Document:

Exhibit
10.27

 

FORM OF REVOLVING NOTE

MD BEAUTY, INC.

 

	
  $________________________1

  	
  ________________________2

  
	
   

  	
  [**Issuance
  date**]

  

 

FOR
VALUE RECEIVED, MD BEAUTY, INC., a Delaware corporation (“Company”), promises to pay to ____________________3
(“Payee”) or its registered assigns, the lesser
of (x) ____________________4 ($[**____________________1 **]) and (y)
the unpaid principal amount of all advances made by Payee to Company as
Revolving Loans under the Credit Agreement referred to below. The principal amount
of this Note shall be payable on the dates and in the amounts specified in the
Credit Agreement; provided that the final such installment shall be in
an amount, if such amount is different than specified therein, sufficient to
repay the entire unpaid principal balance of this Note, together with all
accrued and unpaid interest thereon.

Company
also promises to pay interest on the unpaid principal amount hereof, until paid
in full, at the rates and at the times which shall be determined in accordance
with the provisions of that certain Credit Agreement dated as of February 18,
2005, by and among Company, STB Beauty, Inc., a Delaware corporation, the financial
institutions from time to time party thereto as Lenders, and BNP Paribas, as
Administrative Agent (said Credit Agreement, as it may be amended, supplemented
or otherwise modified from time to time, being the “Credit
Agreement”, the terms defined therein and not otherwise defined
herein being used herein as therein defend).

This
Note is one of Company’s “Revolving Notes” in the aggregate principal amount of
$[**_________**] and is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Loans evidenced
hereby were made and are to be repaid.

All
payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Funding
and Payment Office or at such other place as shall be designated in writing for
such purpose in accordance with the terms of the Credit Agreement. Unless and
until an Assignment Agreement effecting the assignment or transfer of this Note
shall have been accepted by Administrative Agent and recorded in the Register
as provided in the Credit Agreement, Company and Administrative Agent shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
Loans evidenced hereby. Payee hereby agrees, by its acceptance hereof that
before disposing of this Note or any part hereof it will make a notation hereon
of all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, that neither the

1               Insert amount of Lender’s Revolving
Loan Commitment in numbers.

2               Insert place of delivery of Note.

3               Insert Lender’s name in capital
letters.

4               Insert amount of Lender’s
Revolving Loan Commitment in words.

 

1

 

failure to make a notation
of any payment made on this Note nor any error in such notation shall limit or
otherwise affect the rights of Payee or the obligations of Company hereunder
with respect to payments of principal of or interest on this Note.

Whenever
any payment on this Note shall be stated to be due on a day which 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 on this Note; provided, however, that if the day on
which payment relating to a LIBOR Loan is due is not a Business Day but is a
day of the month after which no further Business Day occurs in that month, then
the due date thereof shall be the next preceding Business Day.

This
Note is subject to mandatory prepayment as provided in the Credit Agreement and
to prepayment at the option of Company as provided in the Credit Agreement.

THIS NOTE AND THE RIGHTS AND
OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT
WOULD REQUIRE THE APPLICATION OF ANOTHER LAW.

Upon
the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note, together with all accrued and unpaid interest thereon, may
become, or may be declared to be, due and payable in the manner, upon the conditions
and with the effect provided in the Credit Agreement.

The
terms of this Note are subject to amendment only in the manner provided in the
Credit Agreement.

This
Note is subject to restrictions on transfer or assignment as provided in the
Credit Agreement.

No
reference herein to the Credit Agreement and no provision of this Note or the
Credit Agreement shall alter or impair the obligations of Company, which are
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, and in the currency herein prescribed.

Company
promises to pay all costs and expenses, including reasonable attorneys’ fees,
all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. Company and any endorsers of this Note hereby consent
to renewals and extensions of time at or after the maturity hereof, without
notice, and hereby waive diligence, presentment, protest, demand and notice of
every kind and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.

 

2

 

IN
WITNESS WHEREOF, Company has caused this Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at
the place first written above.

 

	
   

  	
  MD BEAUTY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

TRANSACTIONS ON

REVOLVING NOTE

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Outstanding

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type of

  	
   

  	
  Amount of

  	
   

  	
  Amount of

  	
   

  	
  Principal

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Loan Made

  	
   

  	
  Loan Made

  	
   

  	
  Principal Paid

  	
   

  	
  Balance

  	
   

  	
  Notation

  	
   

  
	
  Date

  	
   

  	
  This Date

  	
   

  	
  This Date

  	
   

  	
  This Date

  	
   

  	
  This Date

  	
   

  	
  Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

4EXHIBIT 10.28

TERM
LOAN AGREEMENT

DATED
AS OF FEBRUARY 18, 2005

AMONG

MD BEAUTY, INC.,

as Company,

STB BEAUTY, INC.,

as Holdings,

THE LENDERS LISTED HEREIN,

as Lenders,

and

BNP PARIBAS,

as Administrative Agent

 

BNP PARIBAS

Lead Arranger

CIBC WORLD MARKETS CORP.

Syndication Agent

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page No.

  	
   

  
	
  SECTION 1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  	
   

  
	
  1.1

  	
   

  	
  Certain Defined Terms

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Accounting Terms; Utilization of GAAP for Purposes of Calculations
  Under Agreement

  	
   

  	
  31

  	
   

  
	
  1.3

  	
   

  	
  Other Definitional Provisions and Rules of Construction

  	
   

  	
  31

  	
   

  
	
  SECTION 2.

  	
   

  	
  AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

  	
   

  	
  32

  	
   

  
	
  2.1

  	
   

  	
  Commitments; Making of Loans; the Register; Optional Notes

  	
   

  	
  32

  	
   

  
	
  2.2

  	
   

  	
  Interest on the Loans

  	
   

  	
  34

  	
   

  
	
  2.3

  	
   

  	
  Fees

  	
   

  	
  37

  	
   

  
	
  2.4

  	
   

  	
  Repayments and Prepayments; General Provisions Regarding Payments;
  Application of Proceeds of Collateral and Payments Under Guaranties

  	
   

  	
  37

  	
   

  
	
  2.5

  	
   

  	
  Use of Proceeds

  	
   

  	
  42

  	
   

  
	
  2.6

  	
   

  	
  Special Provisions Governing LIBOR Loans

  	
   

  	
  43

  	
   

  
	
  2.7

  	
   

  	
  Increased Costs; Taxes; Capital Adequacy

  	
   

  	
  45

  	
   

  
	
  2.8

  	
   

  	
  Statement of Lenders; Obligation of Lenders to Mitigate

  	
   

  	
  49

  	
   

  
	
  2.9

  	
   

  	
  Replacement of a Lender

  	
   

  	
  49

  	
   

  
	
  SECTION 3.

  	
   

  	
  INTENTIONALLY OMITTED

  	
   

  	
  50

  	
   

  
	
  SECTION 4.

  	
   

  	
  CONDITIONS TO LOANS

  	
   

  	
  50

  	
   

  
	
  4.1

  	
   

  	
  Conditions to Term Loans

  	
   

  	
  50

  	
   

  
	
  4.2

  	
   

  	
  Additional Conditions

  	
   

  	
  58

  	
   

  
	
  SECTION 5.

  	
   

  	
  COMPANY’S REPRESENTATIONS AND WARRANTIES

  	
   

  	
  59

  	
   

  
	
  5.1

  	
   

  	
  Organization, Powers, Qualification, Good Standing, Business and
  Subsidiaries

  	
   

  	
  59

  	
   

  
	
  5.2

  	
   

  	
  Authorization of Borrowing, etc

  	
   

  	
  60

  	
   

  
	
  5.3

  	
   

  	
  Financial Condition

  	
   

  	
  61

  	
   

  
	
  5.4

  	
   

  	
  No Material Adverse Change; No Restricted Junior Payments

  	
   

  	
  61

  	
   

  
	
  5.5

  	
   

  	
  Title to Properties; Liens; Real Property; Intellectual Property

  	
   

  	
  61

  	
   

  
	
  5.6

  	
   

  	
  Litigation; Adverse Facts

  	
   

  	
  62

  	
   

  
	
  5.7

  	
   

  	
  Payment of Taxes

  	
   

  	
  62

  	
   

  
	
  5.8

  	
   

  	
  Performance of Agreements; Material Contracts

  	
   

  	
  63

  	
   

  
	
  5.9

  	
   

  	
  Governmental Regulation

  	
   

  	
  63

  	
   

  

 

 

 

	
  5.10

  	
   

  	
  Securities Activities

  	
   

  	
  63

  	
   

  
	
  5.11

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  63

  	
   

  
	
  5.12

  	
   

  	
  Certain Fees

  	
   

  	
  64

  	
   

  
	
  5.13

  	
   

  	
  Environmental Protection

  	
   

  	
  64

  	
   

  
	
  5.14

  	
   

  	
  Employee Matters

  	
   

  	
  65

  	
   

  
	
  5.15

  	
   

  	
  Solvency

  	
   

