capital Stock of Holding (including related
stock appreciation rights or similar securities) held by then present or former
officers or employees of Holding, Company or any of their Subsidiaries or by
any Pension Plan upon such person’s death, disability, retirement or
termination of employment or under the terms of any such Pension Plan or any
other agreement under which such shares of stock or related rights were issued,
provided that the aggregate amount of such purchases or redemptions
under this paragraph (d) shall not exceed in any calendar year $5,000,000 (plus
the amount of net proceeds received by Holding or Company during such calendar
year from Employee Equity Sales and the amount of net proceeds of any key-man
life insurance received during such calendar year); provided, however,
that the aggregate amount of such purchases or redemptions that may be made
pursuant to this paragraph (d) shall not exceed $15,000,000 (plus the
amount of net proceeds received by Holding or Company after the date of this
Agreement from Employee Equity Sales and the amount of any bonuses received by
management of HM in connection with the Acquisition that are rolled into
Capital Stock of Holding); (e) so long as no Default or Event of Default shall
have occurred and be continuing, Company may make Restricted Junior Payments to
Holding to the extent necessary to permit Holding to make, and Holding may make
payments required under the Sponsors Monitoring Agreement, provided that
such amounts are so applied and are permitted pursuant to Section 6.11; (f)
Holding may make non-cash repurchases of Capital Stock deemed to occur upon
exercise of stock options if such Capital Stock represents a portion of the
exercise price of such options; (g) Company may repurchase or redeem the Bridge
Facility or the Permitted Refinancing Indebtedness related thereto with the
proceeds of an initial public offering of common stock of Holding contributed
to Company by Holding, in an amount equal to that portion of the net cash
proceeds of such initial public offering not required to be used to prepay
Loans and reduce commitments pursuant to Section 2.14(c); (h) subject to the
following conditions, Company may declare and pay dividends to Holding
sufficient to enable Holding to make the payments described in clause (a) above
with respect to Permitted Holding Debt so long as no (y) Default or Event of
Default shall have occurred and be continuing or would be caused thereby by and
(z) Holding and its Subsidiaries shall be in compliance, on a Pro Forma Basis
after giving effect to the payment of such dividend, with the covenants
contained in Section 6.7(a)-(c) recomputed as of the last day of the most
recently ended Fiscal Quarter as if such dividend had been made on the first
day of each relevant period for testing compliance; (i) Company may make
distributions or payments of Receivables Fees; (j) Company and Holding may
declare and pay dividends on their Capital Stock in an amount equal to the
EBITDA Purchase Price Adjustment Amount multiplied by the percentage obtained
by dividing (1) the aggregate consideration paid in respect of the Sponsor
Equity on the Closing Date, by (2) the sum of (x) the aggregate Term Loan B
Exposures of all Lenders, plus (y) the consideration paid in respect of the
Sponsor Equity on the Closing Date, plus (z) the aggregate principal amount of
outstanding Indebtedness under the Bridge Facility Documents; (k) prior to the
earlier of (i) the Bridge Refinancing Date and (ii) the issuance of the
exchange notes contemplated by the Bridge Facility, so long as no Default or Event
of Default shall have occurred and be continuing or be caused thereby, Company
may make a prepayment of Indebtedness under the Bridge Facility in an amount
equal to the EBITDA Purchase Price

 

96

 

Adjustment Amount multiplied by the
percentage obtained by dividing (1) the aggregate principal amount of
outstanding Indebtedness under the Bridge Facility Documents, by (2) the sum of
(x) the aggregate Term Loan B Exposures of all Lenders, plus (y) the consideration
paid in respect of the Sponsor Equity on the Closing Date, plus (z) the
aggregate principal amount of outstanding Indebtedness under the Bridge
Facility Documents; and (1) distributions to Holding in amounts permitted to be
used to capitalize a Receivables Subsidiary as contemplated under Section
6.6(r), so long as Holding immediately contributes such amount to a Receivables
Subsidiary.

 

6.5.         Restrictions on Subsidiary
Distributions.  Except
as provided herein, no Credit Party shall, nor shall it permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary of Company to (a) pay dividends or make any other
distributions on any of such Subsidiary’s Capital Stock owned by Company or any
other Subsidiary of Company, (b) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (c) make loans or
advances to Company or any other Subsidiary of Company, or (d) sell or transfer
any of its property or assets to Company or any other Subsidiary of Company
other than restrictions (i) in agreements evidencing Indebtedness permitted by
Section 6.1 (n) that impose restrictions on the property so acquired, (ii) by
reason of customary provisions restricting assignments, subletting or other
transfers contained in leases, licenses, joint venture agreements and similar
agreements entered into in the ordinary course of business, (iii) that are or
were created by virtue of any transfer of, agreement to transfer, Lien or
option or right with respect to any property, assets or Capital Stock not
otherwise prohibited under this Agreement and (iv) created in connection with
any Receivables Facility that in the good faith determination of the board of
directors of Holding, are necessary or advisable to effect such Receivables
Facility, (v) any agreement or other instrument of a Person acquired by the
Company or any Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired; (vi)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business; and (vii)
Indebtedness of Subsidiaries, provided that
the Board of Directors of the Company determines in good faith at the time such
dividend and other payment restrictions are created that such dividend and
other payment restrictions do not materially adversely affect the Company’s
ability to pay principal of, and interest on, the Loans.

 

6.6.         Investments.  No Credit Party
shall, nor shall it permit any of its Subsidiaries to, make or own any
Investment in any Person, including without limitation any Joint Venture,
except:

 

(a)           Permitted Investments, including
Investments that constituted Permitted investments when made but, for reasons not
relating to the Company, no longer constitute Permitted Investments; provided
that prior to the HM Release Date the aggregate principal amount of Cash and
Permitted Investments owned by Subsidiaries of Company (including Excluded
Subsidiaries) that are not Guarantors shall not exceed $15,000,000 at any time;

 

97

 

(b)           Investments as of the Closing Date in
any Subsidiary and Investments made after the Closing Date in Domestic
Subsidiaries that are Guarantor Subsidiaries and Investments in Company;

 

(c)           intercompany loans to the extent
permitted under Section 6.1;

 

(d)           Consolidated Capital Expenditures
permitted by Section 6.7(d);

 

(e)           (i)  loans and advances to
employees of Holding and its Subsidiaries made in the ordinary course of
business in an aggregate principal amount not to exceed $5,000,000 in the
aggregate (calculated without regard to write-downs or write-offs thereof) and
(ii) advances of payroll payments and expenses to employees in the ordinary course
of business;

 

(f)            Investments made in connection with
Permitted Business Acquisitions permitted pursuant to Section 6.8;

 

(g)           Investments described in Schedule
6.6;

 

(h)           (i)  accounts receivable
arising and trade credit granted in the ordinary course of business and any
Securities 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 (ii) prepayments and other credits to
suppliers made in the ordinary course of business consistent with the past
practices of Company and its Subsidiaries;

 

(i)            prior to the HM Release Date,
Company may make Investments in Wholl1y–Owned Subsidiaries that are not
Guarantors, provided that the net (after giving effect to returns thereon)
aggregate amount of all such Investments does not exceed $60,000,000 at any
time; provided that, to the extent such Investments are not funded with
the proceeds of Designated Capital Contribution, all such Investments shall be
made in the form of intercompany loans; provided further that,
the aggregate amount of Investments otherwise permitted by this clause (i)
shall be reduced by the amount of any consideration paid in connection with a
Permitted Business Acquisition in which an entity is acquired and not merged
with and into Company;

 

(j)            [Reserved]

 

(k)           Company may make other Investments
(including Investments in Excluded Subsidiaries and Foreign Subsidiaries) in an
aggregate amount not to exceed $25,000,000 (after giving effect to returns
thereon); provided that, to the extent any such Investment is not funded
with the proceeds of a Designated Capital Contribution, such Investment shall
be made as an intercompany loan provided further that the
aggregate amount of such Investments made to Excluded Subsidiaries shall not
exceed $10,000,000 after giving effect for returns thereon;

 

(l)            Company and its Subsidiaries may
enter into and perform their obligations under Hedge Agreements and Other Hedge
Agreements entered into in the ordinary course of business and so long as any
such Hedge Agreement or Other Hedge Agreement is not speculative in nature;

 

98

 

(m)          provided no Default or Event of
Default shall have occurred and be continuing, additional Investments made with
(i) the then available Cumulative Capital Contribution Amount, and/or (ii) the
then available Cumulative Retained Excess Cash Flow Amount, but only to the
extent that the Company so elects in a written notice delivered to
Administrative Agent at the time such Investment is made;

 

(n)           Investments arising out of the
receipt by Company or any Subsidiary of Company of non-cash consideration with
respect to sales of assets permitted under Section 6.8, provided that
such consideration (if the stated amount or value thereof is in excess of
$1,000,000) is pledged upon receipt pursuant to the Pledge and Security and
Collateral Trust Agreement or the Holding Pledge and Security Agreement to the
extent required thereby;

 

(o)           Investments resulting from pledges
and deposits referred to in Section 6.2;

 

(p)           Holding shall be permitted to
contribute the proceeds of Designated Capital Contributions to Company;

 

(q)           Investments expressly permitted by
Section 6.8; and

 

(r)            Investments constituting customary
capitalization of a Receivables Subsidiary in amounts and in terms reasonably
acceptable to Administrative Agent.

 

6.7.         Financial Covenants

 

(a)           Interest Coverage Ratio.  Holding and Company shall not permit the
Interest Coverage Ratio as of the last day of any Fiscal Quarter specified
below to be less than the correlative ratio indicated:

 

	
  Fiscal Quarters Ending

  	
   

  	
  Interest

  Coverage Ratio

  	
   

  
	
  March
  31, 2003 through June 30, 2005

  	
   

  	
  2.10:1:00

  	
   

  
	
  September
  30, 2005 through June 30, 2006

  	
   

  	
  2.25:1:00

  	
   

  
	
  September
  30, 2006 through June 30, 2007

  	
   

  	
  2.50:1.00

  	
   

  
	
  September
  30, 2007 through June 30, 2008

  	
   

  	
  2.75:1.00

  	
   

  
	
  Thereafter

  	
   

  	
  3.00:1.00

  	
   

  

 

(b)           Total Leverage Ratio.  Holding and Company shall not permit the
Total Leverage Ratio as of the last day of any Fiscal Quarter specified below
to exceed the correlative ratio indicated:

 

	
  Fiscal Quarters Ending

  	
   

  	
  Total Leverage

  Ratio

  	
   

  
	
  March
  31, 2003 through December 31, 2003

  	
   

  	
  5.15:1.00

  	
   

  
	
  March
  31, 2004 through June 30, 2005

  	
   

  	
  5.10:1.00

  	
   

  
	
  September
  30, 2005 through December 31, 2005

  	
   

  	
  4.75:1.00

  	
   

  
	
  March
  31, 2006 through June 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  September
  30, 2006 through December 31, 2006

  	
   

  	
  4.25:1.00

  	
   

  
	
  March
  31, 2007 through June 30, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  September
  30, 2007 through December 31, 2007

  	
   

  	
  3.75:1.00

  	
   

  
	
  March
  31, 2008 through June 30, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  Thereafter

  	
   

  	
  3.25:1.00

  	
   

  

 

99

 

(c)           Senior Leverage Ratio.  Holding and Company shall not permit the
Senior Leverage Ratio as of the last day of any Fiscal Quarter specified below
to exceed the correlative ratio indicated:

 

	
  Fiscal Quarters Ending

  	
   

  	
  Senior

  Leverage Ratio

  	
   

  
	
  March
  31, 2003 through June 30, 2005

  	
   

  	
  3.00:1.00

  	
   

  
	
  September
  30, 2005 through June 30, 2006

  	
   

  	
  2.75:1.00

  	
   

  
	
  September
  30, 2006 through December 31, 2006

  	
   

  	
  2.50:1.00

  	
   

  
	
  March
  31, 2007 through December 31, 2007

  	
   

  	
  2.25:1.00

  	
   

  
	
  Thereafter

  	
   

  	
  2.00:1.00

  	
   

  

 

(d)           Maximum Consolidated Capital
Expenditures. 
(i)  Company shall not, and shall not permit its Subsidiaries
to, make or incur Consolidated Capital Expenditures, in any Fiscal Year
specified below, in an aggregate amount in excess of the corresponding amount
set forth below opposite such Fiscal Year; provided, such amount for any
Fiscal Year shall be increased by an amount equal to 50% of the excess, if any,
(without giving effect to any adjustment in accordance with this proviso) over
the actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year:

 

	
  Fiscal Year

  	
   

  	
  Consolidated

  Capital Expenditures

  	
   

  
	
  2003

  	
   

  	
  $

  	
  180,000,000

  	
   

  
	
  2004

  	
   

  	
  $

  	
  155,000,000

  	
   

  
	
  2005

  	
   

  	
  $

  	
  155,000,000

  	
   

  
	
  2006

  	
   

  	
  $

  	
  155,000,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  155,000,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  155,000,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  155,000,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  155,000,000

  	
   

  

 

100

 

(ii)           In addition to the Consolidated
Capital Expenditures permitted pursuant to preceding clause (i) above, if, as
of any date, incremental Consolidated Capital Expenditures may not be made
pursuant to clause (i) above, provided no Default or Event of Default shall
have occurred and be continuing Company and its Subsidiaries may make
additional Consolidated Capital Expenditures as follows, but only to the extent
that Company so elects at the time of making such Consolidated Capital
Expenditure and notifies Administrative Agent thereof in writing: (x)
Consolidated Capital Expenditures in an amount not to exceed the then available
Cumulative Capital Contribution Amount, and (y) Consolidated Capital
Expenditures in an amount not to exceed the then available Cumulative Retained
Excess Cash Flow Amount.

 

(e)           Certain Calculations.  With respect to any period during which a
Permitted Business Acquisition or an Asset Sale has occurred, for purposes of
determining compliance with the financial covenants set forth in this Section
6.7 (but not for purposes of determining the Applicable Margin), Consolidated
EBITDA shall be calculated with respect to such period on a Pro Forma Basis
giving effect to such Permitted Business Acquisition or Asset Sale.

 

6.8.         Fundamental Changes; Disposition of
Assets; Acquisitions.  No
Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into
any transaction of merger or consolidation, or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease or
sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its business,
assets or property of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible, whether now owned or hereafter acquired, or
acquire by purchase or otherwise (other than purchases or other acquisitions of
inventory, materials, equipment or other assets in the ordinary course of
business) the business, property or fixed assets of, or stock or other evidence
of beneficial ownership of, any Person or any division or line of business or
other business unit of any Person, except:

 

(a)           Subject to the provisions of Section
6.17, any Subsidiary of Company may be merged into Company, or be liquidated,
wound up or dissolved, or all or any part of its business, property or assets
may be conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any Guarantor
Subsidiary; provided, in the case of such a merger, Company or such Guarantor
Subsidiary, as applicable shall be the continuing or surviving Person;

 

(b)           sales or other dispositions of assets
that do not constitute Asset Sales;

 

(c)           provided no Default or Event of
Default shall have occurred and be continuing, Permitted Business Acquisitions,
the aggregate consideration for which constitutes less than the Permitted
Business Acquisition Amount;

 

101

 

(d)           Investments made in accordance with
Section 6.6;

 

(e)           sales, leases or other dispositions
of equipment or other property (including inventory) of Holding or its
Subsidiaries determined by the senior management of Holding to be no longer
useful or necessary in the operation of the business of Company or its Subsidiaries
provided that the Net Asset Sale Proceeds thereof shall be applied in
accordance with Section 2.14(a);

 

(f)            sales, leases or other dispositions
of property having a net book value not in excess of $25,000,000 in any Fiscal
Year, provided that (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the consideration received for such
property shall be not less than 75% in Cash and in an amount at least equal to
the fair market value thereof (determined in good faith by the board of
directors of Holding) and the Net Asset Sale Proceeds thereof are applied in
accordance with Section 2.14(a), provided further, that no sale
may be made pursuant to this clause (f) of the Capital Stock of any Subsidiary
except in connection with the sale of all its outstanding Capital Stock that is
held by Company and any other Subsidiary and provided further,
that to the extent that the net book value of such property sold, leased or
disposed in any Fiscal Year is less than $25,000,000, the amount of such
difference, but in no case more than $5,000,000, may be carved forward and used
for sales, leases, or dispositions of property in the immediately succeeding
Fiscal Year (after the full amount such sales, leases and other dispositions of
property otherwise permitted to be made under this paragraph (f) in such Fiscal
Year, without regard to the provisions of this proviso, have been made) (it
being understood that amounts once carried forward into such succeeding Fiscal
Year shall lapse and terminate at the end of such Fiscal Year);

 

(g)           the sale of defaulted receivables in
the ordinary course of business and not as part of an accounts receivables
financing transaction;

 

(h)           the Acquisition, the Merger and the
mergers required pursuant to Section 5.17(a);

 

(i)            the transactions permitted by
Section 6.10.

 

(j)            inactive Subsidiaries may be
liquidated or dissolved; and

 

(k)           sales or dispositions on arms length
commercial terms of “Classworks” and/or its product lines.

 

6.9.         Disposal of Subsidiary Interests.  Except for any sale
of all of its interests in the Capital Stock of any of its Subsidiaries in
compliance with the provisions of Section 6.8, no Credit Party shall, nor shall
it permit any of its Subsidiaries to (other than Excluded Subsidiaries), (a)
sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of
any of its Subsidiaries (other than Excluded Subsidiaries), except to qualify
directors if required by applicable law; or (b) permit any of its Subsidiaries
(other than Excluded Subsidiaries) to sell, assign, pledge or otherwise
encumber or dispose of any Capital Stock of any of its Subsidiaries, except to
another Credit Party (subject to the restrictions on such disposition otherwise
imposed hereunder), or to qualify directors if required by applicable law.

 

102

 

6.10.       Sales and Lease-Backs.  No Credit Party shall, nor shall it
permit any of its Subsidiaries to, become or remain liable as lessee or as a
guarantor or other surety with respect to any lease of any property (whether
real, personal or mixed), whether now owned or hereafter acquired, which such
Credit Party (a) has sold or transferred or is to sell or to transfer to any
other Person (other than Holding or any of its Subsidiaries), or (b) intends to
use for substantially the same purpose as any other property which has been or
is to be sold or transferred by such Credit Party to any Person (other than
Holding or any of its Subsidiaries) in connection with such lease (such transaction,
a “Sale and Lease-Back Transaction”); provided
that, Sale and Lease-Back Transactions shall be permitted so long as at no time
will the aggregate Remaining Present Value of all leases entered into pursuant
to such Sale and Lease-Back Transactions exceed $20,000,000.

 

6.11.       Transactions with Shareholders and
Affiliates.  No
Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder of
10% or more of any class of Capital Stock of Holding or any of its Subsidiaries
or with any Affiliate of Holding or of any such holder, on terms that are less
favorable to Holding or that Subsidiary, as the case may be, than those that
might be obtained at the time from a Person who is not such a holder or
Affiliate; provided, the foregoing restriction shall not apply to:

 

(a)           any transaction between Company and
any Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries and
indemnities in the ordinary course of business;

 

(b)           any payment of or on account of
monitoring or management or similar fees payable to any Sponsor or Affiliate
thereof pursuant to the Sponsors Monitoring Agreement in an aggregate amount in
any Fiscal Year in the aggregate not in excess of $5,000,000 (plus reasonable
expenses in connection therewith and unpaid amounts accrued for prior periods);

 

(c)           loans or advances to employees of
Holding or any of its Subsidiaries in accordance with Section 6.6(e);

 

(d)           the indemnification of, and the
payment of reasonable and customary fees and indemnities to, directors,
officers and employees of Holding and its Subsidiaries in the ordinary course
of business;

 

(e)           any issuance of Securities, or other
payments, awards or grants in cash, Securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the board of directors of Holding (or Company, if prior to the
Closing Date);

 

(f)            transactions in which Holding
delivers to Joint Lead Arrangers a letter from an independent financial advisor
reasonably acceptable to Joint Lead Arrangers stating that such transaction is
fair to Company or applicable Subsidiary from a financial point of view;

 

(g)           reasonable and customary investment
banking fees paid by Holding or any Subsidiary in the ordinary course of
business on an arms length commercial basis to any Sponsor or Affiliate thereof
in connection with the provision of advisory services by such person in a
corporate transaction;

 

103

 

(h)           transactions described in Schedule
6.11 and any amendment to any agreement governing any such transaction so long
as such amendment is not disadvantageous to the Lenders in any material
respect;

 

(i)            any employment agreements entered
into by any of Holding or any of its Subsidiaries in the ordinary course of
business;

 

(j)            dividends and repurchases permitted
under Section 6.4 and Investments permitted under Section 6.6;

 

(k)           any purchase by the Sponsors of
Capital Stock of Holding or any purchase by Holding of Capital Stock of Company
or any contribution by Holding to the equity capital of Company, provided
that any Capital Stock of Company purchased by Holding shall be pledged to the
Collateral Trustee on behalf of the Lenders;

 

(l)            the existence of, or the performance
by Holding, Company or any of their Subsidiaries of their obligations in
connection with, the Related Agreements to which any of them is a party as of
the Closing Date; provided, however, that the existence of, or
the performance by Holding, Company or any Subsidiary of obligations under any
future amendment to any such existing agreement shall only be permitted by this
clause (1) to the extent that the terms of any such amendment or new agreement
are not otherwise disadvantageous to the Lenders in any material respect; and

 

(m)          the transactions pursuant to a
Receivables Facility.

 

6.12.       Conduct of Business.  From and after the Closing Date, without
limitation to the provisions of Section 6.13, no Credit Party shall, nor shall
it permit any of its Subsidiaries (other than a Receivables Subsidiary) to,
engage in any business other than (i) the businesses engaged in by such Credit
Party on the Closing Date and similar incidental or related businesses and (ii)
such other lines of business as may be consented to by Requisite Lenders.

 

6.13.       Permitted Activities of Holding.  Holding shall not
(a) incur any Indebtedness or any other obligation or liability whatsoever
other than the Indebtedness and obligations hereunder and under the Related
Agreements and Permitted Holding Debt; (b) create or suffer to exist any Lien
upon any property or assets now owned or hereafter acquired by it other than
the Liens created under the Collateral Documents to which it is a party or
permitted pursuant to Section 6.2; (c) engage in any business or activity or
own any assets other than (i) holding 100% of the Capital Stock of Company,
(ii) performing its obligations and activities incidental thereto under the
Credit Documents, and to the extent not inconsistent therewith, the Related
Agreements; (iii) issuing Permitted Holding Debt and making Restricted Junior
Payments and Investments to the extent permitted by this Agreement; and (iv)
holding 100% of the Capital Stock of any direct Subsidiary of Holding formed in
connection with the Receivables Facility and making Permitted Investments
therein; (d) consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person; (e) sell or otherwise
dispose of any Capital Stock of any of its direct Subsidiaries other than
Unrestricted Subsidiaries; (f) create or acquire any Subsidiary or make or own
any Investment in any Person other than Company (including, but not limited to,
entering into Joint Ventures or becoming a general partner in any

 

104

 

partnership); (g) make any Consolidated
Capital Expenditures; (h) fail to hold itself out to the public as a legal
entity separate and distinct from all other Persons; or (i) fail on the date of
receipt by Holding of any Cash proceeds from any capital contribution to, or
issuance of any Capital Stock or Permitted Holding Debt to make a capital contribution
to Company of such Cash proceeds.

 

6.14.       Amendments or Waivers of Certain Related
Agreements.  No
Credit Party shall, nor shall it permit any of its Subsidiaries to, agree to
any material and adverse amendment, restatement, supplement or other modification
to, or waiver of, any of its material rights under any Related Agreement (other
than agreements with respect to Subordinated Indebtedness which are subject to
the provisions of Section 6.15) after the Closing Date without in each case
obtaining the prior written consent of Requisite Lenders to such amendment,
restatement, supplement or other modification or waiver.

 

6.15.       Amendments
or Waivers of with respect to Subordinated Indebtedness.  No Credit Party shall, nor
shall it permit any of its Subsidiaries to, amend or otherwise change the terms
of any Subordinated Indebtedness, or make any payment consistent with an
amendment thereof or change thereto, if the effect of such amendment or change
is to increase the interest rate on such Subordinated Indebtedness, change (to
earlier dates) any dates upon which payments of principal or interest are due
thereon, change any event of default or condition to an event of default with
respect thereto (other than to eliminate any such event of default or increase
any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions of such
Subordinated Indebtedness (or of any guaranty thereof), or if the effect of
such amendment or change, together with all other amendments or changes made,
is to increase materially the obligations of the obligor thereunder or to
confer any additional rights on the holders of such Subordinated Indebtedness
(or a trustee or other representative on their behalf) which would be adverse
to any Credit Party or Lenders in any material respect.

 

6.16        Fiscal
Year.  No
Credit Party shall, nor shall it permit any of its Subsidiaries to change its
Fiscal Year-end from December 31.

 

6.17        Designation of Unrestricted Subsidiaries;
RS Designations.

 

(a)           Company may designate a Subsidiary
acquired or formed after the Closing Date as an Unrestricted Subsidiary under
this Agreement (a “Designation”)
only if.

 

(i)            no Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
Designation;

 

(ii)           after giving effect to such
Designation, Company and its Subsidiaries would be in compliance with each of
the covenants set forth in Sections 6.6 and 6.7, as applicable, calculated on a
Pro Forma Basis as if such Designation had occurred immediately prior to the
first day of the period of four consecutive fiscal quarters most recently
ended;

 

(iii)          Company has delivered to the
Administrative Agent (x) written notice of such Designation and (y) a certificate,
dated the effective date of such Designation, of an Authorized Officer of
Company stating that no Event of Default has occurred and is

 

105

 

continuing or would result from such
designation and setting forth reasonably detailed calculations demonstrating
pro forma compliance with each of Section 6.7, in accordance with clause (ii)
above; and

 

(iv)          any Investments previously made by
Company or any of its Subsidiaries in such Unrestricted Subsidiary is deemed an
Investment made pursuant to Section 6.6(k) or Section 6.6(m) and no Event of
Default shall occur as a result thereof.

 

(b)           Company may designate any
Unrestricted Subsidiary as a Subsidiary under this Agreement (an “RS Designation”) only if:

 

(i)            such Subsidiary is predominantly
engaged in similar business activities to Company and its Subsidiaries;

 

(ii)           no Event of Default shall have
occurred and be continuing at the time of or after giving effect to such RS
Designation;

 

(iii)          after giving effect to such RS
Designation, Company and its Subsidiaries would be in compliance with each of
the covenants set forth in Section 6.7, calculated on a Pro Forma Basis as if
such RS Designation had occurred immediately prior to the first day of the
relevant period specified in such Section, as applicable;

 

(iv)          Company has delivered to the
Administrative Agent (x) written notice of such RS Designation and (y) a
certificate, dated the effective date of such RS Designation, of an Authorized
Officer of Company stating that no Event of Default has occurred and is
continuing and setting forth reasonably detailed calculations demonstrating pro
forma compliance with each of Section 6.7, in accordance with clause (iii)
above; and

 

(v)           all Indebtedness of such Subsidiary
outstanding and all Liens on assets of such Subsidiary existing immediately
following the RS Designation would, if initially incurred at such time, have
been permitted to be incurred pursuant to Sections 6.1 and 6.2.

 

                Upon any such RS Designation, Company shall be deemed
to have (i) received a return of its Investment in such Unrestricted Subsidiary
equal to the lesser of (x) the amount of such Investment immediately prior to
such RS Designation and (y) the fair market value (as reasonably determined by
Company) of the net assets of such Subsidiary at the time of such RS
Designation and (ii) an Investment in an Unrestricted Subsidiary equal to the
excess, if positive, of the amount referred to in clause (i)(x) above over the
amount referred to in clause (i)(y) above.

 

(c)           Neither Company nor any Subsidiary
shall at any time (x) provide a Guaranty of any Indebtedness of any
Unrestricted Subsidiary, except pursuant to Section 6.6(k) or (m), or (y) be
liable for any Indebtedness of any Unrestricted Subsidiary except pursuant to
Section 6.6(k) or (m).

 

SECTION 7.         GUARANTY

 

7.1.         Guaranty of the Obligations.  Subject to the
provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably
and unconditionally guaranty to

 

106

 

Administrative Agent for the ratable benefit
of the Beneficiaries the due and punctual payment in full of all Obligations
when the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

 

7.2.         Contribution by Guarantors.  All Guarantors
desire to allocate among themselves (collectively, the “Contributing
Guarantors”), in a fair and equitable manner, their obligations
arising under this Guaranty. 
Accordingly, in the event any payment or distribution is made on any
date by a Guarantor (a “Funding Guarantor”)
under this Guaranty that exceeds its Fair Share as of such date, such Funding
Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the amount of such other Contributing Guarantor’s
Fair Share Shortfall as of such date, with the result that all such
contributions will cause each Contributing Guarantor’s Aggregate Payments to
equal its Fair Share as of such date.  “Fair Share” means, with respect to a Contributing Guarantor
as of any date of determination, an amount equal to (a) the ratio of (i) the
Fair Share Contribution Amount with respect to such Contributing Guarantor to
(ii) the aggregate of the Fair Share Contribution Amounts with respect to all
Contributing Guarantors multiplied by (b) the aggregate amount paid or
distributed on or before such date by all Funding Guarantors under this
Guaranty in respect of the obligations Guaranteed.  “Fair Share Shortfall” means, with
respect to a Contributing Guarantor as of any date of determination, the
excess, if any, of the Fair Share of such Contributing Guarantor over the
Aggregate Payments of such Contributing Guarantor.  “Fair Share Contribution Amount”
means, with respect to a Contributing Guarantor as of any date of
determination, the maximum aggregate amount of the obligations of such
Contributing Guarantor under this Guaranty that would not render its
obligations hereunder or thereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any comparable applicable provisions of state law; provided, solely
for purposes of calculating the “Fair Share Contribution
Amount” with respect to any Contributing Guarantor for purposes of
this Section 7.2, any assets or liabilities of such Contributing Guarantor
arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall
not be considered as assets or liabilities of such Contributing Guarantor.  “Aggregate Payments”
means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (1) the aggregate amount of all payments and
distributions made on or before such date by such Contributing Guarantor in
respect of this Guaranty (including, without limitation, in respect of this
Section 7.2), minus (2) the aggregate amount of all payments received on or
before such date by such Contributing Guarantor from the other Contributing
Guarantors as contributions under this Section 7.2.  The amounts payable as contributions hereunder shall be
determined as of the date on which the related payment or distribution is made
by the applicable Funding Guarantor. 
The allocation among Contributing Guarantors of their obligations as set
forth in this Section 7.2 shall not be construed in any way to limit the
liability of any Contributing Guarantor hereunder.  Each Guarantor is a third party beneficiary to the contribution
agreement set forth in this Section 7.2.

 

7.3.         Payment by Guarantors.  Subject to Section 7.2, Guarantors
hereby jointly and severally agree, in furtherance of the foregoing and not in
limitation of any other right which any Beneficiary may have at law or in
equity against any Guarantor by virtue hereof, that upon the failure of Company
to pay any of the Guaranteed Obligations when and as the same shall

 

107

 

become due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will
upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the
ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid
principal amount of all Guaranteed Obligations then due as aforesaid, accrued
and unpaid interest on such Guaranteed Obligations (including interest which,
but for Company’s becoming the subject of a case under the Bankruptcy Code,
would have accrued on such Guaranteed Obligations, whether or not a claim is
allowed against Company for such interest in the related bankruptcy case) and
all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

 

7.4.         Liability of Guarantors Absolute.  Each Guarantor
agrees that its obligations hereunder are irrevocable, absolute, independent
and unconditional and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guaranteed Obligations. 
In furtherance of the foregoing and without limiting the generality
thereof, each Guarantor agrees as follows:

 

(a)           this Guaranty is a guaranty of
payment when due and not of collectability. 
This Guaranty is a primary obligation of each Guarantor and not merely a
contract of surety;

 

(b)           the obligations of each Guarantor
hereunder are independent of the obligations of Company and the obligations of
any other guarantor (including any other Guarantor) of the obligations of
Company, and a separate action or actions may be brought and prosecuted against
such Guarantor whether or not any action is brought against Company or any of
such other guarantors and whether or not Company is joined in any such action
or actions;

 

(c)           payment by any Guarantor of a
portion, but not all, of the Guaranteed Obligations shall in no way limit,
affect, modify or abridge any Guarantor’s liability for any portion of the
Guaranteed Obligations which has not been paid.  Without limiting the generality of the foregoing, if
Administrative Agent is awarded a judgment in any suit brought to enforce any
Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to pay
the portion of the Guaranteed Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor’s liability hereunder in
respect of the Guaranteed Obligations;

 

(d)           any Beneficiary, upon such terms as
it deems appropriate, without notice or demand and without affecting the
validity or enforceability hereof or giving rise to any reduction, limitation,
impairment, discharge or termination of any Guarantor’s liability hereunder,
from time to time may (i) renew, extend, accelerate, increase the rate of
interest on, or otherwise change the time, place, manner or terms of payment of
the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or substitutions
for, the Guaranteed Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other obligations;
(iii) request and accept other guaranties of the Guaranteed Obligations and
take and hold security for the payment hereof or the Guaranteed Obligations,
(iv) release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration,

 

108

 

any security for payment of the Guaranteed
Obligations, any other guaranties of the Guaranteed Obligations, or any other
obligation of any Person (including any other Guarantor) with respect to the
Guaranteed Obligations; (v) enforce and apply any security now or hereafter
held by or for the benefit of such Beneficiary in respect hereof or the
Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that such Beneficiary may have against any
such security, in each case as such Beneficiary in its discretion may determine
consistent herewith or the applicable Hedge Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy
of any Guarantor against Company or any security for the Guaranteed
Obligations; and (vi) exercise any other rights available to it under the
Credit Documents or the Hedge Agreements; and

 

(e)           this Guaranty and the obligations of
Guarantors hereunder shall be valid and enforceable and shall not be subject to
any reduction, limitation, impairment, discharge or termination for any reason
(other than payment in full of the Guaranteed Obligations), including the
occurrence of any of the following, whether or not any Guarantor shall have had
notice or knowledge of any of them: (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy (whether
arising under the Credit Documents or the Hedge Agreements, at law, in equity
or otherwise) with respect to the Guaranteed Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security for the
payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment
or modification of, or any consent to departure from, any of the terms or
provisions (including provisions relating to events of default) hereof, any of
the other Credit Documents, any of the Hedge Agreements or any agreement or
instrument executed pursuant thereto, or of any other guaranty or security for
the Guaranteed Obligations, in each case whether or not in accordance with the
terms hereof or such Credit Document, such Hedge Agreement or any agreement
relating to such other guaranty or security; (iii) the Guaranteed Obligations,
or any agreement relating thereto, at any time being found to be illegal,
invalid or unenforceable in any respect; (iv) the application of payments
received from any source (other than payments received pursuant to the other
Credit Documents or any of the Hedge Agreements or from the proceeds of any
security for the Guaranteed Obligations, except to the extent such security
also serves as collateral for indebtedness other than the Guaranteed
Obligations) to the payment of indebtedness other than the Guaranteed
Obligations, even though any Beneficiary might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s
consent to the change, reorganization or termination of the corporate structure
or existence of Holding or any of its Subsidiaries and to any corresponding
restructuring of the Guaranteed Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims
which Company may allege or assert against any Beneficiary in respect of the
Guaranteed Obligations, including failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) any other act or thing or omission, or delay to do any other
act or thing, which may or might in any manner or to any extent vary the risk
of any Guarantor as an obligor in respect of the Guaranteed Obligations.

 

109

 

7.5.         Waivers by Guarantors.  Each Guarantor hereby waives, for the
benefit of Beneficiaries: (a) any right to require any Beneficiary, as a
condition of payment or performance by such Guarantor, to (i) proceed against
Company, any other guarantor (including any other Guarantor) of the Guaranteed
Obligations or any other Person, (ii) proceed against or exhaust any security
held from Company, any such other guarantor or any other Person, (iii) proceed
against or have resort to any balance of any Deposit Account or credit on the
books of any Beneficiary in favor of Company or any other Person, or (iv)
pursue any other remedy in the power of any Beneficiary whatsoever; (b) any
defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Company or any other Guarantor including any
defense based on or arising out of the lack of validity or the unenforceability
of the Guaranteed Obligations or any agreement or instrument relating thereto
or by reason of the cessation of the liability of Company or any other
Guarantor from any cause other than payment in full of the Guaranteed
Obligations; (c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor
in other respects more burdensome than that of the principal; (d) any defense
based upon any Beneficiary’s errors or omissions in the administration of the
Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any
principles or provisions of law, statutory or otherwise, which are or might be
in conflict with the terms hereof and any legal or equitable discharge of such
Guarantor’s obligations hereunder, (ii) the benefit of any statute of
limitations affecting such Guarantor’s liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that any Beneficiary protect, secure,
perfect or insure any security interest or lien or any property subject
thereto; (f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
hereof, notices of default hereunder, the Hedge Agreements or any agreement or
instrument related thereto, notices of any renewal, extension or modification
of the Guaranteed Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
Section 7.4 and any right to consent to any thereof, and (g) any defenses or
benefits that may be derived from or afforded by law which limit the liability
of or exonerate guarantors or sureties, or which may conflict with the terms
hereof.

 

7.6.         Guarantors’ Rights of Subrogation, Contribution,
etc.  Until the
Guaranteed Obligations shall have been indefeasibly paid in full and the
Revolving Commitments shall have terminated and all Letters of Credit shall
have expired or been cancelled, each Guarantor hereby waives any claim, right
or remedy, direct or indirect, that such Guarantor now has or may hereafter
have against Company or any other Guarantor or any of its assets in connection
with this Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise and including without
limitation (a) any right of subrogation, reimbursement or indemnification that
such Guarantor now has or may hereafter have against Company with respect to
the Guaranteed Obligations, (b) any right to enforce, or to participate in, any
claim, right or remedy that any Beneficiary now has or may hereafter have
against Company, and (c) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by any Beneficiary.  In addition, until the Guaranteed
Obligations shall have been indefeasibly paid in full and the Revolving
Commitments shall have terminated and all Letters of Credit shall have expired
or been cancelled, each Guarantor shall withhold exercise of any right of
contribution such Guarantor may have against any other guarantor (including any
other Guarantor) of the

 

110

 

Guaranteed Obligations, including, without
limitation, any such right of contribution as contemplated by Section 7.2.  Each Guarantor further agrees that, to the
extent the waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation, reimbursement or indemnification such
Guarantor may have against Company or against any collateral or security, and
any rights of contribution such Guarantor may have against any such other
guarantor, shall be junior and subordinate to any rights any Beneficiary may
have against Company, to all right, title and interest any Beneficiary may have
in any such collateral or security, and to any right any Beneficiary may have
against such other guarantor.  If any
amount shall be paid to any Guarantor on account of any such subrogation,
reimbursement, indemnification or contribution rights at any time when all
Guaranteed Obligations shall not have been finally and indefeasibly paid in
full, such amount shall be held in trust for Administrative Agent on behalf of
Beneficiaries and shall forthwith be paid over to Administrative Agent for the
benefit of Beneficiaries to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms hereof.

 

7.7.         Subordination of Other Obligations.  Any Indebtedness of
Company or any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of
payment to the Guaranteed Obligations, and any such indebtedness collected or
received by the Obligee Guarantor after an Event of Default has occurred and is
continuing shall be held in trust for Administrative Agent on behalf of
Beneficiaries and shall forthwith be paid over to Administrative Agent for the
benefit of Beneficiaries to be credited and applied against the Guaranteed
Obligations but without affecting, impairing or limiting in any manner the
liability of the Obligee Guarantor under any other provision hereof.

 

7.8.         Continuing Guaranty.  This Guaranty is a continuing guaranty
and shall remain in effect until all of the Guaranteed Obligations shall have
been paid in full and the Revolving Commitments shall have terminated and all
Letters of Credit shall have expired or been cancelled.  Each Guarantor hereby irrevocably waives any
right to revoke this Guaranty as to future transactions giving rise to any
Guaranteed Obligations.

 

7.9.         Authority of Guarantors or Company.  It is not necessary
for any Beneficiary to inquire into the capacity or powers of any Guarantor or
Company or the officers, directors or any agents acting or purporting to act on
behalf of any of them.

 

7.10.       Financial Condition of Company.  Any Credit
Extension may be made to Company or continued from time to time, and any Hedge
Agreements may be entered into from time to time, in each case without notice
to or authorization from any Guarantor regardless of the financial or other
condition of Company at the time of any such grant or continuation or at the
time such Hedge Agreement is entered into, as the case may be.  No Beneficiary shall have any obligation to
disclose or discuss with any Guarantor its assessment, or any Guarantor’s
assessment, of the financial condition of Company.  Each Guarantor has adequate means to obtain information from
Company on a continuing basis concerning the financial condition of Company and
its ability to perform its obligations under the Credit Documents and the Hedge
Agreements, and each Guarantor assumes the responsibility for being and keeping
informed of the financial condition of Company and of all circumstances bearing
upon the risk of

 

111

 

nonpayment of the Guaranteed
Obligations.  Each Guarantor hereby
waives and relinquishes any duty on the part of any Beneficiary to disclose any
matter, fact or thing relating to the business, operations or conditions of
Company now known or hereafter known by any Beneficiary.

 

7.11.       Bankruptcy,
etc. 
(a)  The obligations of Guarantors hereunder shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by
any case or proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement of Company
or any other Guarantor or by any defense which Company or any other Guarantor
may have by reason of the order, decree or decision of any court or
administrative body resulting from any such proceeding.

 

(b)           Each Guarantor acknowledges and
agrees that any interest on any portion of the Guaranteed Obligations which
accrues after the commencement of any case or proceeding referred to in clause
(a) above (or, if interest on any portion of the Guaranteed Obligations ceases
to accrue by operation of law by reason of the commencement of such case or
proceeding, such interest as would have accrued on such portion of the
Guaranteed Obligations if such case or proceeding had not been commenced) shall
be included in the Guaranteed Obligations because it is the intention of
Guarantors and Beneficiaries that the Guaranteed Obligations which are
guaranteed by Guarantors pursuant hereto should be determined without regard to
any rule of law or order which may relieve Company of any portion of such
Guaranteed Obligations.  Guarantors will
permit any trustee in bankruptcy, receiver, debtor in possession, assignee for
the benefit of creditors or similar person to pay Administrative Agent, or
allow the claim of Administrative Agent in respect of, any such interest
accruing after the date on which such case or proceeding is commenced.