  	
  65

  	
   

  
	
  5.16

  	
   

  	
  Matters Relating to Collateral

  	
   

  	
  65

  	
   

  
	
  5.17

  	
   

  	
  Disclosure

  	
   

  	
  66

  	
   

  
	
  5.18

  	
   

  	
  Second Lien Claims

  	
   

  	
  66

  	
   

  
	
  SECTION 6.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  66

  	
   

  
	
  6.1

  	
   

  	
  Financial Statements and Other Reports

  	
   

  	
  67

  	
   

  
	
  6.2

  	
   

  	
  Existence, etc

  	
   

  	
  72

  	
   

  
	
  6.3

  	
   

  	
  Payment of Taxes and Claims; Tax

  	
   

  	
  72

  	
   

  
	
  6.4

  	
   

  	
  Maintenance of Properties; Insurance; Application of Net Insurance/
  Condemnation Proceeds

  	
   

  	
  72

  	
   

  
	
  6.5

  	
   

  	
  Inspection Rights; Lender Meeting

  	
   

  	
  74

  	
   

  
	
  6.6

  	
   

  	
  Compliance with Laws, etc

  	
   

  	
  75

  	
   

  
	
  6.7

  	
   

  	
  Environmental Matters

  	
   

  	
  75

  	
   

  
	
  6.8

  	
   

  	
  Execution of Subsidiary Guaranty and Personal Property Collateral
  Documents After the Closing Date

  	
   

  	
  76

  	
   

  
	
  6.9

  	
   

  	
  Matters Relating to Additional Real Property Collateral

  	
   

  	
  78

  	
   

  
	
  6.10

  	
   

  	
  Interest Rate Protection

  	
   

  	
  78

  	
   

  
	
  6.11

  	
   

  	
  Deposit Accounts, Securities Accounts and Cash Management Systems

  	
   

  	
  78

  	
   

  
	
  6.12

  	
   

  	
  Collateral Assignment of Life Insurance Policy

  	
   

  	
  79

  	
   

  
	
  6.13

  	
   

  	
  Financial Assistance to Second Lien Term Loans.

  	
   

  	
  79

  	
   

  
	
  SECTION 7.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  79

  	
   

  
	
  7.1

  	
   

  	
  Indebtedness

  	
   

  	
  80

  	
   

  
	
  7.2

  	
   

  	
  Liens and Related Matters

  	
   

  	
  81

  	
   

  
	
  7.3

  	
   

  	
  Investments; Acquisitions

  	
   

  	
  83

  	
   

  
	
  7.4

  	
   

  	
  Contingent Obligations

  	
   

  	
  85

  	
   

  
	
  7.5

  	
   

  	
  Restricted Junior Payments

  	
   

  	
  86

  	
   

  
	
  7.6

  	
   

  	
  Maximum Leverage Ratio

  	
   

  	
  87

  	
   

  
	
  7.7

  	
   

  	
  Restriction on Fundamental Changes; Asset Sales

  	
   

  	
  87

  	
   

  

 

 

2

 

	
  7.8

  	
   

  	
  Consolidated Capital Expenditures

  	
   

  	
  88

  	
   

  
	
  7.9

  	
   

  	
  Transactions with Shareholders and Affiliates

  	
   

  	
  89

  	
   

  
	
  7.10

  	
   

  	
  Sales and Lease-Backs

  	
   

  	
  89

  	
   

  
	
  7.11

  	
   

  	
  Conduct of Business

  	
   

  	
  89

  	
   

  
	
  7.12

  	
   

  	
  Amendments or Waivers of Certain Agreements; Amendments of Holdings
  Note Documents

  	
   

  	
  90

  	
   

  
	
  7.13

  	
   

  	
  Fiscal Year

  	
   

  	
  90

  	
   

  
	
  7.14

  	
   

  	
  OFAC

  	
   

  	
  90

  	
   

  
	
  SECTION 8.

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  91

  	
   

  
	
  8.1

  	
   

  	
  Failure to Make Payments When Due

  	
   

  	
  91

  	
   

  
	
  8.2

  	
   

  	
  Default in Other Agreements

  	
   

  	
  91

  	
   

  
	
  8.3

  	
   

  	
  Breach of Certain Covenants

  	
   

  	
  91

  	
   

  
	
  8.4

  	
   

  	
  Breach of Warranty

  	
   

  	
  91

  	
   

  
	
  8.5

  	
   

  	
  Other Defaults Under Loan Documents

  	
   

  	
  91

  	
   

  
	
  8.6

  	
   

  	
  Involuntary Bankruptcy; Appointment of Receiver, etc

  	
   

  	
  92

  	
   

  
	
  8.7

  	
   

  	
  Voluntary Bankruptcy; Appointment of Receiver, etc

  	
   

  	
  92

  	
   

  
	
  8.8

  	
   

  	
  Judgments and Attachments

  	
   

  	
  93

  	
   

  
	
  8.9

  	
   

  	
  Dissolution

  	
   

  	
  93

  	
   

  
	
  8.10

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  93

  	
   

  
	
  8.11

  	
   

  	
  Change in Control

  	
   

  	
  93

  	
   

  
	
  8.12

  	
   

  	
  Invalidity of Loan Documents; Failure of Security; Repudiation of
  Obligations

  	
   

  	
  93

  	
   

  
	
  SECTION 9.

  	
   

  	
  ADMINISTRATIVE AGENT

  	
   

  	
  94

  	
   

  
	
  9.1

  	
   

  	
  Appointment

  	
   

  	
  94

  	
   

  
	
  9.2

  	
   

  	
  Powers and Duties; General Immunity

  	
   

  	
  96

  	
   

  
	
  9.3

  	
   

  	
  Independent Investigation by Lenders; No Responsibility For Appraisal
  of Creditworthiness

  	
   

  	
  97

  	
   

  
	
  9.4

  	
   

  	
  Right to Indemnity

  	
   

  	
  98

  	
   

  
	
  9.5

  	
   

  	
  Resignation of Administrative Agent; Successor Administrative Agent

  	
   

  	
  98

  	
   

  
	
  9.6

  	
   

  	
  Intercreditor Agreement; Collateral Documents and Guaranties

  	
   

  	
  99

  	
   

  
	
  9.7

  	
   

  	
  Duties of Other Agents

  	
   

  	
  100

  	
   

  
	
  9.8

  	
   

  	
  Administrative Agent May File Proofs of Claim

  	
   

  	
  100

  	
   

  
	
  SECTION 10.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  101

  	
   

  

 

 

3

 

	
  10.1

  	
   

  	
  Successors and Assigns; Assignments and Participations in Loans and
  Letters of Credit

  	
   

  	
  101

  	
   

  
	
  10.2

  	
   

  	
  Expenses

  	
   

  	
  104

  	
   

  
	
  10.3

  	
   

  	
  Indemnity

  	
   

  	
  105

  	
   

  
	
  10.4

  	
   

  	
  Set-Off

  	
   

  	
  106

  	
   

  
	
  10.5

  	
   

  	
  Ratable Sharing

  	
   

  	
  107

  	
   

  
	
  10.6

  	
   

  	
  Amendments and Waivers

  	
   

  	
  107

  	
   

  
	
  10.7

  	
   

  	
  Independence of Covenants

  	
   

  	
  108

  	
   

  
	
  10.8

  	
   

  	
  Notices; Effectiveness of Signatures

  	
   

  	
  108

  	
   

  
	
  10.9

  	
   

  	
  Survival of Representations, Warranties and Agreements

  	
   

  	
  109

  	
   

  
	
  10.10

  	
   

  	
  Failure or Indulgence Not Waiver; Remedies Cumulative

  	
   

  	
  109

  	
   

  
	
  10.11

  	
   

  	
  Marshalling; Payments Set Aside

  	
   

  	
  110

  	
   

  
	
  10.12

  	
   

  	
  Severability

  	
   

  	
  110

  	
   

  
	
  10.13

  	
   

  	
  Obligations Several; Independent Nature of Lenders’ Rights; Damage
  Waiver

  	
   

  	
  110

  	
   

  
	
  10.14

  	
   

  	
  Release of Security Interest or Guaranty

  	
   

  	
  111

  	
   

  
	
  10.15

  	
   

  	
  Applicable Law

  	
   

  	
  111

  	
   

  
	
  10.16

  	
   

  	
  Construction of Agreement; Nature of Relationship

  	
   

  	
  111

  	
   

  
	
  10.17

  	
   

  	
  Consent to Jurisdiction and Service of Process

  	
   

  	
  112

  	
   

  
	
  10.18

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  112

  	
   

  
	
  10.19

  	
   

  	
  Confidentiality

  	
   

  	
  113

  	
   

  
	
  10.20

  	
   

  	
  USA Patriot Act

  	
   

  	
  114

  	
   

  
	
  10.21

  	
   

  	
  Counterparts; Effectiveness

  	
   

  	
  114

  	
   

  
	
  10.22

  	
   