 

(c)           In the event that all or any portion
of the Guaranteed Obligations are paid by Company, the obligations of
Guarantors hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such
payment(s) are rescinded or recovered from any Beneficiary as a preference,
fraudulent transfer or otherwise, and any such payments which are so rescinded
or recovered shall constitute Guaranteed Obligations for all purposes
hereunder.

 

7.12.       Discharge of Guaranty Upon Sale of Guarantor.  If all of the
Capital Stock of any Guarantor (other than Holding) or any of its successors in
interest hereunder shall be sold or otherwise disposed of (including by merger
or consolidation) in accordance with the terms and conditions hereof, the
Guaranty of such Guarantor or such successor in interest, as the case may be,
hereunder shall automatically be discharged and released without any further
action by any Beneficiary or any other Person effective as of the time of such
sale or disposition.

 

SECTION 8.         EVENTS
OF DEFAULT

 

8.1.         Events of Default.  If any one or more of the following
conditions or events shall occur:

 

(a)           Failure to Make Payments When Due.  Failure by Company to pay (i) when due any
installment of principal of any Loan, whether at stated maturity, by
acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; (ii) when due any

 

112

 

amount payable to a Fronting Bank in
reimbursement of any drawing under a Letter of Credit; or (iii) any interest on
any Loan or any fee or any other amount due hereunder within five (5) Business
Days after the date due; or

 

(b)           Default in Other Agreements.  (i) Failure of any Credit Party or any of
their respective Subsidiaries to pay when due any principal of or interest on
or any other amount payable in respect of one or more items of Indebtedness
(other than Indebtedness referred to in Section 8.1(a)) in an individual or
aggregate principal amount of $15,000,000 or more, in any case beyond the grace
period, if any, provided therefor; or (ii) breach or default by any Credit
Party with respect to any other material term of (1) one or more items of
Indebtedness in the individual or aggregate principal amount referred to in
clause (i) above or (2) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness, in each case beyond the
grace period, if any, provided therefor, if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness
(or a trustee on behalf of such holder or holders), to cause, that Indebtedness
to become or be declared due and payable (or redeemable) prior to its stated
maturity; or

 

(c)           Breach of Certain Covenants.  Failure of any Credit Party to perform or
comply with any term or condition contained in Section 5.1(f), Section 5.2
(with respect to Holding and Company only), Section 5.17(a) or Section 6; or

 

(d)           Breach of Representations, etc.
Any representation, warranty, certification or other statement made or deemed
made by any Credit Party in any Credit Document or in any statement or
certificate at any time given by any Credit Party or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect as of the date made or deemed made; or

 

(e)           Other Defaults Under Credit
Documents.  Any Credit Party shall
default in the performance of or compliance with any term contained herein or
any of the other Credit Documents, other than any such term referred to in any
other Section of this Section 8.1, and such default shall not have been
remedied or waived within thirty (30) days after receipt by Company of notice
from Administrative Agent or any Lender of such default; or

 

(f)            Involuntary Bankruptcy;
Appointment of Receiver, etc.  (i) A
court of competent jurisdiction shall enter a decree or order for relief in
respect of Holding or any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, which decree or order is not stayed; or any
other similar relief shall be granted under any applicable federal or state
law; or (ii) an involuntary case shall be commenced against Holding or any of
its Subsidiaries under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or a decree
or order of a court having jurisdiction in the premises for the appointment of
a receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Holding or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of Holding or any of its Subsidiaries for all or a substantial part
of its property; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of Holding or any
of its 

 

113

 

Subsidiaries, and any such event described in
this clause (ii) shall continue for sixty (60) days without having been
dismissed, bonded or discharged; or

 

(g)           Voluntary Bankruptcy’ Appointment
of Receiver, etc.  (i) Holding or
any of its Subsidiaries shall have an order for relief entered with respect to
it or shall commence a voluntary case under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under
any such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or Holding or any of its Subsidiaries shall make any assignment for
the benefit of creditors; or (ii) Holding or any of its Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the board of directors (or similar
governing body) of Holding or any of its Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to herein or in Section 8.1(f); or

 

(h)           Judgments and Attachments.  Any money judgment, writ or warrant of
attachment or similar process involving in any individual case or in the
aggregate at any time an amount in excess of $15,000,000 (in either case, to
the extent not covered by insurance where Joint Lead Arrangers are reasonably
satisfied that the relevant insurance company is solvent and has not denied
coverage) shall be entered or filed against Holding or any of its Subsidiaries
or any of their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of sixty (60) days (or any action shall be
legally taken by a judgment creditor to levy upon assets or properties or
Holding or any of its Subsidiaries to enforce any such judgment); or

 

(i)            Dissolution.  Any order, judgment or decree shall be
entered against any Credit Party decreeing the dissolution or split up of such
Credit Party and such order shall remain undischarged or unstayed for a period
in excess of thirty (30) days; or

 

(j)            Employee Benefit Plans.  (i) There shall occur one or more ERISA
Events which individually or in the aggregate results in or could reasonably be
expected to result in liability of Holding, any of its Subsidiaries or any of
their respective ERISA Affiliates that could reasonably be expected to result
in a Material Adverse Effect during the term hereof,

 

(k)           Change of Control.  A Change of Control shall occur;

 

(l)            Guaranties, Collateral Documents
and other Credit Documents.  At any
time after the execution and delivery thereof, (i) the Guaranty for any reason,
other than the satisfaction in full of all Obligations, or shall be declared to
be null and void or any Guarantor shall repudiate its obligations thereunder,
(ii) this Agreement or any Collateral Document shall be declared null and void,
or Collateral Trustee shall not have or shall cease to have a valid and
perfected Lien in any Collateral consisting of assets that are not immaterial
to Holding and its Subsidiaries purported to be covered by the Collateral
Documents with the priority required by the relevant Collateral Document, in
each case for any reason other than the failure of Collateral Trustee or any
Secured Party to take any action within its control and except to the extent covered
by a title insurance policy to the reasonable satisfaction of the Collateral
Trustee, or (iii) any Credit Party shall contest the validity or enforceability
of any Credit Document in writing or

 

114

 

deny in writing that it has any further
liability, including with respect to future advances by Lenders, under this
Agreement or any Collateral Document to which it is a party or (iv) the
Obligations shall cease to constitute senior indebtedness under the
subordination provisions of the Subordinated Indebtedness, or, in any case,
such subordination provisions shall be invalidated or otherwise cease to be
legal, valid and binding obligations of the parties thereto, enforceable in
accordance with their terms; or

 

(m)          Failure to Effect Merger.  The Merger shall not have occurred by close
of business on the day immediately following the Closing Date.

 

THEN,
(1) upon the occurrence of any Event of Default described in Section 8.1(f) or
8.1(g) with respect to Company, automatically, and (2) upon the occurrence of
any other Event of Default, at the request of (or with the consent of)
Requisite Lenders, upon notice to Company by Administrative Agent, (A) the
Commitments (other than, in the case of an Event of Default not constituting a
Major Default, the Term Loan B Commitment in an amount equal to $225,000,000
less the principal amount of the then outstanding Delayed Draw Term Loans), if
any, of each Lender having such Commitments and the obligation of each Fronting
Bank to issue any Letter of Credit shall immediately terminate; (B) each of the
following shall immediately become due and payable, in each case without
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by each Credit Party: (I) the unpaid principal
amount of and accrued interest on the Loans, (II) an amount equal to the
maximum amount that may at any time be drawn under all Letters of Credit then
outstanding (regardless of whether any beneficiary under any such Letter of
Credit shall have presented, or shall be entitled at such time to present, the
drafts or other documents or certificates required to draw under such Letters
of Credit), and (III) all other Obligations; provided, the foregoing
shall not affect in any way the obligations of Lenders under Section 2.4(e);
(C) the Administrative Agent may cause the Collateral Trustee to enforce any
and all Liens and security interests created pursuant to Collateral Documents;
and (D) Administrative Agent shall direct Company to pay (and Company hereby
agrees upon receipt of such notice, or upon the occurrence of any Event of
Default specified in Section 8.1(f) and (g) to pay) to Administrative Agent
such additional amounts of cash, to be held as security for Company’s
reimbursement Obligations in respect of Letters of Credit then outstanding,
equal to the undrawn and unexpired amount of all Letters of Credit at such
time.  Amounts so held as security shall
be applied by the Administrative Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after all such Letters
of Credit shall have expired or been fully drawn upon, if any, shall be applied
to repay other obligations of Company hereunder and under the other Credit Documents.  After all such Letters of Credit shall have
expired or been fully drawn upon and all other obligations of Company hereunder
and under the other Credit Documents shall have been paid in full, the balance,
if any, of the amounts so held as security shall be returned to Company (or
such other Person as may be lawfully entitled thereto).

 

Notwithstanding anything
to the contrary above, prior to the Clean-Up Period Termination Date, except
after the occurrence of a Major Default, none of the Agents or Lenders shall
have or seek to exercise any rights of rescission or other remedy in
consequence of any of the representations or warranties in the Credit Documents
being or being proved to have been incorrect in any respect so long as such
representations and warranties were made in good faith by Company and without
knowledge of any inaccuracy with respect thereto and, prior to the

 

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Clean-Up Period Termination Date Company uses its commercially
reasonable efforts to cure such breach of representation and warranty and has a
reasonable expectation that such cure can be accomplished prior to the Clean-Up
Period Termination Date.

 

8.2.         Company’s Right to Cure Financial Performance
Covenants. 
Notwithstanding anything to the contrary contained in Section 8.1, in
the event that Holding and Company fail to comply with the requirements of any
Financial Performance Covenant, until the 10th day subsequent to delivery of
the related Compliance Certificate, Holding shall have the right, one time
only, to issue Permitted Cure Securities for cash or otherwise receive cash
contributions to the capital of Holding, in either case in an amount equal to
the lesser of (a) the amount necessary to cure the relevant failure to comply
with all the Financial Performance Covenants and (b) $20,000,000, and, in each
case, to contribute any such cash to the capital of Company (collectively, the
“Cure Right”), and upon the receipt by
Company of such cash (the “Cure Amount”)
pursuant to the exercise by Holding of such Cure Right such Financial
Performance Covenant shall be recalculated giving effect to the following pro
forma adjustments:

 

(i)            Consolidated EBITDA shall be
increased, in accordance with the definition thereof, solely for the purpose of
measuring the Financial Performance Covenants and not for any other purpose
under this Agreement, by an amount equal to the Cure Amount;

 

(ii)           if, after giving effect to the
foregoing recalculations, Holding and Company shall then be in compliance with
the requirements of all Financial Performance Covenants, Holding and Company
shall be deemed to have satisfied the requirements of the Financial Performance
Covenants as of the relevant date of determination with the same effect as
though there had been no failure to comply therewith at such date, and the
applicable breach or default of the Financial Performance Covenants which had
occurred shall be deemed cured for all purposes of the Agreement; and

 

(iii)          to the extent that the Cure Amount
proceeds are used to repay Indebtedness, such Indebtedness shall not be deemed
to have been repaid for purposes of calculating the Senior Leverage Ratio and
Total Leverage Ratio for the period with respect to which such Compliance
Certificate applies.

 

SECTION 9.         AGENTS

 

9.1.         Appointment of Agents.  GSCP is hereby appointed Co-Syndication
Agent and a Joint Lead Arranger hereunder, and each Lender hereby authorizes
GSCP, in such capacities, to act as its agent in accordance with the terms
hereof and the other Credit Documents. 
CIBCWM is hereby appointed a Joint Lead Arranger and each Lender
authorizes CIBCWM, in such capacity, to act as its agent in accordance with the
terms hereof and the other Credit Documents. 
CIBC is hereby appointed Administrative Agent and Collateral Trustee
hereunder and under the other Credit Documents, and each Lender hereby
authorizes Administrative Agent and Collateral Trustee to act in such
capacities as its agent in accordance with the terms hereof and the other
Credit Documents.  DB is hereby
appointed Co-Syndication Agent hereunder, and each Lender hereby authorizes DB,
in such capacity, to act as its agent in accordance with the terms hereof and
the other Credit Documents.  Fleet is
hereby appointed Co-Documentation Agent hereunder, and each Lender hereby
authorizes Fleet to act as its agent in accordance with the terms hereof

 

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and the other Credit Documents.  Each Agent hereby agrees to act upon the
express conditions contained herein and the other Credit Documents, as
applicable.  The provisions of this
Section 9 are solely for the benefit of Agents and Lenders and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions
thereof (except as provided in Sections 9.7 and 9.8).  In performing its functions and duties hereunder, each Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency’ or
trust with or for Holding or any of its Subsidiaries.  After the Closing Date, none of GSCP, in its capacities as
Co-Syndication Agent and a Joint Lead Arranger, CIBCWM in its capacity as Joint
Lead Arranger, or DB, in its capacity as Co-Syndication Agent, shall have any
obligations but shall be entitled to all benefits of this Section 9.

 

9.2.         Powers and Duties. 
Each Lender irrevocably authorizes each Agent
to take such action on such Lender’s behalf and to exercise such powers, rights
and remedies hereunder and under the other Credit Documents as are specifically
delegated or granted to such Agent by the terms hereof and thereof, together
with such powers, rights and remedies as are reasonably incidental
thereto.  Each Agent shall have only
those duties and responsibilities that are expressly specified herein and the
other Credit Documents.  Each Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees.  No Agent shall
have, by reason hereof or any of the other Credit Documents, a fiduciary
relationship in respect of any Lender; and nothing herein or any of the other
Credit Documents, expressed or implied, is intended to or shall be so construed
as to impose upon any Agent any obligations in respect hereof or any of the
other Credit Documents except as expressly set forth herein or therein.

 

9.3.         General Immunity.

 

(a)           No Responsibility for Certain
Matters.  No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectability or sufficiency hereof or any other
Credit Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any
other documents furnished or made by any Agent to Lenders or by or on behalf of
any Credit Party to any Agent or any Lender in connection with the Credit
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of any Credit Party or any other Person liable
for the payment of any Obligations, nor shall any Agent be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Credit
Documents or as to the use of the proceeds of the Loans or as to the existence
or possible existence of any Event of Default or Default or to make any
disclosures with respect to the foregoing. 
Anything contained herein to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.

 

(b)           Exculpatory Provisions.  No Agent nor any of its officers, partners,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by any Agent under or in connection with any of the Credit Documents
except to the extent caused by

 

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such Agent’s gross negligence or willful
misconduct.  Each Agent shall be
entitled to refrain from any act or the taking of any action (including the
failure to take an action) in connection herewith or any of the other Credit
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until such Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders
as may be required to give such instructions under Section 10.5) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), such Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. 
Without prejudice to the generality of the foregoing, (i) each Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper Person or Persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Holding and its Subsidiaries), accountants,
experts and other professional advisors selected by it; and (ii) no Lender
shall have any right of action whatsoever against any Agent as a result of such
Agent acting or (where so instructed) refraining from acting hereunder or any of
the other Credit Documents in accordance with the instructions of Requisite
Lenders (or such other Lenders as may be required to give such instructions
under Section 10.5).

 

9.4.         Agents Entitled to Act as Lender.  The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, any Agent in its individual capacity as
a Lender hereunder.  With respect to its
participation in the Loans and the Letters of Credit, each Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as if it were not performing the duties and functions delegated to it
hereunder, and the term “Lender” shall, unless the context clearly otherwise
indicates, include each Agent in its individual capacity.  Any Agent and its Affiliates may accept
deposits from, lend money to, own securities of, and generally engage in any
kind of banking, trust, financial advisory or other business with Holding or
any of its Affiliates as if it were not performing the duties specified herein,
and may accept fees and other consideration from Company for services in
connection herewith and otherwise without having to account for the same to
Lenders.

 

9.5.         Lenders’ Representations, Warranties
and Acknowledgment.

 

(a)           Each Lender represents and warrants
that it has made its own independent investigation of the financial condition
and affairs of Holding and its Subsidiaries in connection with Credit
Extensions hereunder and that it has made and shall continue to make its own
appraisal of the creditworthiness of Holding and its Subsidiaries.  No Agent shall have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter, and no Agent shall have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.

 

(b)           Each Lender, by delivering its
signature page to this Agreement and funding its Term Loan B and/or a Revolving
Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and
consented to and approved, each Credit Document and each other

 

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document required to be approved by any
Agent, Requisite Lenders or Lenders, as applicable on the Closing Date.

 

9.6.         Right to Indemnity. 
Each Lender, in proportion to its Pro Rata
Share, severally agrees to indemnify each Agent, to the extent that such Agent
shall not have been reimbursed by any Credit Party, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other Credit Documents
or otherwise in its capacity as such Agent in any way relating to or arising
out hereof or the other Credit Documents; provided, no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent’s gross negligence or willful misconduct.  If any indemnity furnished to any Agent for
any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished; provided, in no event shall this sentence require any Lender
to indemnify any Agent against any liability, obligation, loss, damage,
penalty, action, judgment, suit, cost, expense or disbursement in excess of
such Lender’s Pro Rata Share thereof, and provided further, this
sentence shall not be deemed to require any Lender to indemnify any Agent
against any liability, obligation, loss, damage, penalty, action, judgment,
suit, cost, expense or disbursement described in the proviso in the immediately
preceding sentence.

 

9.7.         Successor Administrative Agent and Swing
Line Lender.  Administrative
Agent may resign at any time by giving thirty (30) days’ prior written notice
thereof to Lenders and Company, and Administrative Agent may be removed at any
time with or without cause by an instrument or concurrent instruments in
writing delivered to Company and Administrative Agent and signed by Requisite
Lenders.  Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days’ notice to Company, to appoint a successor Administrative
Agent, which successor Administrative Agent shall (unless an Event of Default
under Section 8.1(a), (g), or (h) with respect to Company shall have occurred
and be continuing) be subject to approval by the Company (which approval shall
not be unreasonably withheld or delayed). 
Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall promptly (i) transfer to such successor
Administrative Agent all sums, Securities and other items of Collateral held
under the Collateral Documents, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of
the successor Administrative Agent under the Credit Documents, and (ii) execute
and deliver to such successor Administrative Agent such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Administrative Agent of the
security interests created under the Collateral Documents, whereupon such
retiring or removed Administrative Agent shall be discharged from its duties
and obligations hereunder.  After any
retiring or removed Administrative Agent’s resignation or removal hereunder as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
hereunder.  Any

 

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resignation or removal of Administrative
Agent pursuant to this Section shall also constitute the resignation or removal
of CIBC or its successor as Swing Line Lender, and any successor Administrative
Agent appointed pursuant to this Section shall, upon its acceptance of such
appointment, become the successor Swing Line Lender for all purposes
hereunder.  In such event (a) Company
shall prepay any outstanding Swing Line Loans made by the retiring or removed
Administrative Agent in its capacity as Swing Line Lender, (b) upon such prepayment,
the retiring or removed Administrative Agent and Swing Line Lender shall
surrender any Swing Line Note held by it to Company for cancellation, and (c)
Company shall issue, if so requested by successor Administrative Agent and
Swing Line Loan Lender, a new Swing Line Note to the successor Administrative
Agent and Swing Line Lender, in the principal amount of the Swing Line Loan
Sublimit then in effect and with other appropriate insertions.

 

9.8.         Collateral Documents and Guaranty.

 

(a)           Agents under Collateral Documents
and Guaranty.  Each Lender hereby
further authorizes Administrative Agent or Collateral Trustee, as applicable,
on behalf of and for the benefit of Lenders, to be the agent for and
representative of Lenders with respect to the Guaranty, the Collateral and the
Collateral Documents.  Subject to
Section 10.5, without further written consent or authorization from Lenders,
Administrative Agent or Collateral Trustee, as applicable may execute any
documents or instruments necessary to (i) release any Lien encumbering any item
of Collateral that is the subject of a sale or other disposition of assets
permitted hereby or to which Requisite Lenders (or such other Lenders as may be
required to give such consent under Section 10.5) have otherwise consented or
is subject to a Lien permitted by Section 6.2 (f), (m), (o) or (p) or (ii)
release any Guarantor from the Guaranty pursuant to Section 7.12 or with
respect to which Requisite Lenders (or such other Lenders as may be required to
give such consent under Section 10.5) have otherwise consented.

 

(b)           Right to Realize on Collateral and
Enforce Guaranty.  Anything
contained in any of the Credit Documents to the contrary notwithstanding, each
Credit Party, Administrative Agent, Collateral Trustee and each Lender hereby
agree that (i) no Lender shall have any right individually to realize upon any
of the Collateral or to enforce the Guaranty, it being understood and agreed
that all powers, rights and remedies hereunder may be exercised solely by
Administrative Agent, on behalf of Lenders in accordance with the terms hereof
and all powers, rights and remedies under the Collateral Documents may be
exercised solely by Collateral Trustee, and (ii) in the event of a foreclosure
by Collateral Trustee on any of the Collateral pursuant to a public or private sale,
Collateral Trustee or any Lender may be the purchaser of any or all of such
Collateral at any such sale and Collateral Trustee, as agent for and
representative of Secured Parties (but not any Lender or Lenders in its or
their respective individual capacities unless Requisite Lenders shall otherwise
agree in writing) shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the
Obligations as a credit on account of the purchase price for any collateral
payable by Collateral Trustee at such sale.

 

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SECTION 10.       MISCELLANEOUS

 

10.1.       Notices.  Unless otherwise
specifically provided herein, any notice or other communication herein required
or permitted to be given to a Credit Party, Swing Line Lender, or Agent, shall
be sent to such Person’s address as set forth on Appendix A or in the
other relevant Credit Document, and in the case of any Lender or Fronting Bank,
the address as indicated on the applicable signature page to this Agreement or
otherwise indicated to Administrative Agent in writing.  Each notice hereunder shall be in writing
and may be personally served, or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service and signed for against receipt thereof, upon receipt of
telefacsimile, or five Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided, no notice to
any Agent shall be effective until received by such Agent or when the latest
unrevoked direction from such party is given in accordance with this Section
10.1.

 

10.2.       Expenses.  Whether or not the
transactions contemplated hereby shall be consummated, Company agrees to pay
promptly (a) all the actual and reasonable costs and expenses of the Joint Lead
Arrangers of preparation of the Credit Documents and any consents, amendments,
waivers or other modifications thereto; (b) the reasonable fees, expenses and
disbursements of a single counsel to Agents in connection with the negotiation,
preparation, execution and administration of the Credit Documents and any consents,
amendments, waivers or other modifications thereto and any other documents or
matters requested by Company; (c) all the actual and reasonable costs and
expenses of creating and perfecting Liens in the Collateral in favor of
Collateral Trustee, for the benefit of the Secured Parties, including filing
and recording fees, expenses and taxes, stamp or documentary taxes, search
fees, title insurance premiums and reasonable fees, expenses and disbursements
of counsel to each Agent and of counsel providing any opinions that any Agent
or Requisite Lenders may request in respect of the Collateral or the Liens
created pursuant to the Collateral Documents; (d) all the costs and reasonable
costs, fees, expenses and disbursements of any auditors, accountants, consultants
or appraisers engaged with the prior consent of Company, not to be unreasonably
withheld; (e) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any appraisers, consultants,
advisors and agents employed or retained by Collateral Trustee and its counsel)
in connection with the custody or preservation of any of the Collateral; (f)
all other actual and reasonable costs and expenses incurred by each Agent in
connection with the syndication of the Loans and Commitments and the
negotiation, preparation and execution of the Credit Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (g) after the occurrence of an Event of
Default, all costs and expenses, including reasonable attorneys’ fees and costs
of settlement, incurred by any Agent and Lenders in enforcing any Obligations
of or in collecting any payments due from any Credit Party hereunder or under
the other Credit Documents by reason of such Default or Event of Default
(including in connection with the sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Guaranty) or
in connection with any refinancing or restructuring of the credit arrangements
provided hereunder in the nature of a “work-out” or pursuant to any insolvency
or bankruptcy cases or proceedings.

 

121

 

10.3.       Indemnity.

 

(a)           In addition to the payment of
expenses pursuant to Section 10.2, whether or not the transactions contemplated
hereby shall be consummated, each Credit Party agrees to defend (subject to
Indemnitees’ selection of counsel), indemnify, pay and hold harmless, each
Agent and Lender and the officers, partners, directors, trustees, employees,
agents and Affiliates of each Agent and each Lender (each, an “Indemnitee”),
from and against any and all Indemnified Liabilities; provided, no
Credit Party shall have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
from the gross negligence or willful misconduct of that Indemnitee.  To the extent that the undertakings to
defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be
unenforceable in whole or in part because they are violative of any law or
public policy, the applicable Credit Party shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.

 

(b)           To the extent permitted by applicable
law, no Credit Party shall assert, and each hereby waives, any claim against
any Agent, Lender or any of their respective Affiliates, directors, employees,
attorneys or agents, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
(whether or not the claim therefor is based on contract, tort or duty imposed
by any applicable legal requirement) arising out of, in connection with,
arising out of, as a result of, or in any way related to, this Agreement or any
Credit Document or any agreement or instrument contemplated hereby or thereby,
the transactions contemplated hereby or thereby, any Loan, Letter of Credit, or
the use of the proceeds thereof or any act or omission or event occurring in
connection therewith, and Holding and Company hereby waives, releases and
agrees not to sue upon any such claim or any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.

 

10.4.       Set-Off.  In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default under Section 8.1(a) each Lender is hereby authorized
by each Credit Party at any time or from time to time, subject to the consent
of Administrative Agent (such consent not to be unreasonably withheld or
delayed), without notice to any Credit Party or to any other Person (other than
Administrative Agent), any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits (general or special,
including Indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts) and any other Indebtedness at any
time held or owing by such Lender to or for the credit or the account of any
Credit Party against and on account of the obligations and liabilities of any
Credit Party to such Lender hereunder, the Letters of Credit and participations
therein and under the other Credit Documents, including all claims of any
nature or description arising out of or connected hereto, the Letters of Credit
and participations therein or with any other Credit Document, irrespective of
whether or not (a) such Lender shall have made any demand hereunder or (b) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 2 and although such obligations and liabilities, or
any of them, may be contingent or unmatured. 
Each Credit Party hereby further grants to Administrative Agent and

 

122

 

each Lender a security interest in all
Deposit Accounts maintained with Administrative Agent or such Lender as
security for the Obligations.

 

10.5.       Amendments and Waivers.

 

(a)           Requisite Lenders’ Consent.  Subject to Section 10.5(b) and 10.5(c), no
amendment, modification, termination or waiver of any provision of the Credit
Documents, or consent to any departure by any Credit Party therefrom, shall in
any event be effective without the written concurrence of the Requisite Lenders
(other than Defaulting Lenders).

 

(b)           Affected Lenders’ Consent.  Without the written consent of each Lender
(other than a Defaulting Lender) that would be directly affected thereby, no
amendment, modification, termination, or consent shall be effective if the
effect thereof would:

 

(i)            extend the scheduled final maturity
of any Loan or Note;

 

(ii)           waive, reduce or postpone any
scheduled repayment pursuant to Section 2.12 (but not prepayment);

 

(iii)          extend the stated expiration date of any
Letter of Credit beyond the Revolving Commitment Termination Date;

 

(iv)          reduce the rate of interest on any
Loan (other than any waiver of any increase in the interest rate applicable to
any Loan pursuant to Section 2.10) or any fee payable hereunder; it being
understood that any amendment or modification to the financial definitions in
this Agreement shall not constitute a reduction in the rate of interest for
purposes of this clause (iv);

 

(v)           extend the time for payment of any
such interest or fees except (x) in connection with the waiver of applicability
of any post-default increase in interest rates and (y) that any amendment or
modification to the financial definitions in this Agreement shall not
constitute an extension of the time for payment for purposes of this clause
(v);

 

(vi)          reduce the principal amount of any
Loan or any reimbursement obligation in respect of any Letter of Credit;

 

(vii)         amend, modify, terminate or waive any
provision of this Section 10.5(b) or Section 10.5(c);

 

(viii)        amend the definition of “Requisite Lenders” or “Pro Rata Share”;
provided, with the consent of Requisite Lenders, additional extensions
of credit pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro Rata Share”
on substantially the same basis as the Term Loan B Commitments, the Term Loan
B, the Revolving Commitments and the Revolving Loans are included on the
Closing Date;

 

123

 

(ix)           release all or substantially all of
the Collateral or all or substantially all of the Guarantors from the Guaranty,
except as expressly provided in the Credit Documents; or

 

(x)            consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under any
Credit Document (except in a transaction permitted under 6.8).

 

(c)           Other Consents.  No amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by
any Credit Party therefrom, shall:

 

(i)            increase any Commitment of any Lender
over the amount thereof then in effect without the consent of such Lender; provided,
no amendment, modification or waiver of any condition precedent, covenant,
Default or Event of Default shall constitute an increase in any Revolving
Commitment of any Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a
mandatory reduction in the aggregate Commitments shall not constitute an
increase of the Commitment of any Lender, and that an increase in the available
portion of any Commitment of any Lender shall not constitute an increase in the
Commitment of such Lender);

 

(ii)           amend, modify, terminate or waive any
provision hereof relating to the Swing Line Sublimit or the Swing Line Loans
without the consent of Swing Line Lender;

 

(iii)          amend the definition of “Requisite Class Lenders” without the consent of Requisite
Class Lenders of each Class; provided, with the consent of the Requisite
Lenders, additional extensions of credit pursuant hereto may be included in the
determination of such “Requisite Class Lenders”
on substantially the same basis as the Term Loan B Commitments, the Term Loans
B, the Revolving Commitments and the Revolving Loans are included on the
Closing Date;

 

(iv)          alter the required application of any
repayments or prepayments as between Classes pursuant to Section 2.15 without
the consent of Requisite Class Lenders of each Class which is being allocated a
lesser repayment or prepayment as a result thereof; provided, Requisite
Lenders may waive, in whole or in part, any repayment or prepayment so long as
the application, as between Classes, of any portion of such repayment or
prepayment which is still required to be made is not altered and, if additional
classes of term loans are extended after the Closing Date with the consent of
the Requisite Lenders as required above, such new term loans may be included on
a pro rata basis in the various prepayments or repayments required pursuant to
Section 2.15 with respect to Term Loans B;

 

(v)           amend, modify, terminate or waive any
obligation of Lenders relating to the purchase of participations in Letters of
Credit as provided in Section 2.4(e) without the written consent of
Administrative Agent and of the Fronting Banks; or

 

124

 

(vi)          amend, modify, terminate or waive any
provision of Section 9 as the same applies to any Agent, or any other provision
hereof as the same applies to the rights or obligations of any Agent, in each
case without the consent of such Agent.

 

Notwithstanding anything
to the contrary contained herein, this Agreement may be amended with the
written consent of the Administrative Agent, Company, the holders of not less
than 50.0% of the Revolving Exposure and the Lenders providing the relevant
Replacement Term Loans (as defined below) to permit the refinancing of all
outstanding Term Loans B (“Refinanced Term Loan B”) with a replacement
term loan tranche hereunder (“Replacement Term Loans”), provided
that (a) the aggregate principal amount of such Refinanced Term Loans shall not
exceed the aggregate principal amount of such Refinanced Term Loan B, (b) the
interest rate for such Replacement Term Loans shall not be higher than the
interest rate for such Refinanced Term Loan B, (c) the weighted average life to
maturity of such Replacement Term Loans shall not be shorter than the weighted
average life to maturity of such Refinanced Term Loan B at the time of such
refinancing and (d) all other terms applicable to such Replacement Term Loans
shall be substantially identical to, or less favorable to the Lenders providing
such Replacement Term Loans than, those applicable to such Refinanced Term Loan
B, except to the extent necessary to provide for covenants and other terms applicable
to any period after the latest final maturity of the Term Loans B in effect
immediately prior to such refinancing.

 

(d)           Execution of Amendments, etc.  Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender.  Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.  No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances.  Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 10.5 shall be binding upon each Lender
at the time outstanding, each future Lender and, if signed by a Credit Party,
on such Credit Party.

 

10.6.       Successors and Assigns;
Participations.

 

(a)           Generally.  This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and their permitted successors and
assigns.  Credit Party’s rights or
obligations hereunder nor any interest therein may be assigned or delegated by
any Credit Party without the prior written consent of all Lenders except in a
transaction permitted by Section 6.8. 
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 and, to the extent expressly contemplated hereby,
Affiliates of each of the Agents and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

(b)           Register.  Company, Administrative Agent and Lenders
shall deem and treat the Persons listed as Lenders in the Register as the
holders and owners of the corresponding Commitments and Loans listed therein
for all purposes hereof, and no assignment or transfer of any such Commitment
or Loan shall be effective, in each case, unless and until an Assignment
Agreement effecting the assignment or transfer thereof shall have been
delivered to and accepted by Administrative Agent and recorded in the Register
as provided in Section 10.6(e).  Prior
to

 

125

 

such recordation, all amounts owed with
respect to the applicable Commitment or Loan shall be owed to the Lender listed
in the Register as the owner thereof, and any request, authority or consent of
any Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and binding
on any subsequent holder, assignee or transferee of the corresponding
Commitments or Loans.

 

(c)           Right to Assign.  Each Lender shall have the right at any time
to sell, assign or transfer all or a portion of its rights and obligations
under this Agreement, including, without limitation, all or a portion of its
Commitment or Loans owing to it or other Obligation (provided, however,
that each such assignment shall be of a uniform, and not varying, percentage of
all rights and obligations under and in respect of any Loan and any related
Commitments):

 

(i)            to any Person meeting the criteria
of clause (i) of the definition of the term of “Eligible Assignee” upon the
giving of notice to Company and Administrative Agent; and

 

(ii)           to any Person meeting the criteria of
clause (ii) of the definition of the term of “Eligible Assignee” and consented
to by each of Company and Administrative Agent (such consent not to be (x)
unreasonably withheld or delayed or, (y) in the case of Company, required at
any time (1) an Event of Default shall have occurred and then be continuing or
(2) during syndication of the Loans and Commitments, at which times the Company
shall be notified and consulted with respect to and prior to any such
assignment); provided, further each such assignment pursuant to this
Section 10.6(c) shall be in an aggregate amount of not less than (A) $5,000,000
(or such lesser amount as may be agreed to by Company and Administrative Agent
or as shall constitute the aggregate amount of the Revolving Commitments and
Revolving Loans of the assigning Lender) with respect to the assignment of the
Revolving Commitments and Revolving Loans and (B) $1,000,000 (or such lesser
amount as may be agreed to by Company and Administrative Agent or as shall
constitute the aggregate amount of the Term Loan B of the assigning Lender)
with respect to the assignment of Term Loan B.

 

(d)           Mechanics.  The assigning Lender and the assignee
thereof shall execute and deliver to Administrative Agent an Assignment
Agreement, together with (i) a processing and recordation fee of $3,500 (or
such lesser amount as may be agreed by the Administrative Agent, and provided
further, that only one fee shall be payable in the case of contemporaneous
assignments to Related Funds), and (ii) such forms, certificates or other
evidence, if any, with respect to United States federal income tax withholding
matters as the assignee under such Assignment Agreement may be required to
deliver to Administrative Agent pursuant to Section 2.20(c).

 

(e)           Notice of Assignment.  Upon its receipt of a duly executed and
completed Assignment Agreement, together with the processing and recordation
fee referred to in Section 10.6(d) (and any forms, certificates or other
evidence required by this Agreement in connection therewith), Administrative
Agent shall record the information contained in such Assignment Agreement in
the Register, shall give prompt notice thereof to Company and shall maintain a
copy of such Assignment Agreement.

 

126

 

(f)            Representations and Warranties of
Assignee.  Each Lender, upon
execution and delivery hereof or upon executing and delivering an Assignment
Agreement, as the case may be, represents and warrants as of the Closing Date
or as of the applicable Effective Date (as defined in the applicable Assignment
Agreement) that (i) it is an Eligible Assignee; (ii) it has experience and
expertise in the making of or investing in commitments or loans such as the
applicable Commitments or Loans, as the case may be; and (iii) it will make or
invest in, as the case may be, its Commitments or Loans for its own account in
the ordinary course of its business and without a view to distribution of such
Commitments or Loans within the meaning of the Securities Act or the Exchange
Act or other federal securities laws (it being understood that, subject to the
provisions of this Section 10.6, the disposition of such Commitments or Loans
or any interests therein shall at all times remain within its exclusive
control).

 

(g)           Effect of Assignment.  Subject to the terms and conditions of this
Section 10.6, as of the “Effective Date” specified in the applicable Assignment
Agreement: (i) the assignee thereunder shall have the rights and obligations of
a “Lender” hereunder to the extent such rights and obligations hereunder have
been assigned to it pursuant to such Assignment Agreement and shall thereafter
be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning
Lender thereunder shall, to the extent that rights and obligations hereunder
have been assigned thereby pursuant to such Assignment Agreement, relinquish
its rights (other than any rights which survive the termination hereof under
Section 10.8) and be released from its obligations hereunder (and, in the case
of an Assignment Agreement covering all or the remaining portion of an
assigning Lender’s rights and obligations hereunder, such Lender shall cease to
be a party hereto; provided, anything contained in any of the Credit
Documents to the contrary notwithstanding, (y) the Fronting Banks shall
continue to have all rights and obligations thereof with respect to such
Letters of Credit until the cancellation or expiration of such Letters of
Credit and the reimbursement of any amounts drawn thereunder and (z) such
assigning Lender shall continue to be entitled to the benefit of all
indemnities hereunder as specified herein with respect to matters arising out
of the prior involvement of such assigning Lender as a Lender hereunder); (iii)
the Commitments shall be modified to reflect the Commitment of such assignee
and any Revolving Commitment of such assigning Lender, if any; and (iv) if any
such assignment occurs after the issuance of any Note hereunder, the assigning
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its applicable Notes to Administrative
Agent for cancellation, and thereupon Company shall issue and deliver new
Notes, if so requested by the assignee and/or assigning Lender, to such
assignee and/or to such assigning Lender, with appropriate insertions, to
reflect the new Revolving Commitments and/or outstanding Loans of the assignee and/or
the assigning Lender.

 

(h)           Participations.  Each Lender shall have the right at any time
to sell one or more participations to any Person in all or any part of its
Commitments, Loans or in any other Obligation. 
The holder of any such participation, shall not be entitled to require
such Lender to take or omit to take any action hereunder except with respect to
any amendment, modification or waiver that would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Commitment Termination Date) in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or fees thereon (except (x) in connection with a waiver of
applicability of any post-default increase in interest rates and (y) that any
amendment or modification to the financial definitions in this Agreement shall
not constitute a reduction in the rate of interest for purposes

 

127

 

of clause (i)) or reduce the principal amount
thereof, or increase the amount of the participant’s participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Commitment shall not
constitute a change in the terms of such participation, and that an increase in
any Commitment or Loan shall be permitted without the consent of any
participant if the participant’s participation is not increased as a result thereof),
(ii) consent to the assignment or transfer by any Credit Party of any of its
rights and obligations under this Agreement except in a transaction permitted
by Section 6.8 or (iii) release all or substantially all of the Collateral
under the Collateral Documents (except as expressly provided in the Credit
Documents) supporting the Loans hereunder in which such participant is
participating.  Company agrees that each
participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and
2.20 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (c) of this Section; provided, (i) a
participant shall not be entitled to receive any greater payment under Section
2.19 or 2.20 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 Company’s prior written
consent and (ii) a participant that would be a Non-US Lender if it were a
Lender shall not be entitled to the benefits of Section 2.20 unless Company is
notified of the participation sold to such participant and such participant
agrees, for the benefit of Company, to comply with Section 2.20 as though it
were a Lender.  To the extent permitted
by law, each participant also shall be entitled to the benefits of Section 10.4
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.17 as though it were a Lender.

 

(i)            Certain Other Assignments.  In addition to any other assignment
permitted pursuant to this Section 10.6, any Lender may assign and/or pledge
all or any portion of its Loans, the other Obligations owed by or to such
Lender, and its Notes, if any, (i) to secure obligations of such Lender to, any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any operating circular
issued by such Federal Reserve Bank and (ii) in the case of any Lender which
has made a Term Loan B and is an investment fund, to the trustee under the
indenture to which such fund is a party in support of its obligations to such
trustee for the benefit of the applicable trust beneficiaries; provided,
no Lender, as between Company and such Lender, shall be relieved of any of its
obligations hereunder as a result of any such assignment and pledge, and provided
further, in no event shall the applicable Federal Reserve Bank or
trustee be considered to be a “Lender” or be entitled to require the assigning
Lender to take or omit to take any action hereunder.

 

10.7.       Independence of Covenants.  All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.

 

10.8.       Survival of Representations, Warranties and
Agreements.  All
representations, warranties and agreements made herein shall survive the
execution and delivery hereof and the making of any Credit Extension.  Notwithstanding anything herein or implied
by law to the contrary, the agreements of each Credit Party set forth in
Sections 2.18(c), 2.19, 2.20, 10.2, and 10.3 and the agreements of Lenders set
forth in Sections 2.17 and 9.6 shall survive the

 

128

 

payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, the termination of the Commitments, and the termination hereof.

 

10.9.       No
Waiver; Remedies Cumulative.  No
failure or delay on the part of any Agent or any Lender in the exercise of any
power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. 
The rights, powers and remedies given to each Agent and each Lender
hereby are cumulative and shall be in addition to and independent of all
rights, powers and remedies existing by virtue of any statute or rule of law or
in any of the other Credit Documents or any of the Hedge Agreements.  Any forbearance or failure to exercise, and
any delay in exercising, any right, power or remedy hereunder shall not impair
any such right, power or remedy or be construed to be a waiver thereof, nor
shall it preclude the further exercise of any such right, power or remedy.

 

10.10.     Marshalling;
Payments Set Aside.  Neither
any Agent nor any Lender shall be under any obligation to marshal any assets in
favor of any Credit Party or any other Person or against or in payment of any
or all of the Obligations.  To the
extent that any Credit Party makes a payment or payments to Administrative
Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or
Administrative Agent or Lenders enforce any security interests or exercise
their rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.

 

10.11.     Severability.  In case any
provision herein or obligation hereunder or any Note shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired
thereby.