  	
  Intercreditor Agreement

  	
   

  	
  114

  	
   

  

 

 

4

 

 

EXHIBITS

 

I                           FORM OF NOTICE OF
BORROWING

II                          FORM OF NOTICE OF
CONVERSION/CONTINUATION

III                         [RESERVED]

IV                         FORM OF TERM NOTE

V                          [RESERVED]

VI                         [RESERVED]

VII                       FORM OF COMPLIANCE
CERTIFICATE

VIII                      FORM OF OPINION OF COMPANY
COUNSEL

IX                        FORM OF ASSIGNMENT
AGREEMENT

X                          FORM OF FINANCIAL
CONDITION CERTIFICATE

XI                        FORM OF SUBSIDIARY
GUARANTY

XII                       FORM OF SECURITY
AGREEMENT

XIII                      FORM OF HOLDINGS GUARANTY

XIV                      [RESERVED]

XV                       [RESERVED]

XVI                      FORM OF MANAGEMENT
SUBORDINATION AGREEMENT

 

5

 

SCHEDULES

	
  1.1

  	
   

  	
  EXISTING DEBT

  
	
   

  	
   

  	
   

  
	
  4.1C

  	
   

  	
  CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP;
  MANAGEMENT

  
	
   

  	
   

  	
   

  
	
  4.1J

  	
   

  	
  ENVIRONMENTAL REPORTS

  
	
   

  	
   

  	
   

  
	
  4.1L

  	
   

  	
  CLOSING DATE MORTGAGED PROPERTIES

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  SUBSIDIARIES OF HOLDINGS

  
	
   

  	
   

  	
   

  
	
  5.5B

  	
   

  	
  REAL PROPERTY

  
	
   

  	
   

  	
   

  
	
  5.5C

  	
   

  	
  INTELLECTUAL PROPERTY

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  FISCAL YEARS

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  PERMITTED INDEBTEDNESS

  
	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  CERTAIN EXISTING LIENS

  
	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  CERTAIN EXISTING INVESTMENTS

  
	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  CONTINGENT
  OBLIGATIONS

  
	
   

  	
   

  	
   

  
	
  7.9

  	
   

  	
  TRANSACTIONS
  WITH SHAREHOLDERS AND AFFILIATES

  

 

 

 

6

 

EXECUTION

MD BEAUTY, INC.

TERM LOAN AGREEMENT

This TERM LOAN
AGREEMENT is dated as of February 18, 2005 and entered into by and
among STB  BEAUTY, INC.,
a Delaware corporation (“Holdings”), MD BEAUTY, INC., a Delaware corporation (the “Company”), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a “Lender” and collectively as “Lenders”),
and BNP PARIBAS (“BNP Paribas”), as
administrative agent for Lenders (in such capacity, “Administrative Agent”).

R E C I T A L S

WHEREAS, Lenders have agreed to extend certain
credit facilities to Company, in an aggregate amount not to exceed $54,500,000,
consisting of Term Loans (this and other capitalized terms used in these
recitals without definition being used as defined in subsection 1.1), the
proceeds of which will be used, together with the proceeds of the First Lien
Term Loans and the Holdings Notes, to fund the Recapitalization and fees,
commissions and expenses related thereto;

WHEREAS, Company has agreed to secure all of the
Obligations hereunder and under the other Loan Documents by granting to
Administrative Agent, for the benefit of Lenders, a Second Priority Lien on
substantially all of its fee owned real property and its personal and mixed
property, including a pledge of the Capital Stock of each of its Domestic
Subsidiaries and 66% of the Capital Stock of each of its first tier Foreign
Subsidiaries; and

WHEREAS, Holdings and all of the Subsidiaries of
Company have agreed to guarantee the Obligations hereunder and under the other
Loan Documents and to secure their guaranties by granting to Administrative
Agent for the benefit of Lenders, a Second Priority Lien on substantially all
of their fee owned real property and their personal and mixed property, including
a pledge of all of the Capital Stock of their Domestic Subsidiaries and 66% of
the Capital Stock of their first tier Foreign Subsidiaries.

NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Holdings, Company,
Lenders, and Administrative Agent agree as follows:

Section
1.              DEFINITIONS

1.1                               Certain Defined Terms.

The following terms used
in this Agreement shall have the following meanings:

“Acquisition
Agreement” means the
Agreement and Plan of Merger dated as of May 3, 2004, by and among Holdings,
STB Acquisition, Inc., a Delaware corporation, Company, JH Partners and certain
stockholders and option holders of Company, as in effect on June 10, 

 

 

2004 and as such
agreement may be amended from time to time thereafter to the extent permitted
under subsection 7.12A.

“Additional
Mortgaged Property” has the meaning assigned to that term in
subsection 6.9.

“Additional
Mortgage” has the meaning assigned to that term in subsection 6.9.

“Adjusted LIBOR” means, for each Interest
Period in respect of any LIBOR Loan, an interest rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1% determined pursuant to the
following formula:

	
  Adjusted LIBOR 

  	
  =

  	
  LIBOR

  
	
   

  	
   

  	
   

  	
  1.00 — Eurodollar Reserve
  Percentage

  
				

 

Adjusted LIBOR shall be adjusted automatically as of the effective date
of any change in the Eurodollar Reserve Percentage.

“Administrative
Agent” has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Administrative Agent
appointed pursuant to subsection 9.5A.

“Affected
Lender” has the meaning assigned to that term in subsection 2.6C.

“Affected
Loans” has the meaning assigned to that term in subsection 2.6C.

“Affiliate”
as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract or
otherwise.  Notwithstanding the
foregoing, neither Administrative Agent nor any Lender shall be deemed to be an
“Affiliate” of any Loan Party or any Affiliate thereof.

“Agreement”
means this Term Loan Agreement dated as of February 18, 2005, as it may be
amended, supplemented or otherwise modified from time to time.

“Applicable Consolidated Leverage Ratio”
means, at any time, the ratio of (i) Consolidated Total Debt (minus all Cash
and Cash Equivalents held by any Loan Party subject to a Second Priority Lien)
at such date to (ii) Consolidated EBITDA for the four consecutive Fiscal
Quarters most recently ended as of the date for which a Compliance Certificate
has been most recently delivered pursuant to subsection 6.1(iv).

“Approved
Fund” means a Fund that is administered or managed by (i) a Lender,
(ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity
that administers or manages a Lender.

 

2

 

“Asset Sale”
means the sale (x) by Company or any of its Subsidiaries to any Person other
than Company or any Subsidiary Guarantor or (y) by any Foreign Subsidiary to
any Person other than Company or any of its Subsidiaries of, in each case,
(i) any of the stock of any of Company’s Subsidiaries,
(ii) substantially all of the assets of any division or line of business
of Company or any of its Subsidiaries, or (iii) any other assets (whether
tangible or intangible) of Company or any of its Subsidiaries (other than (a)
inventory (or other assets) sold, licensed, leased or disposed of in the
ordinary course of business, (b) sales, assignments, transfers or dispositions
of accounts in the ordinary course of business for purposes of collection and
(c) any such other assets to the extent that the aggregate value of such assets
sold in any single transaction or related series of transactions is equal to
$200,000 or less).

“Assignment
Agreement” means an Assignment and Assumption Agreement in
substantially the form of Exhibit IX annexed hereto.

“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 (rounded upwards to the nearest 1/100 of
1%) 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%.  If, for any reason, Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate,
including the inability or failure of Administrative Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base Rate shall be
determined without regards to clause (ii) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist.  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 date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

“Base Rate
Loans” means Loans bearing interest at rates determined by reference
to the Base Rate as provided in subsection 2.2A.

“Base Rate
Margin” means the margin over the Base Rate used in determining the
rate of interest of Base Rate Loans pursuant to subsection 2.2A.

“Berkshire
Partners” means Berkshire Partners LLC, a Massachusetts limited
liability company.

“Business Day”
means (i) for all purposes other than as covered by clause (ii) below, 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 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 LIBOR or any LIBOR 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.

 

3

 

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

“Capital Stock” means the capital stock or other equity interests of
a Person.

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

“Cash Equivalents”
means, as at any date of determination, (i) marketable securities (a) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time
of the acquisition thereof, the highest rating obtainable from either Standard
& Poor’s (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”);
(iii) commercial paper maturing no more than one year from the date of creation
thereof and having, at the time of the acquisition thereof, a rating of at
least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of
deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that has Tier 1 capital (as defined in such regulations) of not less
than $100,000,000; and (v) shares of any money market mutual fund that (a) has
substantially all of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of
not less than $500,000,000, and (c) has the highest rating obtainable from
either S&P or Moody’s.

“CEO Payment
Amount” means a one-time bonus payment to Leslie Blodgett in the
amount of $711,000 made in June, 2004.

“Certificate
of Merger” means the Certificate of Merger dated as of June 10,
2004, by and between STB Acquisition, Inc., a Delaware corporation, and
Company.

“Change in
Control” means any of the following: 
(i) (a) Permitted Holders shall cease to beneficially own and
control at least a majority of
the issued and outstanding shares of Capital Stock of Holdings entitled
(without regard to the occurrence of any contingency) to vote for the election
of members of the Governing Body of Holdings; (b) Permitted Holders shall cease
to beneficially own and control at least a majority of the issued and
outstanding shares of the Capital Stock of Holdings; (ii) the occurrence of a
change in the composition of the Governing Body of Holdings such that a
majority of the members of such Governing Body are not Continuing Members;
(iii) the failure at any time of Holdings to legally and beneficially own
and control 100% of the issued and outstanding shares of Capital Stock of
Company or the failure at any time of Holdings to have the ability to elect all
of the Governing Body of Company; and (iv) the occurrence of any “Change in
Control” or similar event under the Second Lien Term Loan Documents or the
Holdings Note Documents.  As used herein,
the term 

 

4

 

“beneficially own”
or “beneficial ownership” shall have the meaning set forth in the Exchange Act
and the rules and regulations promulgated thereunder.

“Closing Date”
means February 18, 2005, the date on which the initial Loans are made.

“Closing Date
Mortgage” has the meaning assigned to that term in subsection 4.1L.

“Closing Date
Mortgage Policies” has the meaning assigned to that term in
subsection 4.1L.

“Closing Date
Mortgaged Property” has the meaning assigned to that term in
subsection 4.1L.

“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
Account” has the meaning assigned to that term in the Security
Agreement.

“Collateral
Documents” means the Security Agreement, the Foreign Pledge
Agreements, the Mortgages, Control Agreements and all other instruments or
documents delivered by any Loan Party pursuant to this Agreement or any of the
other Loan Documents in order to grant to Administrative Agent, on behalf of
Lenders, a Lien on any real, personal or mixed property of that Loan Party as
security for the Obligations.

“Commitments”
means the Term Loan Commitments.

“Company”
has the meaning assigned to that term in the introduction to this Agreement.

“Compliance
Certificate” means a certificate substantially in the form of Exhibit VII
annexed hereto.

“Confidential
Information Memorandum” means the Confidential Information
Memorandum circulated by Administrative
Agent in connection with
the syndication of the Loans and the Commitments.

“Consolidated
Capital Expenditures” means, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in “additions to property, plant or equipment” or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries; provided that for purposes of this definition, the
purchase price of 

 

5

 

assets that are
purchased simultaneously with the trade-in of existing assets of a similar type
and nature or with the application of Net Insurance/Condemnation Proceeds or
Net Asset Sale Proceeds (to the extent permitted hereunder) shall be included
in Consolidated Capital Expenditures only to the extent of the gross amount of
such purchase price less the credit granted by the seller of such assets for
the assets being traded in at such time or the amount of such net proceeds, as
the case may be; and provided, further that Consolidated Capital
Expenditures shall exclude (i) acquisition costs in Permitted Acquisitions,
(ii) Permitted Equity Contribution Capex, and (iii) costs of leasehold
improvements to the extent either paid for by landlords or, if paid for by
Company or any of its Subsidiaries, reimbursed by landlords, in each case so
long as neither the company nor any of its Subsidiaries has any obligation to
pay, reimburse or repay as the case may be, any portion of such amounts in any
circumstances.

“Consolidated
Cash Interest Expense” means, for any period, Consolidated Interest
Expense for such period excluding, however, any interest expense
not payable in Cash; provided
that for the period from the Closing Date through the first anniversary of the
Closing Date, Consolidated Cash Interest Expense should be calculated as of any
date of determination by multiplying Consolidated Cash Interest Expense from
the Closing Date through such date of determination by a fraction the numerator
of which is 365 and the denominator of which is the number of days elapsed
since the Closing Date as of such date of determination.

“Consolidated
Current Assets” means, as at any date of determination, the total
assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP, excluding
Cash and Cash Equivalents.

“Consolidated
Current Liabilities” means, as at any date of determination, the
total liabilities of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current liabilities in conformity with GAAP,
excluding the current portions of Funded Debt and Capital Leases.

“Consolidated
EBITDA” means, for any period, the sum, without duplication, of the
amounts for such period of (i) Consolidated Net Income,
(ii) Consolidated Interest Expense, (iii) taxes paid or provisions
for taxes based on income, (iv) total depreciation expense, (v) total
amortization expense, (vi) other non-cash items (including, without
limitation, non-cash effect of any purchase accounting, write-down of
intangibles and marking hedges to market), (vii) non-cash employee compensation
expenses, (viii) the CEO Payment Amount, (ix) Management Fees during such
period, (x) any charges associated with the one-time write offs related to the
Emeryville Lease and the Corporate Office Lease, provided that the
aggregate amount of such charges included in this clause (x) shall not
exceed $2,000,000, (xi) Transaction Costs and any other non-recurring or
extraordinary Cash costs incurred in such period, provided that the
aggregate amount of such other non-recurring or extraordinary Cash costs
included in this clause (xi) shall not exceed $2,000,000 in any one Fiscal
Year or $4,000,000 in the aggregate from and after the Closing Date, but only,
in the case of clauses (ii)-(xi), to the extent deducted in the calculation of
Consolidated Net Income, less other non-cash items added in the
calculation of Consolidated Net Income (other than any such non-cash item to the
extent it will result in the receipt of cash payments in any future period),
all of the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.  

 

6

 

Notwithstanding
anything contained herein to the contrary, the creation and reversal of
reserves in the ordinary course of business shall not constitute non-cash items
for purposes of calculating Consolidated EBITDA.

“Consolidated
Excess Cash Flow” means, for any period, an amount (if positive)
equal to (i) the sum, without duplication, of the amounts for such period of
(a) Consolidated EBITDA (but determined by adding back thereto, but without
duplication, any amounts deducted in the calculation of Consolidated Net Income
for such period that were paid, incurred or accrued in violation of any of the
provisions of this Agreement) and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts
for such period of (a) voluntary and scheduled repayments of Consolidated Total
Debt (excluding repayments of First Lien Revolving Loans or First Lien Swing
Line Loans except to the extent commitments with respect to the First Lien
Revolving Loans are permanently reduced in connection with such repayments, and
repayments of Indebtedness that is not incurred in compliance with subsection
7.1), (b) Consolidated Capital Expenditures (net of any proceeds of any
related financings with respect to such expenditures) made in accordance with subsection
7.8, (c) Consolidated Cash Interest Expense in respect of Indebtedness
incurred in compliance with subsection 7.1, (d) current taxes based on
income of Company and its Subsidiaries paid in cash such period, (e)
Transaction Costs paid in cash during such period, (f) Management Fees paid in
cash during such period to the extent permitted pursuant to subsection 7.5, (g)
any cash consideration paid during such period by Company or any of its
Subsidiaries in connection with any Permitted Acquisition (net of any amount of
Indebtedness incurred or assumed or proceeds of any equity received, in
connection therewith), and (h) Transaction Costs and any other non-recurring or
extraordinary Cash costs incurred in such period; provided that the aggregate
amount of such other non-recurring or extraordinary Cash costs included in this
clause (h) incurred during the term of this Agreement shall not exceed the
aggregate amount included in Consolidated EBITDA pursuant to clause (xi) of the
definition of that term; provided that for Fiscal Year 2005, all
components of Consolidated Excess Cash Flow shall be calculated for the period
from the Closing Date to January 1, 2006.

“Consolidated
Fixed Charges” means, for any period, the sum (without duplication)
of the amounts for such period of (i) Consolidated Cash Interest Expense,
(ii) scheduled principal payments in respect of Consolidated Total Debt
with respect to such period, (iii) taxes based on income and payable in cash
with respect to such period, (iv) Restricted Junior Payments referred to
in subsections 7.5(iv)(a) and 7.5(iv)(b), and (v) the aggregate amount of all
rents paid or payable during that period under all Capital Leases to which
Company or any of its Subsidiaries is a party as lessee, all of the foregoing
as determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP.

“Consolidated
Interest Expense” means, for any period, total interest expense paid
in or payable in respect of such period (including that portion attributable to
Capital Leases in accordance with GAAP and capitalized interest) of Company and
its Subsidiaries on a consolidated basis 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
bankers’ acceptance financing, net costs under Interest Rate Agreements, and
amounts referred to in subsection 2.3 payable to Administrative Agent and
Lenders that are considered 

 

7

 

interest expense
in accordance with GAAP, but excluding, however, any such amounts referred to
in subsection 2.3 payable on or before the Closing Date.

“Consolidated Leverage Ratio” means, as of the last day of any Fiscal
Quarter, the ratio of (i) Consolidated Total Debt (minus all Cash and
Cash Equivalents held by any Loan Party on the last day of such Fiscal Quarter
subject to a Second Priority Lien) as at such date to (ii) Consolidated EBITDA
for the consecutive four Fiscal Quarters ending on such date.