 

10.12.     Obligations Several; Independent Nature of Lenders’
Rights.  The
obligations of Lenders hereunder are several and no Lender shall be responsible
for the obligations or Commitment of any other Lender hereunder.  Nothing contained herein or in any other
Credit Document, and no action taken by Lenders pursuant hereto or thereto,
shall be deemed to constitute Lenders as a partnership, an association, a Joint
Venture or any other kind of entity. 
The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and each Lender shall be entitled to protect and
enforce its rights arising out hereof and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.

 

129

 

10.13.     Headings.  Section headings
herein are included herein for convenience of reference only and shall not
constitute a part hereof for any other purpose or be given any substantive
effect.

 

10.14.     APPLICABLE
LAW.  THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

10.15.     CONSENT TO JURISDICTION.  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY
CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR
ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT,
EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 10.1; (d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES AGENTS AND LENDERS RETAIN THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

 

10.16.     WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS.  EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS.  EACH PARTY HERETO
FURTHER WARRANTS AND

 

130

 

REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER.  IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

10.17.     Confidentiality. 
Each Lender, each Fronting Bank, and each Agent
shall hold all non-public information regarding Company and its business
confidential, it being understood and agreed by Company that, in any event, a
Lender, each Fronting Bank, and each Agent may make (i) disclosures of such
information to Affiliates of such Lender and to their agents and advisors (and
to other persons authorized by a Lender or Agent to organize, present or
disseminate such information in connection with disclosures otherwise made in
accordance with this Section 10.17), (provided, such potential assignees,
transferees, participants and counterparties and advisors are advised of and
agree to be bound by the provisions of this Section 10.17), (ii) disclosures of
such information reasonably required by any bona fide or potential assignee,
transferee or participant in connection with the contemplated assignment,
transfer or participation by such Lender of any Loans or any participations
therein or by any direct or indirect contractual counterparties (or the
professional advisors thereto) in Hedge Agreements, (provided, such Affiliates,
agents, advisors and other Persons are advised of and agree to be bound by the
provisions of this Section 10.17), (iii) disclosure to any rating agency that
requires access to information about a Lender’s investment portfolio in
connection with ratings issued with respect to such Lender or Company when
required by it, provided that, prior to any disclosure, such rating
agency shall undertake in writing to preserve the confidentiality of any
confidential information relating to the Credit Parties received by it from any
of the Agents or any Lender, (iv) disclosures required or requested by any
governmental agency or representative thereof or by the NAIC or pursuant to
legal or judicial process, provided, unless specifically prohibited by
applicable law or court order, each Lender shall make reasonable efforts to
notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition or other routine examination of such Lender by such
governmental agency) or pursuant to any legal or judicial process for
disclosure of any such non-public information prior to disclosure of such
information.

 

10.18.     Usury
Savings Clause.  Notwithstanding
any other provision herein, the aggregate interest rate charged with respect to
any of the Obligations, including all charges or fees in connection therewith
deemed in the nature of interest under applicable law shall not exceed the
Highest Lawful Rate.  If the rate of
interest (determined without regard to the preceding sentence) under this
Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount
of the Loans made hereunder shall bear interest at the Highest Lawful Rate
until the total amount of interest due hereunder equals the amount of interest
which would have been due hereunder if the stated rates of interest set forth
in this Agreement had at all times been in effect.  In addition, if when the Loans made hereunder are repaid in full
the total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have

 

131

 

been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to
the extent permitted by law, Company shall pay to Administrative Agent an
amount equal to the difference between the amount of interest paid and the
amount of interest which would have been paid if the Highest Lawful Rate had at
all times been in effect. 
Notwithstanding the foregoing, it is the intention of Lenders and
Company to conform strictly to any applicable usury laws.  Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender’s option be applied to the
outstanding amount of the Loans made hereunder or be refunded to Company.

 

10.19.     Counterparts.  This Agreement may
be executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.

 

10.20.     Effectiveness.  This Agreement
shall become effective upon the execution of a counterpart hereof by each of
the parties hereto and receipt by Company and Administrative Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.  Delivery of an executed
signature page of this Agreement by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof.  A set of the copies of this Agreement signed
by all the parties shall be lodged with Company and Administrative Agent.

 

[[[Remainder of
page intentionally left blank]]]

 

132

 

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

 

 

	
   

  	
  VERSAILLES
  ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Jonathan Goodman

  	
   

  
	
   

  	
   

  	
  Name: Jonathan Goodman

  
	
   

  	
   

  	
  Title: Vice President,
  Assistant Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
  VERSAILLES
  U.S. HOLDING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Jonathan Goodman

  	
   

  
	
   

  	
   

  	
  Name: Jonathan Goodman

  
	
   

  	
   

  	
  Title: President,
  Treasurer and Assistant Secretary

  

 

133

 

	
   

  	
  CIBC
  WORLD MARKETS CORP.,

  as a Joint Lead Arranger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Deborah Strek

  	
   

  
	
   

  	
   

  	
  Name: Deborah Strek

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

134

 

	
   

  	
  GOLDMAN
  SACHS CREDIT PARTNERS L.P.,

  
	
   

  	
  as a
  Joint Lead Arranger, a Co-Syndication Agent and a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  Revolving Commitment: $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Term Loan B Commitment:
  $

  	
   

  	
   

  
							

 

S-2

 

	
   

  	
  DEUTSCHE
  BANK SECURITIES INC.,

  
	
   

  	
  as a
  Co-Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Christopher Johnson

  	
   

  
	
   

  	
   

  	
  Name:  Christopher Johnson

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Nicholas Hayes

  	
   

  
	
   

  	
   

  	
  Name:  Nicholas Hayes

  
	
   

  	
   

  	
  Title:  Vice President

  
							

 

S-3

 

	
   

  	
  CANADIAN
  IMPERIAL BANK OF COMMERCE,

  
	
   

  	
  as
  Administrative Agent, Collateral Trustee, Swing Line Lender and a Fronting
  Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Deborah Strek

  	
   

  
	
   

  	
   

  	
  Name:  Deborah Strek

  
	
   

  	
   

  	
  Title:  Managing Director, CIBC World Markets, As
  Agent

  
	
   

  	
   

  
	
   

  	
  Revolving Commitment: $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Term Loan B Commitment:
  $

  	
   

  	
   

  
							

 

S-4

 

	
   

  	
  FLEET
  SECURITIES INC.,

  
	
   

  	
  as
  Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  David Dobses

  	
   

  
	
   

  	
   

  	
  Name:  David Dobses

  
	
   

  	
   

  	
  Title:  Managing Director

  

 

S-5

 

	
   

  	
  CIBC
  INC.,

  
	
   

  	
  as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Deborah Strek

  	
   

  
	
   

  	
   

  	
  Name:  Deborah Strek

  
	
   

  	
   

  	
  Title:  Managing Director, CIBC World Markets, As
  Agent

  
	
   

  	
   

  
	
   

  	
  Revolving Commitment: $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Term Loan B Commitment:
  $

  	
   

  	
   

  
							

 

S-6

 

	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Gregory Shefrin

  	
   

  
	
   

  	
   

  	
  Name:  Gregory Shefrin

  
	
   

  	
   

  	
  Title:  Director

  
	
   

  	
   

  
	
   

  	
  Revolving Commitment: $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Term Loan B Commitment:
  $

  	
   

  	
   

  
							

 

S-7

 

	
   

  	
  FLEET
  NATIONAL BANK, 

  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ 
  Andre Paquette

  	
   

  
	
   

  	
   

  	
  Name:  Andre Paquette

  
	
   

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
   

  	
  Revolving Commitment: $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Term Loan B Commitment:
  $

  	
   

  	
   

  
							

 

S-8Exhibit 10.3

 

PLEDGE AND SECURITY AND COLLATERAL TRUST
AGREEMENT

 

dated as of December 30, 2002

 

 

between

 

VERSAILLES ACQUISITION CORPORATION

AND THE OTHER GRANTORS PARTY HERETO

 

 

and

 

CANADIAN IMPERIAL BANK OF COMMERCE,

 

as the Collateral Trustee

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
  DEFINITIONS; GRANT OF SECURITY.

  
	
   

  	
  1.1

  	
  General Definitions

  
	
   

  	
  1.2

  	
  Definitions;
  Interpretation

  
	
  SECTION 2.

  	
  GRANT OF SECURITY AND CREATION OF
  COLLATERAL TRUST.

  
	
   

  	
  2.1

  	
  Grant
  of Security

  
	
   

  	
  2.2

  	
  Certain Limited Exclusions

  
	
   

  	
  2.3

  	
  Creation of Collateral Trust

  
	
   

  	
  2.4

  	
  No Control Arrangements

  
	
  SECTION 3.

  	
  SECURITY FOR OBLIGATIONS; GRANTORS REMAIN
  LIABLE.

  
	
   

  	
  3.1

  	
  Security for Obligations

  
	
   

  	
  3.2

  	
  Equal and Ratable Status

  
	
   

  	
  3.3

  	
  Continuing Liability Under Collateral

  
	
  SECTION 4.

  	
  REPRESENTATIONS AND WARRANTIES AND
  COVENANTS.

  
	
   

  	
  4.1

  	
  Generally

  
	
   

  	
  4.2

  	
  Equipment and Inventory

  
	
   

  	
  4.3

  	
  Receivables

  
	
   

  	
  4.4

  	
  Investment Related PropertyInvestment
  Related Property Generally

  
	
   

  	
  4.5

  	
  Reserved

  
	
   

  	
  4.6

  	
  Letter of Credit Rights

  
	
   

  	
  4.7

  	
  Intellectual Property

  
	
   

  	
  4.8

  	
  Commercial Tort Claims

  
	
  SECTION 5.

  	
  FURTHER ASSURANCES; ADDITIONAL GRANTORS.

  
	
   

  	
  5.1

  	
  Further Assurances

  
	
   

  	
  5.2

  	
  Additional Grantors

  
	
  SECTION 6.

  	
  COLLATERAL TRUSTEE APPOINTED
  ATTORNEY-IN-FACT.

  
	
   

  	
  6.1

  	
  Power of Attorney

  
	
   

  	
  6.2

  	
  No Duty on the Part of Collateral Trustee
  or Secured Parties

  
	
  SECTION 7.

  	
  REMEDIES.

  
	
   

  	
  7.1

  	
  Generally

  
	
   

  	
  7.2

  	
  Application of Proceeds

  
	
   

  	
  7.3

  	
  Sales
  on Credit

  
	
   

  	
  7.4

  	
  Reserved Investment Related Property

  
	
   

  	
  7.5

  	
  Intellectual
  Property

  
	
   

  	
  7.6

  	
  Cash
  Proceeds

  
	
  SECTION 8.

  	
  COLLATERAL TRUSTEE.

  
	
   

  	
  8.1

  	
  Acceptance of Trust Estate

  
	
   

  	
  8.2

  	
  Rights and Duties

  
	
   

  	
  8.3

  	
  Successor

  
	
  SECTION 9.

  	
  CONTINUING SECURITY INTEREST; TRANSFER OF
  LOANS.

  
	
  SECTION 10. 

  	
  STANDARD OF CARE; COLLATERAL TRUSTEE MAY
  PERFORM.

  
	
  SECTION 11.

  	
  INDEMNITY

  
	
  SECTION 12. 

  	
  MISCELLANEOUS.

  
	
   

  	
  12.1

  	
  Notice, Assignment, etc.

  
					

 

i

 

	
  SCHEDULE 4.2
  - LOCATION OF EQUIPMENT AND INVENTORY

  
	
   

  
	
  SCHEDULE 4.4
  - INVESTMENT RELATED PROPERTY

  
	
   

  
	
  SCHEDULE 4.6
  - DESCRIPTION OF LETTERS OF CREDIT

  
	
   

  
	
  SCHEDULE 4.7
  - INTELLECTUAL PROPERTY

  
	
   

  
	
  SCHEDULE 4.8
  - COMMERCIAL TORT CLAIMS

  
	
   

  
	
  EXHIBIT A —
  PLEDGE SUPPLEMENT

  

 

ii

 

This PLEDGE AND
SECURITY AND COLLATERAL TRUST AGREEMENT, dated as of December 30,
2002 (this “Agreement”), between
EACH OF
THE UNDERSIGNED, whether as an original signatory hereto or as an
Additional Grantor (as herein defined) (each, a “Grantor”), and CANADIAN IMPERIAL BANK OF COMMERCE, as
Collateral Trustee for the Secured Parties (as herein defined) (in such
capacity as Collateral Trustee, the “Collateral Trustee”).

 

RECITALS:

 

WHEREAS, reference
is made to that certain Credit and Guaranty Agreement, dated as of the date
hereof (as it may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”),  by and among VERSAILLES ACQUISITION CORPORATION (“Company”), VERSAILLES U.S.
HOLDING
INC. (“Holding”),  the lenders party thereto from time to
time (the “Lenders”), CIBC WORLD MARKETS CORP. and GOLDMAN
SACHS CREDIT PARTNERS L.P. (“GSCP”), as Joint Lead Arrangers and Joint
Bookrunners, GSCP and DEUTSCHE BANK SECURITIES INC.,  as Co-Syndication Agents, and CANADIAN
IMPERIAL BANK OF COMMERCE,  as
Administrative Agent and Collateral Trustee and FLEET SECURITIES INC.,  as Co-Documentation Agent;

 

WHEREAS, subject to
the terms and conditions of the Credit Agreement, certain Grantors may enter
into one or more Hedge Agreements (as therein defined) with one or more Lender
Counterparties;

 

WHEREAS,
in consideration of the extensions of credit and other accommodations of
Lenders and Lender Counterparties as set forth in the Credit Agreement and the
Hedge Agreements, respectively, each Grantor has agreed to secure such
Grantor’s obligations under the Credit Documents and the Hedge Agreements with
Lender Counterparties as set forth herein;

 

WHEREAS, reference
is made to that certain Indenture, dated as of March 15, 1994 (as supplemented
by a First Supplemental HM Indenture dated as of July 27, 1995, as such may be
further amended, restated, supplemented or otherwise modified from time to
time, the “HM
Indenture”),  by
and between Houghton Mifflin Company and State Street Bank and Trust Company,
as successor Trustee (together with any successor trustee appointed in
accordance with the HM Indenture, the “HM Trustee”) pursuant to which, among other things, HM issued $125,000,000 of
its 7% Notes due 2006 (the “2006 HM Notes”) and $150,000,000 of its 7.20% Notes
due 2011 (the “2011 HM Notes” and, with the 2006 HM Notes, the “HM Notes”);

 

WHEREAS, in
consideration of the purchase of the HM Notes by the holders of any HM Notes
(collectively, the “HM Noteholders”) as set forth in the HM Indenture, each Grantor has agreed to
secure such Grantor’s obligations under such Grantor’s obligations under the HM
Indenture and the HM Notes as set forth herein; and

 

NOW, THEREFORE,  in consideration of the premises and the
agreements, provisions and covenants herein contained, each Grantor and the
Collateral Trustee agree as follows:

 

1

 

SECTION 1.  DEFINITIONS; GRANT OF
SECURITY.

 

1.1                               General Definitions.
 In this Agreement, the following
terms shall have the following meanings:

 

“Account Debtor” shall
mean each Person who is obligated on a Receivable or any Supporting Obligation
related thereto.

 

“Accounts” shall
mean all “accounts” as defined in Article 9 of the UCC.

 

“Agreement” shall
have the meaning set forth in the preamble.

 

“Additional Grantors”
shall have the meaning assigned in Section 5.3.

 

“Assigned Agreements”
shall mean all agreements and contracts to which such
Grantor is a party as of the date hereof, or to which such Grantor becomes a
party after the date hereof as each such agreement may be amended, supplemented
or otherwise modified from time to time.

 

“Bankruptcy Code” shall
mean Title 11 of the United States Code entitled “Bankruptcy”, as now and
hereafter in effect, or any successor statute.

 

“Cash Proceeds” shall
have the meaning assigned in Section 7.6.

 

“Chattel Paper” shall
mean all “chattel paper” as defined in Article 9 of the UCC, including, without
limitation, “electronic chattel paper” or “tangible chattel paper”, as each
term is defined in Article 9 of the UCC.

 

“Collateral” shall
have the meaning assigned in Section 2.1.

 

“Collateral Account” shall
mean any account established by the Collateral Trustee.

 

“Collateral Records” shall
mean books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer printouts,
tapes, disks and related data processing software and similar items that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon.

 

“Collateral Support” shall
mean all property (real or personal) assigned, hypothecated or otherwise
securing any Collateral and shall include any security agreement or other
agreement granting a lien or security interest in such real or personal
property.

 

“Collateral Trustee” shall
have the meaning set forth in the preamble.

 

“Commercial Tort Claims” shall
mean all “commercial tort claims” as defined in Article 9 of the UCC,
including, without limitation, all commercial tort claims listed on Schedule
4.8 (as such schedule may be amended or supplemented from time to time).

 

2

 

“Commodities
Accounts” shall mean all “commodity accounts” as
defined in Article 9 of the UCC.

 

“Company” shall
have the meaning set forth in the recitals.

 

“Controlled Foreign
Corporation” shall mean “controlled foreign
corporation” as defined in the Tax Code.

 

“Copyright Licenses” shall
mean any and all agreements providing for the granting of any right in or to
Copyrights (whether such Grantor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule 4.7(B) (as such
schedule may be amended or supplemented from time to time).

 

“Copyrights” shall
mean all United States, and foreign copyrights, including but not limited to
copyrights in software and databases, whether registered or unregistered, and,
with respect to any and all of the foregoing: 
(i) all registrations and applications therefor including, without
limitation, the registrations and applications referred to in Schedule 4.7(A)
(as such schedule may be amended or supplemented from time to time), (ii) all
extensions and renewals thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all rights to sue for past, present and future
infringements thereof, and (v) all Proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages and
proceeds of suit.

 

“Credit Agreement” shall
have the meaning set forth in the recitals.

 

“Credit Facility
Obligations” shall mean the Obligations as defined in
the Credit Agreement.

 

“Credit Facility
Secured Parties” shall mean the Collateral Trustee,
the Agents (as such term is defined in the Credit Agreement), the Lenders and
the Lender Counterparties and shall include, without limitation, all former
Lenders, Lender Counterparties, Agents and Collateral Trustee to the extent
that any Credit Facility Obligations owing to such Persons were incurred while
such Persons were Lenders, Lender Counterparties, Agents or Collateral Trustee
and such Credit Facility Obligations have not been paid or satisfied in full.

 

“Credit Facility
Termination Date” shall mean the last day to occur of
(i) the payment in full of all Credit Facility Obligations, (ii) the cancellation
or termination of the Commitments and (iii) the cancellation or expiration of
all outstanding Letters of Credit.

 

“Documents” shall
mean all “documents” as defined in Article 9 of the UCC.

 

“Deposit Accounts” shall
mean all “deposit accounts” as defined in Article 9 of the UCC.

 

“Equipment” shall
mean:  (i) all “equipment” as defined in
Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data
processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC) and (iii) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or

 

3

 

attached thereto, and all
replacements therefor, wherever located, now or hereafter existing, including
any fixtures.

 

“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time, and any successor thereto.

 

“Event of Default” shall
mean an Event of Default as defined in the Credit Agreement or an Event of
Default as defined in the HM Indenture.

 

“Excluded Property” shall
mean the collective reference to (a) any Lease, license, contract, rights,
instrument or agreement to which any Grantor is a party or any of its rights or
interests thereunder if and for so long as the grant of such security interest
shall constitute or result in (i) the abandonment, invalidation or
unenforceability of any right, title or interest of any Grantor therein or (ii)
a breach or termination pursuant to the terms, or a default under, any such
Lease, license, contract, rights, instrument or agreement or is prohibited by
applicable law (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-408 or 9-409 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction or any other
applicable law provided however that such security interest shall attach
immediately at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and, to the extent
severable, shall attach immediately to any portion of such Lease, license,
contract, rights, instrument or agreement that does not result in any of the
consequences specified in (i) or (ii) above; (b) in any of the outstanding
capital stock of a Controlled Foreign Corporation in excess of 65% of the
voting power of all classes of capital stock of such Controlled Foreign
Corporation entitled to vote; provided that promptly following the amendment of
the Tax Code to allow the pledge of a greater percentage of the voting power of
capital stock in a Controlled Foreign Corporation without adverse tax
consequences, the Collateral shall include, and the security interest granted
by each Grantor shall attach to, such greater percentage of capital stock of
each Controlled Foreign Corporation; (c) all vehicles covered by a certificate
of title or ownership; and (d) any Letter of Credit Rights to the extent that
any Grantor is required by contract or law to apply the proceeds of a drawing
under a letter of credit for another specific purpose.

 

“Fixtures” shall
mean all “fixtures” as defined in Article 9 of the UCC.

 

“General Intangibles”
(i) shall mean all “general intangibles” as defined in
Article 9 of the UCC and (ii) shall include, without limitation, all interest
rate or currency protection or hedging arrangements, all tax refunds, all
licenses, permits, concessions and authorizations, all Assigned Agreements and
all Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC).

 

“Goods” (i) shall
mean all “goods” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all Inventory and Equipment (in each case,
regardless of whether characterized as goods under the UCC).

 

“Grantors” shall
have the meaning set forth in the preamble.

 

“HM Notes” shall
have the same meaning as “HM Bonds” under the Credit Agreement.