“Consolidated
Net Income” means, for any period, the net income (or loss) of
Company and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person (other
than a Subsidiary of Company) in which any other Person (other than Company or
any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to Company or any of
its Subsidiaries by such Person during such period, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of
Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person’s assets are acquired by Company or any of its
Subsidiaries, (iii) the income (or loss) of any Subsidiary of Company to
the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary, (iv) any after-tax gains or losses attributable to asset sales
or returned surplus assets of any Pension Plan, and (v) (to the extent not
included in clauses (i) through (iv) above) any net extraordinary gains or
net non-cash extraordinary losses.

“Consolidated
Total Debt” means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.

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

“Consolidated Working Capital
Adjustment” means, for any period on a consolidated basis, the amount (which may
be a negative number) by which Consolidated Working Capital as of the beginning
of such period exceeds (or is less than) Consolidated Working Capital as of the
end of such period.

“Contingent
Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account
of that Person or as to which that Person is otherwise liable for reimbursement
of drawings, or (iii) under Hedge Agreements.  Contingent Obligations shall 

 

8

 

include (a) the direct
or indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with recourse or sale
with recourse by such Person of the obligation of another, (b) the obligation
to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (1) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (2) 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 (1) or (2)
of this sentence, the primary purpose or intent thereof is as described in the
preceding sentence.  The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.

“Contingent
Tax  Note” means that certain unsecured
Contingent Promissory Note dated June 10, 2004, issued by Company to the “Holder
Representative” (as defined therein) in a principal amount equal to the lesser
of (i) $5,700,000 and (ii) the aggregate amount of Tax Benefits (as defined
therein) received by Company.

“Continuing  Member” means, as of any date of determination any member of
the Governing Body of Holdings who (i) was a member of such Governing Body
on the Closing Date, or (ii) was nominated for election or elected to such
Governing Body with the affirmative vote of a majority of the members who were
either members of such Governing Body on the Closing Date or whose nomination
or election was previously so approved (iii) or was nominated for election or
elected to such Governing Body by one of the Sponsors.

“Contractual
Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material 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.

“Control Agreement” means an agreement, reasonably
satisfactory in form and substance to Administrative Agent, entered into in
connection with any Deposit Account, security account or commodity account
maintained by Holdings or any of its Subsidiaries, pursuant to which the
financial institution at which such account is maintained confirms and
acknowledges Administrative Agent’s security interest in, and after the
occurrence and during the continuance of an Event of Default and delivery of
written notice, sole dominion and control over, such account and limits its
rights to set-off with respect to amounts in such account.

“Corporate
Office Lease” means that certain Office Lease and Addendum (1),
dated as of February 2, 2000, between MD Beauty, Inc., as successor in interest
to Bare Escentuals, Inc., f/k/a/ Dolphin Acquisition Corp. d/b/a/ Bare
Escentuals and Ascendant Inc., as amended by First Amendment to Office Lease,
dated as of November 12, 2001, and Second Amendment to Office Lease, dated as
of March 25, 2002 with respect to the property located at 425 Bush Street, San
Francisco, California 94109.

 

9

 

“Currency
Agreement” means any foreign exchange contract, currency swap
agreement, currency futures contract, currency option contract, synthetic
exchange rate cap or other similar agreement or arrangement to which Company or
any of its Subsidiaries is a party.

“Deposit
Account” means a demand, time, savings, passbook or like account
(including disbursement accounts, remittance accounts and zero balance
accounts) maintained with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a negotiable certificate
of deposit.

“DIP
Financing” has the meaning assigned to such term in the
Intercreditor Agreement.

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

“Domestic
Subsidiary” means any Subsidiary of Company that is incorporated or
organized under the laws of the United States of America, any state thereof or
in the District of Columbia.

“Eligible
Assignee” means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or
any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that
(x) such bank is acting through a branch or agency located in the United
States or (y) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (iv) any other entity that is
an “accredited investor” (as defined in Regulation D under the Securities Act)
that extends credit or buys loans as one of its businesses including insurance
companies, mutual funds and lease financing companies, in each case (under
clauses (i) through (iv) above) that is acceptable to Administrative Agent; and
(B) any Lender, any Affiliate of any Lender and any Approved Fund of any
Lender; provided that none of any Sponsor, any Loan Party or any
Affiliate of any Sponsor or any Loan Party shall be an Eligible Assignee.

“Emeryville
Lease” means that certain Standard Industrial/Commercial
Multi-Tenant Lease — Gross, dated as of May 15, 2002, between Bare Escentuals,
Inc. and Peter Coss — Managing Partner, et al., as amended by Addendum to Lease
dated as of May 15, 2002, and First Amendment to Lease, dated as of August 2,
2002, and that relates to the real property located at 1290 59th
Street, Emeryville, California 94608.

“Employee
Benefit Plan” means any (i) “employee benefit plan” as defined in
Section 3(3) of ERISA which is or, within the preceding six years, was
maintained or contributed to by Company or, any of its Subsidiaries or, solely
with respect to liability under Section 4980B of the Internal Revenue Code, any
of their respective ERISA Affiliates, and (ii) any Pension Plan.

 

 

10

 

“Environmental
Claim” means any investigation, notice, notice of violation, claim,
action, suit, proceeding, demand, abatement order or other order or directive
(conditional or otherwise), by any Government Authority or any other Person,
arising (i) pursuant to or in connection with any actual or alleged violation
of any Environmental Law, (ii) in connection with any Hazardous Materials or
any actual or alleged Hazardous Materials Activity, or (iii) in connection with
any actual or alleged damage, injury, threat or harm to health, safety, natural
resources or the environment.

“Environmental
Laws” means any and all current or future common law duties or
obligations, statutes, ordinances, orders, rules, regulations, guidance
documents, judgments, Governmental Authorizations, or any other requirements of
any Government Authority relating to (i) environmental matters, including
those relating to any Hazardous Materials Activity, (ii) the generation,
use, storage, transportation or disposal of Hazardous Materials, or
(iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner
applicable to Holdings, Company or any of its Subsidiaries or any Facility.

“Equity
Documents” means, collectively, the Stockholder Agreement and each
of the Subscription Agreements.

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

“ERISA
Affiliate”, as applied to any Person, means (i) any corporation
that 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) that 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) solely with respect to liability under Section 4980B of the Internal
Revenue Code, 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.  Any
former ERISA Affiliate of a Person or any of its Subsidiaries shall continue to
be considered an ERISA Affiliate of such Person or such Subsidiary within the
meaning of this definition to the extent that such Person or such Subsidiary
could reasonably expected to have any liability with respect thereto under the
Internal Revenue Code or ERISA.

“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); (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 (other than an
immaterial failure to make such an installment payment) or the failure to make
any required contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any

 

11

 

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 Company, 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 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 be
reasonably likely to constitute grounds under ERISA for the termination of, or
the appointment by PBGC of a trustee to administer, any Pension Plan; (vi) the
imposition of liability on Company, 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
Company, 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 Company, 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 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 Company, any of its Subsidiaries or any of their
respective ERISA Affiliates in connection with any Employee Benefit Plan; (ix)
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 (x) 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.

“Eurodollar Reserve Percentage” means the reserve percentage
(expressed as a decimal, rounded upward, if necessary, to the nearest 1/100 of
1%) in effect on the date LIBOR for such Interest Period is determined (whether
or not applicable to any Lender) under regulations issued from time to time by
the Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as “Eurocurrency
liabilities”) having a term comparable to such Interest Period.

“Event of
Default” means each of the events set forth in Section 8.

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

“Existing
Credit Agreement” means that certain Credit Agreement, dated as of
June 10, 2004, by and between the Company, Holdings, the financial institutions party thereto and BNP Paribas, as amended to the date hereof.

“Existing Indebtedness” means the Existing Credit Agreement and the other
existing Indebtedness of Company and its Subsidiaries for borrowed money as set
forth in

 

12

 

 Schedule 1.1 annexed  hereto and all
guaranties, collateral arrangements and other material agreements and
undertakings with respect thereto.

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

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

“Financial
Plan” has the meaning assigned to that term in subsection 6.1(xii).

“First Lien
Administrative Agent” means BNP Paribas, as administrative agent
under the First Lien Credit Agreement, and its permitted successors in such
capacity.

“First Lien
Claims” means all present and future claims of any one or more of
First Lien Secured Parties against the Loan Parties, or any of them, for the
payment of money arising out of or related to the extension of credit or other
financial accommodations by First Lien Secured Parties to the Loan Parties
under the First Lien Credit Agreement, any refinancing, replacement, refunding
or restatement of all or any portion thereof, any First Lien Hedge Agreement,
any of the other First Lien Loan Documents or a DIP Financing, including,
without limitation, all claims for principal and interest (including but not
limited to post-petition interest, fees and costs even if such interest fees and
costs are not an allowed claim enforceable against any Loan Party in a
bankruptcy case under applicable law), reimbursement obligations in respect of
letters of credit issued under the First Lien Credit Agreement, indemnification
obligations and reimbursement of fees, costs and expenses, or otherwise
(including payments for early termination of First Lien Hedge Agreements),
whether fixed or contingent, matured or unmatured, liquidated or unliquidated.