 

4

 

“HM Noteholders” shall
mean the holders, from time to time, of the HM Notes.

 

“HM Notes
Obligations” shall mean all obligations of any nature
of any Grantor from time to time owed to the HM Trustee or to any HM Noteholder
under any HM Note or the HM Indenture, whether for principal, premium, if any,
or interest (including interest which, but for the filing of a petition in
bankruptcy with respect to any Grantor, would have accrued on any HM Notes Obligation,
whether or not a claim is allowed against such Grantor for such interest in the
related bankruptcy proceeding), fees, expenses, indemnification or otherwise.

 

“HM Notes Secured
Parties” shall mean the Collateral Trustee, the HM
Noteholders and the HM Trustee.

 

“Instruments” shall
mean all “instruments” as defined in Article 9 of the UCC.

 

“Insurance” shall
mean all insurance policies covering any or all of the Collateral (regardless
of whether the Collateral Trustee is the loss payee thereof).

 

“Intellectual
Property” shall mean, collectively, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.

 

“Inventory” shall
mean:  (i) all “inventory” as defined in
Article 9 of the UCC and (ii) all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing
or production of such inventory or otherwise used or consumed in any Grantor’s
business; all goods in which any Grantor has an interest in mass or a joint or
other interest or right of any kind; and all goods which are returned to or
repossessed by any Grantor, all computer programs embedded in any goods and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).

 

“Investment Accounts”
shall mean the Collateral Account, Securities
Accounts, Commodities Accounts and Deposit Accounts.

 

“Investment Related
Property” shall mean: 
(i) all “investment property” (as such term is defined in Article 9 of
the UCC) and (ii) all of the following (regardless of whether classified as
investment property under the UCC):  all
Pledged Equity Interests, Pledged Debt and certificates of deposit.

 

“Lender” shall have
the meaning set forth in the recitals.

 

“Letter of Credit
Right” shall mean “letter-of-credit right” as defined
in Article 9 of the UCC.

 

“Majority Secured
Parties” shall mean the holders of greater than 50% of
the aggregate principal amount of, and unpaid accrued interest on, the Secured
Obligations.

 

“Money” shall mean
“money” as defined in the UCC.

 

5

 

“Patent Licenses” shall
mean all agreements providing for the granting of any right in or to Patents
(whether such Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.7(D) (as such schedule may
be amended or supplemented from time to time).

 

“Patents” shall
mean all United States and foreign patents and certificates of invention, and
applications for any of the foregoing, including, but not limited to:  (i) each patent and patent application
referred to in Schedule 4.7(C) hereto (as such schedule may be amended or
supplemented from time to time), (ii) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals, and reexaminations thereof, (ii)
all rights corresponding thereto throughout the world, (ii) all inventions and
improvements described therein, (iv) all rights to sue for past, present and
future infringements thereof, and (v) all Proceeds of the foregoing, including
without limitation licenses, royalties, income, payments, claims, damages, and
proceeds of suit.

 

“Permitted Lien” shall
mean a Permitted Lien as defined in the Credit Agreement and any liens incurred
in accordance with Section 1007 of the HM Indenture.

 

“Permitted Sale” shall
mean any sale, disposition transfer or assignment of Collateral made in
accordance with the terms of the Credit Agreement or HM Indenture.

 

“Pledged Debt” shall
mean all Indebtedness (in no event shall include Accounts) owed to such
Grantor, including, without limitation, all Indebtedness described on Schedule
4.4.3 under the heading “Pledged Debt” (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Indebtedness.

 

“Pledged Equity
Interests” shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.

 

“Pledged LLC
Interests” shall mean all interests in any limited
liability company including, without limitation, all limited liability company interests
listed on Schedule 4.4.2 under the heading “Pledged LLC Interests” (as such
schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such limited liability company interests and
any interest of such Grantor on the books and records of such limited liability
company or on the books and records of any securities intermediary pertaining
to such interest and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such limited liability company interests.

 

“Pledged Partnership
Interests” shall mean all interests in any general
partnership, limited partnership, limited liability partnership or other
partnership including, without limitation, all partnership interests listed on
Schedule 4.4.2 under the heading “Pledged Partnership Interests” (as such
schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such

 

6

 

Grantor on the books and
records of such partnership or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions,
cash, warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests.

 

“Pledged Trust
Interests” shall mean all interests in a Delaware
business trust or other trust including, without limitation, all trust
interests listed on Schedule 4.4.2 under the heading “Pledged Trust Interests”
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such trust interests and any interest of
such Grantor on the books and records of such trust or on the books and records
of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such trust
interests.

 

“Pledged Stock” shall
mean all shares of capital stock owned by such Grantor, including, without
limitation, all shares of capital stock described on Schedule 4.4.2 under the
heading “Pledged Stock” (as such schedule may be amended or supplemented from
time to time), and the certificates, if any, representing such shares and any
interest of such Grantor in the entries on the books of the issuer of such
shares or on the books of any securities intermediary pertaining to such
shares, and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares.

 

“Pledge Supplement” shall
mean any supplement to this agreement in substantially the form of Exhibit A.

 

“Proceeds” shall
mean: (i) all “proceeds” as defined in Article 9 of the UCC, (ii) payments
or distributions made with respect to any Investment Related Property and
(iii) whatever is receivable or received when Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.

 

“Receivables” shall
mean all rights to payment, whether or not earned by performance, for goods or
other property sold, leased, licensed, assigned or otherwise disposed of, or
services rendered or to be rendered, including, without limitation all such
rights constituting or evidenced by any Account, Chattel Paper, Instrument,
General Intangible or Investment Related Property, together with all of
Grantor’s rights, if any, in any goods or other property giving rise to such
right to payment and all Collateral Support and Supporting Obligations related
thereto.

 

“Record” shall have
the meaning specified in Article 9 of the UCC.

 

“Secured Obligations”
shall mean, collectively, the Credit Facility
Obligations and the HM Notes Obligations.

 

“Secured Parties” shall
mean, collectively, the Credit Facility Secured Parties and the HM Notes
Secured Parties.

 

7

 

“Securities Accounts”
shall mean all “securities accounts” as defined in
Article 8 of the UCC.

 

“Supporting
Obligation” shall mean all “supporting obligations” as
defined in Article 9 of the UCC.

 

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

 

“Trademark Licenses” shall
mean any and all agreements providing for the granting of any right in or to
Trademarks (whether such Grantor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule 4.7(F) (as such
schedule may be amended or supplemented from time to time).

 

“Trademarks” shall
mean all United States, and foreign trademarks, trade names, corporate names,
company names, business names, fictitious business names, Internet domain
names, service marks, certification marks, collective marks, logos, other
source or business identifiers, designs and general intangibles of a like
nature, all registrations and applications for any of the foregoing including,
but not limited to:  (i) the
registrations and applications referred to in Schedule 4.7(E) (as such schedule
may be amended or supplemented from time to time), (ii) all extensions or
renewals of any of the foregoing, (iii) all of the goodwill of the business
connected with the use of and symbolized by the foregoing, (iv) the right to
sue for past, present and future infringement or dilution of any of the
foregoing or for any injury to goodwill, and (v) all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.

 

“Trade Secret
Licenses” shall mean any and all agreements providing
for the granting of any right in or to Trade Secrets (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(G) (as such schedule may be amended or supplemented
from time to time).

 

“Trade Secrets” shall
mean all trade secrets and all other confidential or proprietary information
and know-how, whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying,
incorporating, or referring in any way to such Trade Secret, including but not
limited to:  (i) the right to sue for
past, present and future misappropriation or other violation of any Trade
Secret, and (ii) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.

 

“Trust Estate” shall
mean all right, title, and interest of the Grantors in the Collateral granted
to the Collateral Trustee in accordance with Section 2.1 herein and all rights
of the Collateral Trustee hereunder.

 

“UCC” shall mean the
Uniform Commercial Code as in effect from time to time in the State of New York
or, when the context implies, the Uniform Commercial Code as in effect from
time to time in any other applicable jurisdiction.

 

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

 

8

 

1.2                               Definitions; Interpretation.  All
capitalized terms used herein (including the preamble and recitals hereto) and
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement or, if not defined therein, in the UCC.  References to “Sections,” “Exhibits” and
“Schedules” shall be to Sections, Exhibits and Schedules, as the case may be,
of this Agreement unless otherwise specifically provided.  Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive
effect.  Any of the terms defined herein
may, unless the context otherwise requires, be used in the singular or the
plural, depending on the reference.  The
use herein of the word “include” or “including”, when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as “without limitation” or “but not limited to” or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter.  All
references herein to provisions of the UCC shall include all successor
provisions under any subsequent version or amendment to any Article of the UCC.

 

SECTION 2.  GRANT OF SECURITY AND
CREATION OF COLLATERAL TRUST.

 

2.1                               Grant of Security.  Each Grantor hereby grants to the Collateral
Trustee a security interest in and continuing lien on all of such Grantor’s
right, title and interest in, to and under all personal property of such
Grantor including, but not limited to the following, in each case whether now
owned or existing or hereafter acquired or arising and wherever located (all of
which being hereinafter collectively referred to as the “Collateral”):

 

(a)                                  Accounts;

 

(b)                                 Chattel Paper;

 

(c)                                  Documents;

 

(d)                                 General Intangibles;

 

(e)                                  Goods;

 

(f)                                    Instruments;

 

(g)                                 Insurance;

 

(h)                                 Intellectual Property;

 

(i)                                     Investment Related
Property;

 

(j)                                     Letter of Credit
Rights;

 

(k)                                  Money;

 

(l)                                     Receivables and
Receivable Records;

 

9

 

(m)                               Commercial Tort Claims;

 

(n)                                 Investment Accounts;

 

(o)                                 to the extent not
otherwise included above, all Collateral Records, Collateral Support and
Supporting Obligations relating to any of the foregoing; and

 

(p)                                 to the extent not
otherwise included above, all Proceeds, products, accessions, rents and profits
of or in respect of any of the foregoing.

 

2.2                               Certain Limited
Exclusions.  Notwithstanding anything herein to the
contrary, in no event shall the security interest granted under Section 2.1
hereof attach to any Excluded Property, and Excluded Property shall not be
subject to this Agreement.

 

2.3                               Creation of
Collateral Trust.  Each
Grantor hereby grants the Trust Estate to the Collateral Trustee to hold in
trust for the benefit of the Secured Parties in accordance with the terms set
forth herein.

 

2.4                               No Control
Arrangements. 
Notwithstanding any provisions of the Credit Documents to the contrary,
(a) the Grantors shall not be required to enter control arrangements or provide
control agreements with respect to, or provide control of, any Investment
Accounts or property or interests in property contained therein, or cash or
Permitted Investments and (b) the Grantors shall not be required to maintain
the Investment Accounts or other property described in clause (a) with any
Agent or any Lender and may maintain them with any Person.

 

SECTION 3.  SECURITY FOR
OBLIGATIONS; GRANTORS REMAIN LIABLE.

 

3.1                               Security for
Obligations.  This
Agreement secures, and the Collateral is collateral security for, the prompt
and complete payment or performance in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. §362(a) (and any successor provision thereof)), of all Secured
Obligations.

 

3.2                               Equal and
Ratable Status.  The
parties hereto agree that the HM Notes Obligations and the Credit Agreement
Obligations are, and will be, equally and ratably secured with each other and
that it is their intention to give full effect to the provisions of Section
1007 of the HM Indenture.

 

3.3                               Continuing
Liability Under Collateral. 
Notwithstanding anything herein to the contrary, (i) each Grantor shall
remain liable for all obligations under the Collateral and nothing contained
herein is intended or shall be a delegation of duties to the Collateral Trustee
or any Secured Party and (ii) each Grantor shall remain liable under each of
the agreements included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
to perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and neither the
Collateral Trustee nor any Secured Party shall have any obligation or liability
under any of such agreements by reason of or arising out of this Agreement or
any other document related thereto

 

10

 

nor shall the Collateral
Trustee nor any Secured Party have any obligation to make any inquiry as to the
nature or sufficiency of any payment received by it or have any obligation to
take any action to collect or enforce any rights under any agreement included
in the Collateral, including, without limitation, any agreements relating to
Pledged Partnership Interests or Pledged LLC Interests; and (iii) the exercise
by the Collateral Trustee of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and
agreements included in the Collateral.

 

SECTION 4.  REPRESENTATIONS AND
WARRANTIES AND COVENANTS.

 

4.1                               Generally.

 

(a)                                  Representations
and Warranties.  Each Grantor hereby
represents and warrants as to itself and its property only that:

 

(i)                                     it
has indicated on Schedule 4.1(A) (as such schedule may be amended or
supplemented from time to time):  (w)
the type of organization of such Grantor, (x) the jurisdiction of organization
of such Grantor, and (y) its organizational identification number and (z) the
jurisdiction where the chief executive office, and for the one-year period
preceding the date hereof has been, located.

 

(ii)                                  the
full legal name of such Grantor is as set forth on Schedule 4.1(A) (as
such schedule may be amended or supplemented from time to time);

 

(iii)                               except
as provided on Schedule 4.1(B), it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business or its corporate
structure in any way (e.g., by merger, consolidation, change in corporate form
or otherwise) within the past five (5) years;

 

(iv)                              upon
the filing of all UCC financing statements naming each Grantor as “debtor” and
the Collateral Trustee as “secured party” and describing the Collateral in the
filing offices set forth opposite such Grantor’s name on Schedule 4.1(C) hereof
(as such schedule may be amended or supplemented from time to time) and other
filings delivered by each Grantor, upon consent of the issuer with respect to
Letter of Credit Rights, and to the extent not subject to Article 9 of the UCC,
upon recordation of the security interests granted hereunder in Patents,
Trademarks and Copyrights in the applicable intellectual property registries,
including but not limited to the United States Patent and Trademark Office and
the United States Copyright Office, the security interests granted to the
Collateral Trustee hereunder in the Collateral other than Investment Accounts
constitute valid and perfected first priority Liens (subject in the case of
priority only to Permitted Liens and to the rights of the United States
government (including any agency or department thereof) with respect to United
States government Receivables) on all of the Collateral to the extent a Lien
can be perfected by a UCC filing, possession instruments or filings in the
United States Patent and Trademark Office and United States Copyright Office;

 

(v)                                 unless
otherwise provided herein, all material actions and consents, including all
filings, notices, registrations and recordings necessary or desirable for the

 

11

 

exercise by
the Collateral Trustee of the voting or other rights provided for in this
Agreement or the exercise of remedies in respect of the material Collateral
have been made or obtained;

 

(vi)                              other
than the financing statements filed in favor of the Collateral Trustee, no
effective UCC financing statement, fixture filing or other instrument similar
in effect under any applicable law covering all or any part of the Collateral
is on file in any filing or recording office except for (x) financing
statements for which proper termination statements have been delivered to the
Collateral Trustee for filing and (y) financing statements filed in connection
with Permitted Liens;

 

(vii)                           none
of the Collateral constitutes, or is the Proceeds of, “farm products” (as
defined in the UCC); and

 

(viii)                        it
does not own any “as extracted collateral” (as defined in the UCC) or any
timber to be cut.

 

(b)                                 Covenants and
Agreements.  Each Grantor hereby
covenants and agrees that:

 

(i)                                     except
for Permitted Liens and the security interest created by this Agreement, it (x)
shall not create or suffer to exist any Lien upon or with respect to any of the
Collateral and (y) shall defend the Collateral against all Persons at any time
claiming any interest therein;

 

(ii)                                  it
shall not change such Grantor’s name, identity, corporate structure (e.g., by
merger, consolidation, change in corporate form or otherwise) type of
organization or jurisdiction of organization unless it shall have (a) notified
the Collateral Trustee in writing, by executing and delivering to the
Collateral Trustee a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto,
(i) at least five (5) days prior to any such change or establishment, in the
case of identifying such new proposed name, identity and/or
(iii) jurisdiction of organization and (ii) no later than thirty (30) days
after any change or establishment, in the case of identifying such new
corporate structure, in each case, providing such other information in
connection therewith as the Collateral Trustee may reasonably request and (b)
taken all actions necessary or advisable to maintain the continuous validity,
perfection and the same or better priority of the Collateral Trustee’s security
interest in the Collateral intended to be granted and agreed to hereby; and

 

(iii)                               it
shall not take or permit any action which could materially impair the
Collateral Trustee’s rights in the Collateral except transactions expressly
permitted under the Credit Agreement.

 

4.2                               Equipment and
Inventory.

 

(a)                                  Representations
and Warranties.  Each Grantor
represents and warrants, on the Closing Date as to itself and its property only
that:

 

12

 

(i)                                     all
of the Equipment and Inventory included in the Collateral is kept for the past
four (4) years only at the locations specified in Schedule 4.2 (as such
schedule may be amended or supplemented from time to time).

 

(b)                                 Covenants and
Agreements.  Each Grantor covenants
and agrees as to itself and its property only that:

 

(i)                                     it
shall keep satisfactory and accurate records of the Inventory in accordance
with its customary practice;

 

(ii)                                  it
shall not deliver any Document evidencing any Equipment and Inventory to any
Person other than the issuer of such Document to claim the Goods evidenced
therefor or the Collateral Trustee; and

 

(iii)                               if
any Equipment or Inventory is in possession or control of any third party, each
Grantor shall join with the Collateral Trustee in notifying the third party of
the Collateral Trustee’s security interest.

 

4.3                               Receivables.

 

(a)                                  Covenants and
Agreements:  Each Grantor hereby
covenants and agrees as to itself and its property only that:

 

(i)                                     it
shall keep and maintain at its own cost and expense satisfactory and complete
records of the Receivables in accordance with its customary practice.

 

(ii)                                  it
shall not amend, modify, terminate or waive any provision of any Receivable in
any manner which could reasonably be expected to have a Material Adverse
Effect;

 

(iii)                               after
the occurrence and during the continuance of an Event of Default, the
Collateral Trustee shall have the right at any time to notify, or require any
Grantor to notify, any Account Debtor of the Collateral Trustee’s security
interest in the Receivables and any Supporting Obligation and, in addition, at
any time following the occurrence and during the continuation of an Event of
Default, the Collateral Trustee may: 
(1) direct the Account Debtors under any Receivables to make payment of
all amounts due or to become due to such Grantor thereunder directly to the
Collateral Trustee; and (2) enforce, at the expense of such Grantor, collection
of any such Receivables and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor
might have done.  If the Collateral
Trustee notifies any Grantor that it has elected to collect the Receivables in
accordance with the preceding sentence, any payments of Receivables received by
such Grantor shall be forthwith deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Collateral Trustee if required,
in the Collateral Account maintained under the sole dominion and control of the
Collateral Trustee, and until so turned over, all amounts and proceeds
(including checks and other instruments) received by such Grantor in respect of
the Receivables, any Supporting Obligation or Collateral Support shall be received
in trust for the benefit of the Collateral Trustee hereunder and shall be

 

13

 

segregated
from other funds of such Grantor and such Grantor shall not adjust, settle or
compromise the amount or payment of any Receivable, or release wholly or partly
any Account Debtor or obligor thereof, or allow any credit or discount thereon;
and

 

(iv)                              it
shall use its best efforts to keep in full force and effect any Supporting
Obligation or Collateral Support relating to any Receivable.

 

(b)                                 Delivery and
Control of Receivables.  With
respect to any individual Receivable in excess of $500,000 that is evidenced
by, or constitutes, Chattel Paper or Instruments, each Grantor shall cause each
originally executed copy thereof to be delivered to the Collateral Trustee (or
its agent or designee) promptly appropriately indorsed to the Collateral
Trustee or indorsed in blank.  With
respect to any individual Receivable in excess of $500,000 which would
constitute “electronic chattel paper” under Article 9 of the UCC, each Grantor
shall promptly take all steps necessary to give the Collateral Trustee control
over such Receivables (within the meaning of Section 9-105 of the UCC).  Any Receivable not otherwise required to be
delivered or subjected to the control of the Collateral Trustee in accordance
with this subsection (c) shall be delivered or subjected to such control upon
request of the Collateral Trustee.

 

4.4                               Investment
Related PropertyInvestment Related Property Generally.

 

(a)                                  Covenants and
Agreements.  Each Grantor hereby
covenants and agrees as to itself and its property only that:

 

(i)                                     in
the event it acquires rights in any Pledged Equity Interests or Pledged Debt
after the date hereof, it shall deliver to the Collateral Trustee a completed
Pledge Supplement, no more frequent than every 6 months substantially in the
form of Exhibit A attached hereto, together with all Supplements to Schedules
thereto, reflecting such new Pledged Equity Interests or Pledged Debt.  Notwithstanding the foregoing, it is
understood and agreed that the security interest of the Collateral Trustee
shall attach to all Investment Related Property immediately upon any Grantor’s
acquisition of rights therein and shall not be affected by the failure of any
Grantor to deliver a supplement to Schedule 4.4 as required hereby;

 

(ii)                                  except
as provided in the next sentence, in the event such Grantor receives any
dividends, interest or distributions on any Investment Related Property, or any
securities or other property upon the merger, consolidation, liquidation or
dissolution of any issuer of any Investment Related Property, then (a) such
dividends, interest or distributions and securities or other property shall be
included in the definition of Collateral without further action and (b) such
Grantor shall promptly take all steps, if any, necessary to ensure the
validity, perfection, priority and, if applicable, control of the Collateral
Trustee over such Investment Related Property (including, without limitation,
delivery thereof to the Collateral Trustee) and pending any such action such
Grantor shall be deemed to hold such dividends, interest, distributions,
securities or other property in trust for the benefit of the Collateral
Trustee.  Notwithstanding the foregoing,
so long as no Event of Default shall have occurred and be continuing and the
Collateral Agent shall not have directed that dividends be turned over, the
Collateral Trustee authorizes each Grantor to retain all dividends and
distributions paid;

 

14

 

(iii)                               each
Grantor consents to the grant by each other Grantor of a Security Interest in
all Investment Related Property to the Collateral Trustee.

 

(b)                                 Delivery and
Control.

 

(i)                                     Each
Grantor agrees that with respect to any Investment Related Property in which it
currently has rights it shall comply with the provisions of this Section
4.4.1(b) on or before the Credit Date and with respect to any Investment
Related Property hereafter acquired by such Grantor it shall comply with the
provisions of this Section 4.4.1(b) immediately upon acquiring rights therein,
in each case in form and substance satisfactory to the Collateral Trustee.  With respect to any Investment Related
Property that is represented by a certificate or that is an “instrument” having
an individual principal amount in excess of $500,000 (other than any Investment
Related Property credited to a Securities Account) it shall cause such
certificate or instrument to be delivered to the Collateral Trustee, indorsed
in blank by an “effective endorsement” (as defined in Section 8-107 of the
UCC), regardless of whether such certificate constitutes a “certificated
security” for purposes of the UCC and in no event shall any certificate or
instrument evidencing any Investment Related Property be delivered to or be in
the possession of any Person other than a Grantor or the Collateral Trustee.

 

(c)                                  Voting and
Distributions.

 

(i)                                     So
long as no Event of Default shall have occurred and be continuing:

 

(1)                                  each
Grantor shall be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Investment Related
Property or any part thereof for any purpose not inconsistent with the terms of
this Agreement, the Credit Agreement or the HM Indenture; it being understood,
however, that, without limitation, neither the voting by such Grantor of any
Pledged Stock for, or such Grantor’s consent to, the election of directors (or
similar governing body) at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such meeting, nor
such Grantor’s consent to or approval of any action otherwise permitted under
this Agreement, the Credit Agreement or the HM Indenture, shall be deemed
inconsistent with the terms of this Agreement, the Credit Agreement or the HM
Indenture within the meaning of this Section 4.4(d)(i)(A), and no notice of any
such voting or consent need be given to the Collateral Trustee; and

 

(2)                                  the
Collateral Trustee shall promptly execute and deliver (or cause to be executed
and delivered) to each Grantor all proxies, and other instruments as such
Grantor may from time to time reasonably request for the purpose of enabling
such Grantor to exercise the voting and other consensual rights when and to the
extent which it is entitled to exercise pursuant to clause (A) above;

 

15

 

(3)                                  Upon the occurrence
and during the continuation of an Event of Default:

 

(A)                              all rights of each
Grantor to exercise or refrain from exercising the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant hereto shall
cease and all such rights shall thereupon become vested in the Collateral
Trustee who shall thereupon have the sole right to exercise such voting and
other consensual rights; and

 

(B)                                in order to permit the
Collateral Trustee to exercise the voting and other consensual rights which it
may be entitled to exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive hereunder:  (1) each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to the Collateral Trustee all
proxies, dividend payment orders and other instruments as the Collateral
Trustee may from time to time reasonably request and (2) the each Grantor
acknowledges that the Collateral Trustee may utilize the power of attorney set
forth in Section 6.

 

4.4.2                     Pledged
Equity Interests

 

(a)                                  Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, as to
itself and its property only that:

 

(i)                                     Schedule
4.4.2 (as such schedule may be amended or supplemented from time to time) sets
forth under the headings “Pledged Stock,” “Pledged LLC Interests,” “Pledged
Partnership Interests” and “Pledged Trust Interests,” respectively, all of the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged
Trust Interests owned by any Grantor and such Pledged Equity Interests
constitute the percentage of issued and outstanding shares of stock, percentage
of membership interests, percentage of partnership interests or percentage of
beneficial interest of the respective issuers thereof indicated on such Schedule;

 

(ii)                                  it
is the record and beneficial owner of the Pledged Equity Interests free of all
Liens, rights or claims of other Persons other than Permitted Liens and there
are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of,
any Pledged Equity Interests;

 

(iii)                               none
of the Pledged LLC Interests nor Pledged Partnership Interests are or represent
interests in issuers that:  (a) are
registered as investment companies and (b) are dealt in or traded on securities
exchanges or markets.

 

(b)                                 Covenants and
Agreements.  Each Grantor hereby
covenants and agrees as to itself and its property only that:

 

(i)                                     each
Grantor consents to the grant by each other Grantor of a security interest in
all Investment Related Property to the Collateral Trustee and, without limiting
the foregoing, consents to the transfer of any Pledged Partnership Interest and

 

16

 

any Pledged
LLC Interest to the Collateral Trustee or its nominee following an Event of
Default and to the substitution of the Collateral Trustee or its nominee as a
partner in any partnership or as a member in any limited liability company with
all the rights and powers related thereto.

 

4.4.3                     Pledged
Debt

 

(a)                                  Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date as to itself and its property only
that:

 

(i)                                     Schedule
4.4.3 (as such schedule may be amended or supplemented from time to time) sets
forth under the heading “Pledged Debt” all of the Pledged Debt owned by any
Grantor;

 

(b)                                 Covenants and
Agreements.  Each Grantor hereby
covenants and agrees as to itself and its property only that:

 

(i)                                     it
shall notify the Collateral Trustee of any default under any Pledged Debt that
has caused, either in any individual case or in the aggregate, a Material
Adverse Effect.

 

4.4.4                     Reserved

 

4.5                               Reserved.

 

4.6                               Letter of Credit
Rights.

 

(a)                                  Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, as to
itself and its property only that:

 

(i)                                     all
material letters of credit to which such Grantor has rights is listed on
Schedule 4.6 (as such schedule may be amended or supplemented from time to
time) hereto; and

 

(ii)                                  it
has obtained the consent of each issuer of any material letter of credit to the
assignment of the proceeds of the letter of credit to the Collateral Trustee.

 

(b)                                 Covenants and
Agreements.  Each Grantor hereby
covenants and agrees that with respect to any material letter of credit
hereafter arising it shall obtain the consent of the issuer thereof to the
assignment of the proceeds of the letter of credit to the Collateral Trustee
and shall deliver to the Collateral Trustee a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto.

 

4.7                               Intellectual
Property.

 

(a)                                  Representations
and Warranties.  Except as disclosed
in Schedule 4.7(H) (as such schedule may be amended or supplemented from time
to time), each Grantor hereby

 

17

 

represents and warrants, on the Closing Date and on each Credit Date,
as to itself and its property only that:

 

(i)                                     Schedule
4.7 (as such schedule may be amended or supplemented from time to time) sets
forth a true and complete list of (i) all United States, state and foreign
registrations of and applications for Patents and Trademarks owned by each
Grantor and (ii) registrations for certain Copyrights owned by each Grantor;

 

(ii)                                  it
owns or otherwise has the valid right to use all other Intellectual Property,
including the Intellectual Property on Schedule 4.7 (as such schedule may be
amended from time to time), used in or necessary to the conduct of its
business, free and clear of all Liens, claims, encumbrances and licenses,
except for Permitted Liens and the Patent Licenses, Copyright Licenses,
Trademark Licenses and Trade Secret Licenses;

 

(iii)                               all
Intellectual Property is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and each Grantor has performed all
reasonable acts and has paid all renewal, maintenance, and other fees and taxes
required to maintain each and every registration and application of Copyrights,
Patents and Trademarks in full force and effect;

 

(iv)                              no
holding, decision, or judgment has been rendered in any action or proceeding
before any court or administrative authority challenging the validity of, such
Grantor’s right to register, or such Grantor’s rights to own or use, any
Intellectual Property and no such action or proceeding is pending or, to the
best of such Grantor’s knowledge, threatened, and, to the best of each
Grantor’s knowledge, all Intellectual Property is valid and enforceable;

 

(v)                                 all
registrations and applications for Copyrights, Patents and Trademarks are
recorded in the name of each Grantor, and none of the Trademarks, Patents,
Copyrights or Trade Secrets has been licensed by any Grantor to any affiliate
or third party, except in the ordinary course of business;

 

(vi)                              each
Grantor has been using as appropriate in the ordinary course of its business
appropriate statutory notice of registration in connection with its use of
registered Trademarks, proper marking practices in connection with the use of
Patents, and appropriate notice of copyright in connection with the publication
of Copyrights, in each case material to the business of such Grantor;

 

(vii)                           each
Grantor uses consistent standards of quality in the manufacture, distribution,
and sale of all products sold and in the provision of all services rendered
under or in connection with all material Trademarks and has taken all
reasonable action necessary to insure that all licensees of the material
Trademarks owned by such Grantor use such consistent standards of quality;

 

(viii)                        to
the best of each Grantor’s knowledge, the conduct of such Grantor’s business
does not infringe upon any trademark, patent, copyright, trade secret or
similar intellectual property right owned or controlled by a third party; no
claim has been made that the use of any Intellectual Property owned or, to the
best of each

 

18

 

Grantor’s
knowledge, used by Grantor (or any of its respective licensees) violates the
asserted rights of any third party;

 

(ix)                                to
the best of each Grantor’s knowledge, no third party is infringing upon or
otherwise violating any rights in any material Intellectual Property owned or
used by such Grantor, or any of its respective licensees; and

 

(x)                                   no
settlement or consents, covenants not to sue, nonassertion assurances, or
releases have been entered into by Grantor or to which Grantor is bound that
adversely effect Grantor’s rights to own or use any material Intellectual
Property.

 

(b)                                 Covenants and
Agreements.  Each Grantor hereby
covenants and agrees as follows:

 

(i)                                     it
shall not do any act or omit to do any reasonable act whereby any of the Intellectual
Property which is material to the business of the Grantor may lapse, or become
abandoned, dedicated to the public, or unenforceable, or which would adversely
affect the validity, grant, or enforceability of the security interest granted
therein except as permitted by the Credit Agreement;

 

(ii)                                  it
shall not, with respect to any Trademarks which are material to the business of
any Grantor, cease the use of any of such Trademarks or fail to maintain the
level of the quality of products sold and services rendered under any of such
Trademarks at a level at least substantially consistent with the quality of
such products and services as of the date hereof, and each Grantor shall take
all steps necessary to insure that licensees of such Trademarks use such
consistent standards of quality;

 

(iii)                               it
shall promptly notify the Collateral Trustee if it knows or has reason to know
that any item of the Intellectual Property that is material to the business of
any Grantor may become (a) abandoned or dedicated to the public or placed in
the public domain, (b) invalid or unenforceable, or (c) subject to any adverse
determination or development (including the institution of proceedings) in any
action or proceeding in the United States Patent and Trademark Office, the
United States Copyright Office, any state registry, any foreign counterpart of
the foregoing, or any court;

 

(iv)                              it
shall take all reasonable steps in the United States Patent and Trademark
Office, the United States Copyright Office, any state registry or any foreign
counterpart of the foregoing, to pursue any application and maintain any
registration of each Trademark, Patent, and Copyright owned by any Grantor and
material to its business which is now or shall become included in the
Intellectual Property including, but not limited to, those items on Schedule
4.7(A), (B) and (C) (as each may be amended or supplemented from time to time);

 

(v)                                 in
the event that any material Intellectual Property owned by or exclusively
licensed to any Grantor is infringed, misappropriated, or diluted by a third
party, such Grantor shall promptly take all reasonable actions to stop such
infringement, misappropriation, or dilution and protect its rights in such
Intellectual Property including,

 

19

 

but not
limited to, at such Grantor’s discretion, the initiation of a suit for
injunctive relief and to recover damages;

 

(vi)                              it
shall quarterly report to the Collateral Trustee (i) the filing of any
application to register any material Intellectual Property with the United
States Patent and Trademark Office, or any state registry or foreign
counterpart of the foregoing (whether such application is filed by such Grantor
or through any agent, employee, licensee, or designee thereof) and (ii) the
registration of any Patents, Trademarks, and, to the extent practicable,
material Copyrights, by any such office, in each case by executing and
delivering to the Collateral Trustee a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto;

 

(vii)                           it
shall, promptly upon the reasonable request of the Collateral Trustee, execute
and deliver to the Collateral Trustee any document required to acknowledge,
confirm, register, record, or perfect the Collateral Trustee’s interest in any
part of the Intellectual Property, whether now owned or hereafter acquired;

 

(viii)                        it
shall hereafter use commercially reasonable efforts so as not to permit the
inclusion in any contract to which it hereafter becomes a party of any
provision that could or might in any way materially impair or prevent the
creation of a security interest in, or the assignment of, such Grantor’s rights
and interests in any property included within the definitions of any
Intellectual Property acquired under such contracts;

 

(ix)                                it
shall take all steps reasonably necessary to protect the secrecy of all
material Trade Secrets, including, without limitation, entering into
confidentiality agreements with employees and labeling and restricting access
to secret information and documents;

 

(x)                                   it
shall continue to collect, in the ordinary course of its business, at its own
expense, all amounts due or to become due to such Grantor in respect of the
Intellectual Property or any portion thereof. 
In connection with such collections, each Grantor may take (and, at the
Collateral Trustee’s reasonable direction, shall take) such action as such
Grantor or the Collateral Trustee may deem reasonably necessary or advisable to
enforce collection of such amounts. 
Notwithstanding the foregoing, the Collateral Trustee shall have the
right at any time, to notify, or require any Grantor to notify, any obligors
with respect to any such amounts of the existence of the security interest created
hereby.

 

4.8                               Commercial Tort
Claims.

 

(a)                                  Representations
and Warranties.  Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, as to
itself and its property only that Schedule 4.8 (as such schedule may be amended
or supplemented from time to time) sets forth all Commercial Tort Claims of
each Grantor in excess of $500,000 individually; and

 

(b)                                 Covenants and
Agreements.  Each Grantor hereby
covenants and agrees that with respect to any Commercial Tort Claim in excess
of $500,000 individually hereafter

 

20

 

arising it shall deliver to the Collateral Trustee a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, identifying such new Commercial Tort
Claims.

 

SECTION 5.  FURTHER ASSURANCES;
ADDITIONAL GRANTORS.

 

5.1                               Further Assurances.

 

(a)                                  Each Grantor agrees
that to the extent practicable from time to time, at the expense of such
Grantor, that it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that the
Collateral Trustee may reasonably request, in order to create and/or maintain
the validity, perfection or priority of and protect any security interest
granted hereby or to enable the Collateral Trustee to exercise and enforce its
rights and remedies hereunder with respect to any Collateral to the extent
required hereby.  Without limiting the
generality of the foregoing, each Grantor shall:

 

(i)                                     file
such financing or continuation statements, or amendments thereto, and execute
and deliver such other agreements, instruments, endorsements, powers of
attorney or notices, as may be necessary or desirable, or as the Collateral
Trustee may reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby;

 

(ii)                                  take
all actions necessary to ensure the recordation of appropriate evidence of the
liens and security interest granted hereunder in the Intellectual Property with
any intellectual property registry in which said Intellectual Property is
registered or in which an application for registration is pending including,
without limitation, the United States Patent and Trademark Office, the United
States Copyright Office, the various Secretaries of State, and the foreign
counterparts on any of the foregoing; and

 

(iii)                               at
the Collateral Trustee’s request, appear in and defend any action or proceeding
that may affect such Grantor’s title to or the Collateral Trustee’s security
interest in all or any part of the Collateral.

 

(b)                                 Each Grantor hereby
authorizes the Collateral Trustee to file a Record or Records, including,
without limitation, financing or continuation statements, and amendments
thereto, in any jurisdictions and with any filing offices as the Collateral
Trustee may determine, in its sole discretion, are necessary or advisable to
perfect the security interest granted to the Collateral Trustee herein.  Such financing statements may describe the
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner
as the Collateral Trustee may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Trustee herein, including, without
limitation, describing such property as “all assets” or “all personal property,
whether now owned or hereafter acquired.” Each Grantor shall furnish to the
Collateral Trustee from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Collateral Trustee may reasonably request, all in
reasonable detail.

 

21

 

(c)                                  Each Grantor hereby
authorizes the Collateral Trustee to modify this Agreement after obtaining such
Grantor’s approval of or signature to such modification by amending Schedule
4.7 (as such schedule may be amended or supplemented from time to time) to
include reference to any right, title or interest in any existing material
Intellectual Property or any material Intellectual Property acquired or developed
by any Grantor after the execution hereof or to delete any reference to any
right, title or interest in any Intellectual Property in which any Grantor no
longer has or claims any right, title or interest.

 

5.2                               Additional Grantors. 
From time to time subsequent to the date hereof, additional Persons may
become parties hereto as additional Grantors (each, an “Additional Grantor”),
by executing a Counterpart Agreement. 
Upon delivery of any such counterpart agreement to the Collateral
Trustee, notice of which is hereby waived by Grantors, each Additional Grantor
shall be a Grantor and shall be as fully a party hereto as if Additional
Grantor were an original signatory hereto. 
Each Grantor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Grantor hereunder, nor by any election of Collateral Trustee not to cause any
Subsidiary of Company to become an Additional Grantor hereunder.  This Agreement shall be fully effective as
to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.

 

SECTION 6.  COLLATERAL TRUSTEE
APPOINTED ATTORNEY-IN-FACT.

 

6.1                               Power of Attorney.  Each Grantor hereby irrevocably appoints the
Collateral Trustee (such appointment being coupled with an interest) during the
continuation of an Event of Default as such Grantor’s attorney-in-fact, with
full authority in the place and stead of such Grantor and in the name of such
Grantor, the Collateral Trustee or otherwise, from time to time in the
Collateral Trustee’s discretion to take any action and to execute any
instrument that the Collateral Trustee may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, the following:

 

(a)                                  upon the occurrence
and during the continuance of any Event of Default, to obtain and adjust
insurance required to be maintained by such Grantor or paid to the Collateral
Trustee pursuant to the Credit Agreement;

 

(b)                                 upon the occurrence
and during the continuance of any Event of Default, to ask for, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral;

 

(c)                                  upon the occurrence
and during the continuance of any Event of Default, to receive, endorse and
collect any drafts or other instruments, documents and chattel paper in
connection with clause (b) above;

 

(d)                                 upon the occurrence and
during the continuance of any Event of Default, to file any claims or take any
action or institute any proceedings that the Collateral Trustee may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of the Collateral Trustee with respect to any of the
Collateral;

 

22

 

(e)                                  to prepare, sign, and
file for recordation in any intellectual property registry, appropriate
evidence of the lien and security interest granted herein in the Intellectual
Property in the name of such Grantor as debtor;

 

(f)                                    to take or cause to
be taken all actions necessary to perform or comply or cause performance or
compliance with the terms of this Agreement, including, without limitation,
access to pay or discharge taxes or Liens (other than Permitted Liens) levied
or placed upon or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by the
Collateral Trustee in its sole discretion, any such payments made by the
Collateral Trustee to become obligations of such Grantor to the Collateral
Trustee, due and payable immediately without demand; and

 

(g)                                 generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Collateral Trustee were
the absolute owner thereof for all purposes, and to do, at the Collateral
Trustee’s option and such Grantor’s expense, at any time or from time to time,
all acts and things that the Collateral Trustee deems reasonably necessary to
protect, preserve or realize upon the Collateral and the Collateral Trustee’s
security interest therein in order to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do.

 

6.2                               No
Duty on the Part of Collateral Trustee or Secured Parties.  The powers conferred on the Collateral
Trustee hereunder are solely to protect the interests of the Secured Parties in
the Collateral and shall not impose any duty upon the Collateral Trustee or any
Secured Party to exercise any such powers. 
The Collateral Trustee and the Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.

 

SECTION
7.  REMEDIES.

 

7.1                               Generally.

 

(a)                                  If any Event of
Default shall have occurred and be continuing, the Collateral Trustee may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it at law or in equity,
all the rights and remedies of the Collateral Trustee on default under the UCC
(whether or not the UCC applies to the affected Collateral) to collect, enforce
or satisfy any Secured Obligations then owing, whether by acceleration or
otherwise, and also may pursue any of the following separately, successively or
simultaneously:

 

(i)                                     require
any Grantor to, and each Grantor hereby agrees that it shall at its expense and
promptly upon request of the Collateral Trustee forthwith, assemble all or part
of the Collateral as directed by the Collateral Trustee and make it available
to the Collateral Trustee at a place to be designated by the Collateral Trustee
that is reasonably convenient to both parties;

 

23

 

(ii)                                  enter
onto the property where any Collateral is located and take possession thereof
with or without judicial process;

 

(iii)                               prior
to the disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent the Collateral Trustee deems appropriate; and

 

(iv)                              without
notice except as specified below or under the UCC, sell, assign, lease, license
(on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Collateral Trustee’s offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon
such other terms as the Collateral Trustee may deem commercially reasonable.