“First Lien
Credit Agreement” means the Credit Agreement, dated as of the date
hereof, by and among Holdings, Company, the financial institutions party
thereto, and BNP Paribas, as administrative agent, and any replacement
agreement or facility existing at any time to refund, refinance, replace or
renew (including subsequent or successive refinancings, replacements and
renewals), in whole or in part, amounts outstanding thereunder plus any
additional amounts to the extent permitted under this Agreement.

“First Lien
Hedge Agreement” means the “Lender Hedge Agreements” as defined in
the First Lien Security Agreement.

 

13

 

“First Lien
Loan Documents” means the First Lien Credit Agreement and the “Loan
Documents” as defined in the First Lien Credit Agreement.

“First Lien
Loans” means the First Lien Revolving Loans, the First Lien term
Loans and the First Lien Swing Line Loans.

“First Lien
Revolving Loans” means the revolving loans made from time to time to
Company pursuant to the First Lien Credit Agreement.

“First Lien
Secured Parties” means the lenders under the First Lien Credit
Agreement and the swap counterparties to any First Lien Hedge Agreement.

“First Lien
Security Agreement” has the meaning assigned to such term in the
Intercreditor Agreement.

“First Lien
Swing Line Loans” means the swing line loans made from time to time
to Company pursuant to the First Lien Credit Agreement.

“First Lien
Term Loans” means the term loans made to the Company pursuant to the
First Lien Credit Agreement.

“Fiscal Quarter” means a fiscal quarter
of any Fiscal Year (as reflected on Schedule 6.1 annexed hereto).

“Fiscal Year” means the fiscal year of
Holdings and its Subsidiaries ending on the Fiscal Year End.

“Fiscal Year End” means,
for any Fiscal Year, the applicable Fiscal Year End reflected on Schedule 6.1.

“Flood Hazard
Property” means a Closing Date Mortgaged Property or an Additional
Mortgaged Property located in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards.

“Foreign
Pledge Agreement” means each pledge agreement or similar instrument
governed by the laws of a country other than the United States, executed on the
Closing Date or from time to time thereafter in accordance with subsection 6.8
by Company or any Domestic Subsidiary that owns Capital Stock of one or more
Foreign Subsidiaries organized in such country, in form and substance
satisfactory to Administrative Agent, as such Foreign Pledge Agreement may be
amended, supplemented or otherwise modified from time to time.

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

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

 

14

 

“Funded Debt”
shall mean (i) all Indebtedness, and any other liabilities, and obligations,
now existing or hereafter arising, for money borrowed by the Loan Parties
(which shall be deemed to include all notes issued or other liabilities or
obligations for money borrowed by any Loan Party to its shareholders), whether
or not evidenced by any note, indenture, or agreement (including, without limitation,
the Notes and any Indebtedness for money borrowed from an Affiliate of any Loan
Party) and (ii) without duplication, all Indebtedness of others for money
borrowed (including Indebtedness of an Affiliate of any Loan Party) with
respect to which any Loan Party has become liable by way of a guarantee or
indemnity.  The term “Funded Debt” shall
not include any trade payables or other liabilities not for borrowed money (or
guarantees thereof) incurred in the ordinary course of business and constituting
current obligations of the Loan Parties.

“Funding and
Payment Office” means (i) the office of Administrative Agent located
at 787 Seventh Avenue, New York, New York 10019, or (ii) such other office of
Administrative Agent as may from time to time hereafter be designated as such
in a written notice delivered by Administrative Agent to Company and each
Lender.

“GAAP”
means, subject to the limitations on the application thereof set forth in
subsection 1.2, generally accepted accounting principles as in effect in the
United States of America and set forth in opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, in each case as
the same are applicable to the circumstances as of the date of determination.

“Governing
Body” means the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that
is a corporation, partnership, trust or limited liability company.

“Government
Authority” means any political subdivision or department thereof,
any other governmental or regulatory body, commission, central bank, board,
bureau, organ or instrumentality or any court, in each case whether federal,
state, local or foreign (including supra-national bodies such as the European
Union or the European Central Bank).

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

“Guaranties”
means the Holdings Guaranty and the Subsidiary Guaranty.

“Hazardous
Materials” means (i) any chemical, material or substance at any
time defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous waste”, “acutely hazardous
waste”, “radioactive waste”, “biohazardous waste”, “pollutant”, “toxic
pollutant”, “contaminant”, “restricted hazardous waste”, “infectious waste”, “toxic
substances”, or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or 

 

15

 

the indoor or
outdoor environment (including harmful properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, “TCLP
toxicity” or “EP toxicity” or words of similar import under any applicable
Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) any
asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any Government Authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity
of any Facility or to the indoor or outdoor environment.

“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
designed to hedge against fluctuations in interest rates or currency values,
respectively.

“Holdings”
has the meaning assigned to that term in the introduction to this Agreement.

“Holdings
Common Stock” means the common stock of Holdings, par value $0.01
per share.

“Holdings
Guaranty” means the Holdings Guaranty executed and delivered by
Holdings on the Closing Date, substantially in the form of Exhibit XIII
annexed hereto, as such Holdings Guaranty may thereafter be amended, supplemented
or otherwise modified from time to time.

“Holdings
Note Purchase Agreement” means that
certain Note Purchase Agreement dated as of the date hereof by and between
Holdings and  York Street Mezzanine
Partners, L.P., pursuant to which the Holdings Notes are issued on the Closing
Date.

“Holdings
Note Documents” means the Holdings Note Purchase Agreement, Holdings
Subordination Agreement, Holdings Notes, the management fee subordination
agreement dated as of the date hereof by and between Berkshire Partners LLC and
York Street Mezzanine Partners, L.P., the management fee subordination
agreement dated as the date hereof by and between JH Partners LLC and York
Street Mezzanine Partners, L.P., and the Subordination Agreement dated as of
the date hereof by and among Holdings, York Street 

 

16

 

Mezzanine
Partners, L.P., Berkshire Investors LLC, Berkshire Fund V Limited Partnership,
Berkshire Fund VI Limited Partnership and JH MDB Investors, L.P.

“Holdings
Notes” means those certain 15.0% Senior Subordinated Notes due
February 18, 2014 issued by Holdings pursuant to the Holdings Note Purchase
Agreement.

“Holdings
Stockholders Agreement” means the Stockholders Agreement, dated as
of the Closing Date, among Holdings, Sponsors, and the other holders of common
stock and equity securities of Holdings.

“Holdings
Subordination Agreement” means that certain Subordination Agreement
dated as of the date hereof by and among Administrative Agent, First Lien
Administrative Agent, Holdings and York Street Mezzanine Partners, L.P.

“Indebtedness”
means as applied to any Person, (i) all indebtedness for borrowed money,
(ii) that portion of obligations with respect to Capital Leases that is
properly classified as a liability on a balance sheet in conformity with GAAP,
(iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money (excluding trade
payables incurred in the ordinary course of business and constituting current
obligations), (iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations incurred
under ERISA), which purchase price is (a) due more than six months from
the date of incurrence of the obligation in respect thereof or (b) evidenced by
a note (it being understood that the Contingent Tax Note shall not constitute
Indebtedness for purposes of this Agreement), (v) Synthetic Lease Obligations,
and (vi) 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.  Obligations under
Interest Rate Agreements and Currency Agreements constitute (1) in the case of
Hedge Agreements, Contingent Obligations, and (2) in all other cases,
Investments, and in neither case constitute Indebtedness.

“Indemnified Liabilities” has the meaning assigned to that term in
subsection 10.3.

“Indemnitee”
has the meaning assigned to that term in subsection 10.3.

“Insolvency Event” means, with
respect to any Person, that (i) a court with jurisdiction over such Person
shall enter a decree or order for relief in respect of the Person 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 such Person or any of
its Subsidiaries 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 an involuntary case shall be commenced against such
Person 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 

 

17

 

officer having similar powers over such Person 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 such Person or any of its
Subsidiaries for all or a substantial part of its property; or (ii) a warrant
of attachment, execution or similar process shall have been issued against any
substantial part of the property of such Person or any of its Subsidiaries, and
any such event described in this clause (ii) shall continue for 30 days unless
dismissed, bonded or discharged.

“Insolvency or Liquidation Proceeding” means
(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code
with respect to any Loan Party as a debtor, (b) any other voluntary or
involuntary insolvency, reorganization or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
with respect to any Loan Party as a debtor or with respect to any substantial
part of their respective assets, (c) any liquidation, dissolution, reorganization
or winding up of any Loan Party whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy or (d) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of any Loan Party.

“Intellectual
Property” means all patents, trademarks, tradenames, copyrights,
technology, software, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries taken as a whole.