 

(b)                                 The Collateral Trustee
or any Secured Party may be the purchaser of any or all of the Collateral at
any public or private (to the extent to portion of the Collateral being
privately sold is of a kind that is customarily sold on a recognized market or
the subject of widely distributed standard price quotations) sale in accordance
with the UCC and the Collateral Trustee, as agent for and representative of the
Secured Parties, shall be entitled, at the direction of the Majority Secured
Parties, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
(with the consent of the Majority Secured Parties) as a credit on account of
the purchase price for any Collateral payable by the Collateral Trustee at such
sale.  Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.  Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification.  The Collateral
Trustee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given.  The
Collateral Trustee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.  Each Grantor agrees that it
would not be commercially unreasonable for the Collateral Trustee to dispose of
the Collateral or any portion thereof by using Internet sites that provide for
the auction of assets of the types included in the Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets.  Each Grantor hereby waives any claims
against the Collateral Trustee arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if the Collateral
Trustee accepts the first offer received and does not offer such Collateral to
more than one offeree.  If the proceeds
of any sale or other disposition of the Collateral are insufficient to pay all
the Secured Obligations, Grantors shall be liable for the deficiency and the
reasonable fees of any attorneys employed by the Collateral Trustee to collect
such deficiency.  Each Grantor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to the Collateral Trustee, that the Collateral Trustee
has no adequate remedy at law in respect of such breach and, as a consequence,
that each and every

 

24

 

covenant contained in this Section shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.  Nothing in this Section shall in any way
alter the rights of the Collateral Trustee hereunder.

 

(c)                                  The Collateral
Trustee may sell the Collateral without giving any warranties as to the
Collateral.  The Collateral Trustee may
specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to
adversely effect the commercial reasonableness of any sale of the Collateral.

 

(d)                                 If the Collateral
Trustee sells any of the Collateral on credit, the Secured Obligations will be
credited only with payments actually made by the purchaser and received by the
Collateral Trustee and applied to the indebtedness of the purchaser.  In the event the purchaser fails to pay for
the Collateral, the Collateral Trustee may resell the Collateral.

 

(e)                                  The Collateral
Trustee shall have no obligation to marshall any of the Collateral.

 

7.2                               Application of
Proceeds.  Except as expressly provided elsewhere in
this Agreement, all proceeds received by the Collateral Trustee in respect of
any sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Collateral Trustee
against, the Secured Obligations in the following order of priority:  first, to the payment of all costs
and expenses of such sale, collection or other realization, including
reasonable compensation to the Collateral Trustee and its agents and counsel,
and all other expenses, liabilities and advances made or incurred by the
Collateral Trustee in connection therewith, and all amounts for which the
Collateral Trustee is entitled to indemnification hereunder (in its capacity as
the Collateral Trustee and not as a Lender) and all advances made by the
Collateral Trustee hereunder for the account of the applicable Grantor, and to
the payment of all costs and expenses paid or incurred by the Collateral
Trustee in connection with the exercise of any right or remedy hereunder, all
in accordance with the terms hereof ; second, to the extent of any
excess of such proceeds, to the payment of all other Secured Obligations for
the ratable benefit of the Secured Parties, in the case of Credit Facility
Obligations, to the Administrative Agent to be applied in accordance with the
Credit Agreement and in the case of HM Notes Obligations, to the HM Trustee to
be applied in accordance with the HM Indenture; and third, to the extent
of any excess of such proceeds, to the payment to or upon the order of such
Grantor or to whosoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.

 

7.3                               Sales on Credit. 
If Collateral Trustee sells any of the Collateral upon credit, Grantor
will be credited only with payments actually made by purchaser and received by
Collateral Trustee and applied to indebtedness of the Purchaser.  In the event the purchaser fails to pay for
the Collateral, Collateral Trustee may resell the Collateral and Grantor shall
be credited with proceeds of the sale.

 

25

 

7.4                               Reserved
Investment Related Property.

 

(a)                                  Each Grantor
recognizes that, by reason of certain prohibitions contained in the Securities
Act and applicable state securities laws, the Collateral Trustee may be compelled,
with respect to any sale of all or any part of the Investment Related Property
conducted without prior registration or qualification of such Investment
Related Property under the Securities Act and/or such state securities laws, to
limit purchasers to those who will agree, among other things, to acquire the
Investment Related Property for their own account, for investment and not with
a view to the distribution or resale thereof. 
Each Grantor acknowledges that any such private sale may be at prices and
on terms less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Trustee shall
have no obligation to engage in public sales and no obligation to delay the
sale of any Investment Related Property for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it.  If the Collateral Trustee determines to
exercise its right to sell any or all of the Investment Related Property, upon
written request, each Grantor shall and shall cause each issuer of any Pledged
Stock to be sold hereunder, each partnership and each limited liability company
from time to time to furnish to the Collateral Trustee all such information as
the Collateral Trustee may request in order to determine the number and nature
of interest, shares or other instruments included in the Investment Related Property
which may be sold by the Collateral Trustee in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.

 

7.5                               Intellectual Property.

 

(a)                                  Anything contained
herein to the contrary notwithstanding, upon the occurrence and during the
continuation of an Event of Default:

 

(i)                                     the
Collateral Trustee shall have the right (but not the obligation) to bring suit
or otherwise commence any action or proceeding in the name of any Grantor, the
Collateral Trustee or otherwise, in the Collateral Trustee’s sole discretion,
to enforce any Intellectual Property, in which event such Grantor shall, at the
request of the Collateral Trustee, do any and all lawful acts and execute any
and all documents required by the Collateral Trustee in aid of such enforcement
and such Grantor shall promptly, upon demand, reimburse and indemnify the
Collateral Trustee as provided in Section 10 hereof in connection with the exercise
of its rights under this Section, and, to the extent that the Collateral
Trustee shall elect not to bring suit to enforce any Intellectual Property as
provided in this Section, each Grantor agrees to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the infringement
or other violation of any of such Grantor’s rights in the Intellectual Property
by others and for that purpose agrees to diligently maintain any action, suit
or proceeding against any Person so infringing as it believes necessary to
prevent such infringement or violation;

 

26

 

(ii)                                  upon
written demand from the Collateral Trustee, each Grantor shall grant, assign,
convey or otherwise transfer to the Collateral Trustee an absolute assignment
of all of such Grantor’s right, title and interest in and to the Intellectual
Property and shall execute and deliver to the Collateral Trustee such documents
as are necessary or appropriate to carry out the intent and purposes of this
Agreement;

 

(iii)                               each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that the
Collateral Trustee (or any Secured Party) receives cash proceeds in respect of
the sale of, or other realization upon, the Intellectual Property;

 

(iv)                              within
fifteen (15) Business Days after written notice from the Collateral Trustee,
each Grantor shall make available to the Collateral Trustee, to the extent
within such Grantor’s power and authority, such personnel in such Grantor’s
employ on the date of such Event of Default as the Collateral Trustee may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with the Trademarks, Trademark Licenses, such persons to be available to
perform their prior functions on the Collateral Trustee’s behalf and to be
compensated by the Collateral Trustee at such Grantor’s expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default; and

 

(v)                                 the
Collateral Trustee shall have the right to notify, or require each Grantor to
notify, any obligors with respect to amounts due or to become due to such
Grantor in respect of the Intellectual Property, of the existence of the
security interest created herein, to direct such obligors to make payment of
all such amounts directly to the Collateral Trustee, and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such amounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done;

 

(1)                                  all
amounts and proceeds (including checks and other instruments) received by
Grantor in respect of amounts due to such Grantor in respect of the
Intellectual Property or any portion thereof shall be received in trust for the
benefit of the Collateral Trustee hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over or delivered to the
Collateral Trustee in the same form as so received (with any necessary endorsement)
to be held as cash Collateral and applied as provided by Section 7.6 hereof;
and

 

(2)                                  Grantor
shall not unreasonably adjust, settle or compromise the amount or payment of
any such amount or release wholly or partly by any obligor with respect thereto
or allow any credit or discount thereon except as the same would be allowed in
the ordinary course of the Grantor’s business.

 

(b)                                 If (i) an Event of
Default shall have occurred and, by reason of cure, waiver, modification,
amendment or otherwise, no longer be continuing, (ii) no other Event of

 

27

 

Default shall have occurred and be continuing, (iii) an assignment or
other transfer to the Collateral Trustee of any rights, title and interests in
and to the Intellectual Property shall have been previously made and shall have
become absolute and effective, and (iv) the Secured Obligations shall not have
become immediately due and payable, upon the written request of any Grantor,
the Collateral Trustee shall promptly execute and deliver to such Grantor, at
such Grantor’s sole cost and expense, such assignments or other transfer as may
be necessary to reassign to such Grantor any such rights, title and interests
as may have been assigned to the Collateral Trustee as aforesaid, subject to
any disposition thereof that may have been made by the Collateral Trustee;
provided, after giving effect to such reassignment, the Collateral Trustee’s
security interest granted pursuant hereto, as well as all other rights and
remedies of the Collateral Trustee granted hereunder, shall continue to be in
full force and effect; and provided further, the rights, title and interests so
reassigned shall be free and clear of any other Liens granted by or on behalf
of the Collateral Trustee and the Secured Parties.

 

(c)                                  Solely for the
purpose of enabling the Collateral Trustee to exercise rights and remedies
under this Section 7 if an Event of Default shall have occurred and be
continuing and at such time as the Collateral Trustee shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to
the Collateral Trustee, to the extent it has the right to do so, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of said Trademarks, to use, operate under,
license, or sublicense any Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located.

 

7.6                               Cash Proceeds.  If an Event of Default has occurred and is
continuing, all proceeds of any Collateral received by any Grantor consisting
of cash, checks and other near-cash items (collectively, “Cash Proceeds”) shall be held by such
Grantor in trust for the Collateral Trustee, and shall, forthwith upon receipt
by such Grantor and following a request by the Collateral Agent, unless
otherwise provided pursuant to Section 4.4(a)(ii), be turned over to the
Collateral Trustee in the exact form received by such Grantor (duly indorsed by
such Grantor to the Collateral Trustee, if required) and held by the Collateral
Trustee in the Collateral Account.  Any
Cash Proceeds received by the Collateral Trustee (whether from a Grantor or
otherwise):  (i) if no Event of
Default shall have occurred and be continuing, shall be promptly returned to
the applicable Grantor and (ii) if an Event of Default shall have occurred and
be continuing, may, in the sole discretion of the Collateral Trustee, (A) be
held by the Collateral Trustee for the ratable benefit of the Secured Parties,
as collateral security for the Secured Obligations (whether matured or
unmatured) and/or (B) then or at any time thereafter may be applied by the
Collateral Trustee against the Secured Obligations then due and owing.

 

SECTION 8.  COLLATERAL TRUSTEE.

 

8.1                               Acceptance of
Trust Estate.  The Collateral Trustee hereby accepts the
trusts of this Agreement for the benefit of the Secured Parties.  The Collateral Trustee shall be obligated,
and shall have the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including, without limitation, the release or substitution
of Collateral), solely in accordance with this Agreement.

 

28

 

8.2                               Rights and Duties.

 

(a)                                  The Collateral
Trustee may at any time request directions from the Majority Secured Parties as
to any course of action or other matter relating hereto.  Directions given by the Majority Secured
Parties hereunder shall be binding on all Secured Parties and their successors
and assigns for all purposes and the Collateral Trustee shall not be liable to
any party by reason of the Collateral Trustee acting (or not acting) in
accordance with any directions given by the Majority Secured Parties.

 

(b)                                 So long as the Credit
Facility Obligations are Outstanding, after the date hereof (i) if at any time
the HM Trustee shall hold any Lien on any assets of any Grantor securing the HM
Notes Obligations, the HM Trustee shall assign it to the Collateral Trustee as
security for the Secured Obligations, or if such assignment is not possible,
shall subordinate such lien to the satisfaction of Collateral Trustee acting on
instructions of the Majority Secured Party or shall release such lien and (ii)
each Grantor agrees not to grant any Lien on any of its assets in favor of the
HM Trustee or any HM Noteholder other than to the Collateral Trustee as
security for the Secured Obligations.

 

(c)                                  So long as the HM
Notes Obligations are Outstanding, after the date hereof (i) if at any time the
Administrative Agent shall hold any Lien on any assets of any Grantor securing
the Credit Facility Obligations, the Administrative Agent shall assign it to
the Collateral Trustee as security for the Secured Obligations, or if such
assignment is not possible, shall subordinate such lien to the satisfaction of
Collateral Trustee acting on instructions of the Majority Secured Party or
shall release such lien and (ii) each Grantor agrees not to grant any Lien on
any of its assets in favor of the Administrative Agent or any other Credit
Facility Secured Party other than to the Collateral Trustee as security for the
Secured Obligations.

 

(d)                                 Any Collateral or
proceeds thereof received by the Administrative Agent, the HM Trustee, any
other Secured Party in connection with the exercise of any right or remedy
(including setoff) relating to the Collateral in contravention of this
Agreement shall be segregated and held in trust and forthwith paid over to the
Collateral Trustee for application in accordance with the terms of this
Agreement in the same form as received, with any necessary endorsements or as a
court of competent jurisdiction may otherwise direct.  The Collateral Trustee is hereby authorized to make any such
endorsements as agent for Administrative Agent, the HM Trustee or any such other
Secured Party.  This authorization is
coupled with an interest and is irrevocable.

 

(e)                                  To the maximum extent
permitted by law, each Secured Party who is not a Majority Secured Party waives
any claim it might have against the Majority Secured Parties with respect to,
or arising out of or in connection with, any action or failure to act or any
error of judgment, negligence, mistake or oversight whatsoever on the part of
any Majority Secured Party or its directors, officers, employees, attorneys or
agents with respect to any exercise of rights or remedies under the Credit
Documents, other than any claims resulting from the gross negligence or willful
misconduct of any Majority Secured Party. 
No Majority Secured Party nor any of its directors, officers, employees,
attorneys or agents shall be (a) liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or (b) under
any obligation to sell or otherwise dispose of any Collateral upon the request
of any Grantor or any non-Majority

 

29

 

Secured Party or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.

 

(f)                                    In furtherance of
the foregoing provisions of this Section, each Secured Party, by its acceptance
of the benefits hereof, agrees that it shall have no right individually to
realize upon any of the Collateral hereunder, it being understood and agreed by
such Secured Party that all rights and remedies hereunder may be exercised
solely by the Collateral Trustee for the benefit of Secured Parties in
accordance with the terms of this Section.

 

8.3                               Successor.  The Collateral
Trustee may resign at any time by giving thirty (30) days’ prior written notice
thereof to Administrative Agent and HM Trustee and the Grantors, and Collateral
Trustee may be removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to the Grantors and Collateral
Trustee signed by the Majority Secured Parties.  Upon any such notice of resignation or any such removal, the
Majority Secured Parties shall have the right, upon five (5) Business Days’
notice to the Collateral Trustee, following receipt of the Grantors’ consent
(which shall not be unreasonable withheld or delayed and which shall not be
required while an Event of Default under Section 8.1(a), (g) or (h) shall have
occurred and be continuing), to appoint a successor Collateral Trustee.  Upon the acceptance of any appointment as
Collateral Trustee hereunder by a successor Collateral Trustee, that successor
Collateral Trustee under this Agreement shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Collateral Trustee under this Agreement, and the retiring or removed Collateral
Trustee under this Agreement shall promptly (i) transfer to such successor
Collateral Trustee all sums, Securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Trustee under this Agreement, and (ii) execute and deliver to such
successor Collateral Trustee such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Trustee of the security interests
created hereunder, whereupon such retiring or removed Collateral Trustee shall
be discharged from its duties and obligations under this Agreement.  After any retiring or removed Collateral
Trustee’s resignation or removal hereunder as the Collateral Trustee, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was the Collateral
Trustee hereunder.

 

SECTION 9.  CONTINUING SECURITY
INTEREST; TRANSFER OF LOANS.

 

This Agreement
shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the payment in full of the Credit Facility
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, be binding
upon each Grantor, its successors and assigns, and inure, together with the
rights and remedies of the Collateral Trustee hereunder, to the benefit of the
Collateral Trustee and its successors, transferees and assigns, for the benefit
and on behalf of the Secured Parties. 
Without limiting the generality of the foregoing, any Secured Party may
assign or otherwise transfer any Secured Obligations held by it to any other
Person subject to and in compliance with the terms of the Credit Agreement or
the HM Indenture, as applicable, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted

 

30

 

to the Secured Parties herein
or otherwise.  Upon the payment in full
of the Credit Facility Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all Outstanding Letters of
Credit, the security interest granted hereby shall terminate hereunder and of
record and all rights to the Collateral shall revert to Grantors.  Notwithstanding the foregoing, the
Collateral Trustee shall release, at the request of the applicable Grantor, the
security interest granted hereby on any Collateral described in Section
9.8(a)(i) of the Credit Agreement.  Upon
any such termination the Collateral Trustee shall, at Grantors’ expense,
execute and deliver to Grantors such documents as Grantors shall reasonably
request to evidence such termination or release.

 

SECTION 10.  STANDARD OF CARE;
COLLATERAL TRUSTEE MAY PERFORM.

 

The powers
conferred on the Collateral Trustee hereunder are solely to protect its interest,
for the benefit and on behalf of the Secured Parties, in the Collateral and
shall not impose any duty upon it to exercise any such powers.  Except for the exercise of reasonable care
in the custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Trustee shall have no
duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.  The Collateral Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Collateral Trustee accords its
own property.  Neither the Collateral
Trustee nor any of its directors, officers, employees or agents shall be liable
for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
otherwise.  If any Grantor fails to
perform any agreement contained herein, the Collateral Trustee may itself
perform, or cause performance of, such agreement, and the expenses of the Collateral
Trustee incurred in connection therewith shall be payable by each Grantor under
Section 10.2 of the Credit Agreement.

 

SECTION 11.  INDEMNITY

 

Unless an
Event of Default shall have occurred and be continuing, each Grantor shall be
entitled to assume the defense of any action for which indemnification is
sought hereunder with counsel or its choice at its expense (in which case the
Company shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by an Indemnitee except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to each
such Indemnitee.  Notwithstanding each
Grantor’s election to assume the defense of such action, each Indemnitee shall
have the right to employ separate counsel and to participate in the defense of
such action, and such Grantor shall bear the reasonable fees, costs and
expenses of such separate counsel, if (i) the use of counsel chosen by such
Grantor to represent such Indemnitee would present such counsel with a conflict
of interest; (ii) the actual or potential defendants in, or targets of, any
such action include both such Grantor and such Indemnitee and such Indemnitee
shall have reasonably concluded that there may be legal defenses available to
it that are different from or additional to those available to such Grantor (in
which such Grantor shall not have the right to assume the defense or such
action on behalf of such Indemnitee), (iii) such Grantor shall not have
employed counsel reasonably satisfactory to such Indemnitee to represent it
within a reasonable time after notice of the institution of such action; or
(iv) such Grantor shall authorize

 

31

 

such Indemnitee to employ
separate counsel at such Grantor’s expense. 
Each Grantor will not be liable under this Agreement for any amount paid
by an Indemnitee to settle any claims or actions if the settlement is entered
into without such Grantor’s consent, which consent may not be withheld or
delayed unless such settlement is unreasonable in light of such claims or
actions against, and defenses available to, such Indemnitee.

 

SECTION 12.  MISCELLANEOUS.

 

12.1                        Notice, Assignment, etc.

 

Any notice
required or permitted to be given under this Agreement shall be given in
accordance with Section 10.1 of the Credit Agreement and Section 105 of the HM
Indenture, as applicable.  No failure or
delay on the part of the Collateral Trustee in the exercise of any power, right
or privilege hereunder or under the HM Indenture or any other Credit Document
or shall impair such power, right or privilege or be construed to be a waiver
of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further exercise
thereof or of any other power, right or privilege.  All rights and remedies existing under this Agreement, the HM
Indenture and the other Credit Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.  In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.  All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default (as each term is defined in the Credit Agreement or the HM
Indenture) if such action is taken or condition exists.  This Agreement shall be binding upon and
inure to the benefit of the Collateral Trustee and Grantors and their
respective successors and assigns.  No
Grantor shall, without the prior written consent of the Collateral Trustee
given in accordance with the Credit Agreement or the HM Indenture, assign any
right, duty or obligation hereunder. 
This Agreement, the HM Indenture, the HM Notes and the other Credit
Documents embody the entire agreement and understanding between Grantors and
the Collateral Trustee and supersede all prior agreements and understandings
between such parties relating to the subject matter hereof and thereof.  Accordingly, the Credit Documents and the HM
Indenture may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. 
There are no unwritten oral agreements between the parties.  This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signature pages are physically
attached to the same document.

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ITS CONFLICTS OF LAW PROVISIONS (OTHER

 

32

 

THAN
SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAWS).

 

33

 

IN WITNESS
WHEREOF, each Grantor and the Collateral Trustee have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

 

	
   

  	
  VERSAILLES ACQUISITION

  CORPORATION,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  Brizius

  
	
   

  	
   

  	
  Name:
  Charles Brizius

  
	
   

  	
   

  	
  Title: Vice
  President, Assistant Secretary and

  
	
   

  	
   

  	
  Assistant
  Treasurer

  

 

S-1

 

	
   

  	
  CANADIAN IMPERIAL BANK

  OF COMMERCE,
as the Collateral Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah
  Strek

  
	
   

  	
   

  	
  Name:
  Deborah Strek

  
	
   

  	
   

  	
  Title:
  Managing Director

  

 

S-2

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