“Intercreditor
Agreement” means that certain Intercreditor Agreement dated as of
February 18, 2005 by and between BNP Paribas as Administrative Agent for
Lenders, and BNP Paribas in its capacity as administrative agent for the
lenders under the First Lien Credit Agreement and consented to by Company,
Holdings and each Subsidiary Guarantor.

“Interest
Payment Date” means (i) with respect to 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 (ii) with respect to any LIBOR Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each
Interest Period of longer than three months “Interest
Payment Date” shall also include the date that is three months, or
any integral multiple thereof, after the commencement of such Interest Period.

“Interest
Period” has the meaning assigned to that term in subsection 2.2B.

“Interest
Rate Agreement” means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
or arrangement to which Company or any of its Subsidiaries is a party.

“Interest
Rate Determination Date” means, with respect
to any Interest Period, the second Business Day 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.

 

18

 

“Inventory”
means, with respect to any Person as of any date of determination, all goods,
merchandise and other personal property which are then held by such Person for
sale or lease, including raw materials and work in process.

“Investment”
means (i) any direct or indirect purchase or other acquisition by Company
or any of its Subsidiaries of, or of a beneficial interest in, any Securities
of any other Person (including any Subsidiary of Company), (ii) any direct
or indirect redemption, retirement, purchase or other acquisition for value, by
any Subsidiary of Company from any Person other than Company or any of its
wholly-owned Subsidiaries, of any equity Securities of such Subsidiary,
(iii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
by Company or any of its Subsidiaries to any other Person (other than a
wholly-owned Subsidiary of Company), including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business but
excluding accounts receivable that are not so included, or (iv) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements. 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 (other than adjustments for the repayment of, or the refund of
capital with respect to, the original principal amount of any such Investment).

“IP
Collateral” means, collectively, the Intellectual Property that
constitutes Collateral under the Security Agreement.

“IP Filing
Office” means the United States Patent and Trademark Office, the
United States Copyright Office or any successor or substitute office in which
filings are necessary or, in the opinion of Administrative Agent, desirable in
order to create or perfect Liens on any IP Collateral.

“JH Partners”
means JH Partners LLC f/k/a Jesse.Hansen & Co., LLC, a Delaware limited
liability company.

“Joint
Venture” means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form.

“Leasehold
Property” means any leasehold interest of any Loan Party as lessee
under any lease of real property.

“Lender”
and “Lenders” means the Persons identified
as “Lenders” and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 10.1; provided
that the term “Lenders”, when used in the context of a particular Commitment,
shall mean Lenders having that Commitment.

 

19

 

“Lender Hedge
Agreement” means any Hedge Agreement entered into by Company or any
of its Subsidiaries and one or more Lenders or Affiliates thereof pursuant to
the terms of this Agreement.

“LIBOR”
means, for any Interest Rate Determination Date with respect to an Interest
Period for a LIBOR Loan, the London interbank offered rate, rounded upward, if
necessary, to the nearest 1/100 of 1%, equal to the offered rate for deposits
in Dollars for a period equal to such Interest Period, commencing on the first
day of such Interest Period, which appears on Telerate Page 3750 (or such other
page as may replace Telerate Page 3750 on that service or any successor service
for the purpose of displaying London interbank offered rates of major banks) as
of 11:00 A.M. (London time), on the Interest Rate Determination Date for such
Interest Period.  If the LIBOR rate for
an Interest Period cannot be determined pursuant to the preceding sentence,
then the LIBOR rate for such Interest Period shall be determined on the basis
of the rates at which deposits in Dollars are offered to BNP Paribas at
approximately 11:00 A.M. (London time) on the Interest Rate Determination Date
for such Interest Period, and on an amount that is approximately equal to the
principal amount of the LIBOR Loans to which such Interest Period is
applicable.  Administrative Agent will
request the principal London office of BNP Paribas to provide a quotation of
its rate.

“LIBOR Loans”
means Loans bearing interest at rates determined by reference to Adjusted LIBOR
as provided in subsection 2.2A.

“LIBOR Margin”
means the margin over Adjusted LIBOR used in determining the rate of interest
of LIBOR Loans pursuant to subsection 2.2A.

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

“Loan”
or “Loans” means one or more of the Loans
made by Lenders to Company pursuant to subsection 2.1A.

“Loan
Documents” means this Agreement, the Notes, the Guaranties, the
Collateral Documents, the Intercreditor Agreement, each Compliance Certificate,
each Lender Hedge Agreement, each Management Subordination Agreement, the
Holdings Subordination Agreement, each certificate, each fee letter, and each
other instrument, document and agreement from time to time delivered by any
Loan Party pursuant to this Agreement or any other Loan Document and all
amendments, waivers and consents relating thereto.

“Loan Party”
means each of Holdings, Company
and any of Company’s Subsidiaries from time to time executing a Loan Document,
and “Loan Parties” means all such Persons,
collectively.

“Management
Agreements” means collectively, (i) that certain Management
Agreement dated as of June 10, 2004 by and between JH Partners and Company, as
amended by

 

20

 

The First
Amendment to Management Agreement dated as of February 18, 2004, and (ii) that
certain Management Agreement dated as of June 10, 2004 by and between Berkshire
Partners and Company, as amended by The First Amendment to Management Agreement
dated as of February 18, 2004, as such agreements are in effect on the Closing
Date and as it may thereafter be amended supplemented or otherwise modified to
the extent permitted under subsection 7.12.

“Management
Fees” means (i) the structuring and negotiation fees payable by
Company to each of Berkshire Partners and JH Partners on the Closing Date and
reimbursement of out of pocket expenses in connection therewith pursuant to the
Management Agreements; provided that the aggregate amount of such fees
shall in no event exceed $2,400,000 plus the amount of any expense
reimbursement paid at Closing, (ii) the fees for services rendered in
connection with financing, acquisition and disposition transactions involving
any Loan Party, equaling one-half of one percent (0.50%) of the gross
transaction value of each such transaction and payable by Company to each of
Berkshire Partners and JH Partners at the closing of such transactions pursuant
to the Management Agreements (iii) all other fees, expenses and other
amounts or consideration payable by Company or any of its Subsidiaries to any
manager or other Person (other than Company or any of its Subsidiaries, or any
direct employee thereof) for management or consulting services or arrangements
(other than as an employee of Company or any of its Subsidiaries), including,
without limitation, the management fees payable pursuant to the Management
Agreements; provided that the aggregate amount of such other fees and
other amounts or consideration shall in no event exceed $600,000 plus expenses
for any Fiscal Year, and (iv) amounts payable solely to reimburse reasonable
amounts paid by such manager or other Person to Persons that are not Affiliates
on behalf of Company and its Subsidiaries.

“Management Subordination Agreement” means
each of (i) the Management Subordination Agreement executed and delivered by JH
Partners and Company, and (ii) the Management Subordination Agreement executed
and delivered by Berkshire Partners, in each case substantially in the form of Exhibit
XVI annexed hereto, as such agreement may hereafter be amended,
supplemented or otherwise modified to the extent permitted under subsection
7.12.

“Margin Stock”
has the meaning assigned to that term in Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.

“Material
Adverse Effect” means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Holdings and its Subsidiaries taken as a whole or (ii) the
impairment (other than by reasons of the type set forth in clause (i)) of the
ability of any Loan Party to perform, or of Administrative Agent or Lenders to
enforce, the Obligations.

“Material
Contract” means any contract or other arrangement to which Holdings,
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.

“Maximum Consolidated Capital Expenditures Amount”
has the meaning assigned to that term in subsection 7.8.

 

21

 

“Mortgage”
means (i) a security instrument (whether designated as a deed of trust or a
mortgage or by any similar title) executed and delivered by any Loan Party, in
form and substance satisfactory to Administrative Agent in its reasonable
discretion, in each case with such changes thereto as may be recommended by
Administrative Agent’s local counsel based on local laws or customary local
mortgage or deed of trust practices, or (ii) at Administrative Agent’s option,
in the case of an Additional Mortgaged Property, an amendment to an existing
Mortgage, in form satisfactory to Administrative Agent, adding such Additional
Mortgaged Property to the Real Property Assets encumbered by such existing
Mortgage, in either case as such security instrument or amendment may be
amended, supplemented or otherwise modified from time to time.  “Mortgages”
means all such instruments, including any Additional Mortgages, collectively.

“Multiemployer
Plan” means any “multiemployer plan” as defined in Section 3(37) of
ERISA, to which the Company, any Subsidiary or any ERISA Affiliate currently
contributes or is obligated to contribute, or with respect to which the
Company, any Subsidiary or any ERISA Affiliate has or could reasonably be
expected to have any liability (whether absolute or contingent).

“Net Asset
Sale Proceeds” means, with respect to any Asset Sale, 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) received from such Asset Sale, net of any bona fide direct
costs or expenses incurred by any Loan Party in connection with such Asset
Sale, including (i) income taxes reasonably estimated to be actually
payable by any Loan Party within two years of the date of such Asset Sale as a
result of any gain recognized in connection with such Asset Sale and
(ii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness (other than the Loans) that is (a)
secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof or under applicable law as a result of such
Asset Sale and (b) actually paid at the time of receipt of such cash payment to
a Person that is not an Affiliate of any Loan Party or of any Affiliate of a
Loan Party.

“Net
Insurance/Condemnation Proceeds” means any Cash payments or proceeds
received by Holdings, Company, or any of its Subsidiaries (i) under any
business interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Holdings, Company
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, in each case net of
any (a) actual and reasonable documented costs incurred by Holdings, Company or
any of its Subsidiaries in connection with the adjustment or settlement of any
claims of Holdings, Company or such Subsidiary in respect thereof and (b) any
reasonable costs incurred in connection with any sale of such assets as
referred to in clause (ii) of this definition including, without limitation,
income taxes payable as a result of any gain recognized in connection
therewith.

“Net
Securities Proceeds” means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs and expenses associated
therewith, 

 

22

 

including
reasonable legal fees and expenses) from (i) the issuance of Securities of or
the incurrence of Indebtedness by Holdings, Company or any of its Subsidiaries
and (ii) capital contributions made by a holder of Capital Stock of Holdings.

“Non-US
Lender” means a Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other political
subdivision thereof.

“Notes”
means one or more of the Term Notes.

“Notice of
Borrowing” means a notice substantially in the form of Exhibit I
annexed hereto.

“Notice of
Conversion/Continuation” means a notice substantially in the form of
Exhibit II annexed hereto.

“Obligations”
means all obligations of every nature of each Loan Party from time to time owed
to Administrative Agent, Lenders or any of them under the Loan Documents,
whether for principal, interest (including interest accruing on or after the
occurrence of an Insolvency Event), fees, expenses, indemnification or
otherwise.

“OFAC”
means the Office of Foreign Assets Control of the United States Department of
the Treasury, or any successor office or agency.

“Officer”
means the president, chief executive officer, a vice president, chief financial
officer, treasurer, general partner (if an individual), managing member (if an
individual) or other individual appointed by the Governing Body or the
Organizational Documents of a corporation, partnership, trust or limited
liability company to serve in a similar capacity as any of the foregoing.

“Officer’s
Certificate” as applied to any Person that is a corporation,
partnership, trust or limited liability company, means a certificate executed
on behalf of such Person by one or more Officers of such Person or one or more
Officers of a general partner or a managing member if such general partner or
managing member is a corporation, partnership, trust or limited liability
company.

“Operating
Lease” means, as applied to
any Person, any lease (including leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.

“Organizational
Documents” means the documents (including Bylaws, if applicable)
pursuant to which a Person that is a corporation, partnership, trust or limited
liability company is organized.

“Paid in Full”
means the irrevocable termination of all commitments to extend credit that
would constitute First Lien Claims, the payment in full in cash of all First
Lien Claims (except undrawn letters of credit and Unasserted Obligations),
including (without limitation) principal, interest, fees, costs (including but
not limited to post-petition interest, fees and costs even if such interest,
fees and costs 

 

23

 

are not an allowed
claim enforceable against any Loan Party in a bankruptcy case under applicable
law) and premium (if any), and the discharge or cash collateralization (in an
amount equal to 102% of the maximum amount that may be drawn thereon) of all
letters of credit outstanding under any First Lien Claims.

“Participant”
means a purchaser of a participation in the rights and obligations under this Agreement
pursuant to subsection 10.1C.

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

“Pension Plan”
means any employee benefit plan, within the meaning of Section 3(3) of
ERISA, other than a Multiemployer Plan, that is subject to Section 412 of the
Internal Revenue Code or Section 302 of ERISA that is currently maintained or
contributed to by the Company, any Subsidiary or any ERISA Affiliate, or with
respect to which the Company, any Subsidiary or any ERISA Affiliate has or
could reasonably be expected to have any liability (whether absolute or
contingent).

“Permitted
Acquisition” has the meaning assigned to that term in subsection
7.3(x).

“Permitted
Encumbrances” means the following types of Liens (excluding any such
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue
Code or by ERISA, any such Lien relating to or imposed in connection with any
Environmental Claim, and any such Lien expressly prohibited by any applicable
terms of any of the Collateral Documents):

(i)            Liens
for taxes, assessments or governmental charges or claims the payment of which
is not, at the time, required by subsection 6.3;

(ii)           statutory
Liens of landlords, Liens of collecting banks under the UCC on items in the
course of collection, statutory Liens and rights of set-off of banks, statutory
Liens of carriers, warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by law, in each case incurred in the ordinary course of
business (a) for amounts not yet overdue or (b) for amounts that are overdue
and that (in the case of any such amounts overdue for a period in excess of 30
days) are being contested in good faith by appropriate proceedings, so long as
(1) such reserves or other appropriate provisions, if any, as shall be required
by GAAP shall have been made for any such contested amounts, and (2) in the
case of a Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the Collateral
on account of such Lien;

(iii)          deposits
made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to
secure the performance of statutory obligations, bids, leases, government
contracts, trade contracts and other similar obligations (exclusive of
obligations for the payment of 

 

24

 

borrowed money), so long as no foreclosure, sale or similar proceedings
have been commenced with respect to any portion of the Collateral on account
thereof;

(iv)          any
attachment or judgment Lien not constituting an Event of Default under
subsection 8.8;

(v)           licenses
(with respect to Intellectual Property and other property), leases or subleases
granted to third parties in accordance with any applicable terms of the
Collateral Documents and not interfering in any material respect with the
ordinary conduct of the business of Company or any of its Subsidiaries or
resulting in a material diminution in the value of any Collateral as security
for the Obligations;

(vi)          easements,
rights-of-way, restrictions, encroachments, and other minor defects or
irregularities in title, in each case which do not and will not interfere in
any material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries or result in a material diminution in the value of any
Collateral as security for the Obligations;

(vii)         any
(a) interest or title of a lessor or sublessor under any lease not prohibited
by this Agreement, (b) Lien or restriction that the interest or title of
such lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any Lien or restriction
referred to in the preceding clause (b), so long as the holder of such Lien or
restriction agrees to recognize the rights of such lessee or sublessee under
such lease;

(viii)        Liens
arising from filing UCC financing statements relating solely to leases not
prohibited by this Agreement;

(ix)           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;

(x)            any
zoning or similar law or right reserved to or vested in any governmental office
or agency to control or regulate the use of any real property;

(xi)           Liens
granted pursuant to the Collateral Documents;

(xii)          Liens
securing obligations (other than obligations representing Indebtedness for
borrowed money) under operating, reciprocal easement or similar agreements
entered into in the ordinary course of business of Company and its
Subsidiaries; and

(xiii)         Liens
in respect of an agreement to sell or otherwise transfer any  property, to the extent such sale or transfer
is permitted by subsection 7.7.

“Permitted
Equity Contribution Capex” means any expenditure by Company or its
Subsidiaries for capital improvements financed by a non-refundable cash equity 

 

25

 

contribution to
Company or such Subsidiary; provided that the aggregate amount of all
such expenditures shall in no event exceed $5,000,000.

“Permitted
Holders” means (i) Sponsors or any entity controlled thereby or any
of the partners thereof and/or (ii) any of the Permitted Transferees of any
Person in clause (i) hereof.

“Permitted
Transferees” means, with respect to any Person, (i) any Affiliates
of such Person, (ii) the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any such Person or (iii) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders, or
general and limited partners, of which, or a limited liability company, the
members of which, include only such Person or his or her spouse or lineal
descendants, in each case to whom such Person has transferred the beneficial
ownership of any Securities of Holdings.

“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 Government Authorities.

“Pledged
Collateral” means collectively, the “Pledged Collateral” as defined
in the Security Agreement and any Foreign Pledge Agreement.

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

“Prepaid
Amount” has the meaning
assigned to that term in subsection 2.4B(iii)(e).

“Prime Rate”
means the rate that BNP Paribas in New York announces from time to time as its
prime rate, effective as of the date announced as the effective date of any
change in such prime rate. Without notice to Company or any other Person, the
Prime Rate shall change automatically from time to time as and in the amount by
which such prime rate shall fluctuate.  The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.  BNP
Paribas or any other Lender may make commercial loans or other loans at rates
of interest at, above or below the Prime Rate.

“Proceedings”
means any action, suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration.

“Pro Rata
Share” means with respect to all payments, computations and other
matters relating to the Term Loan Commitment or the Term Loan of any Lender,
the percentage obtained by dividing (x) the Term Loan Exposure of
that Lender by (y) the aggregate Term Loan Exposure of all Lenders.

 

26

 

“QVC
Inventory” means Inventory owned by Company and located in one or
more premises of QVC, Inc.

“Real
Property Asset” means, at any time of determination, any interest
then owned by any Loan Party in any real property including any fee or
leasehold interest.

“Recapitalization”
means the recapitalization of the Company in which the Existing Indebtedness
(except Existing Indebtedness described on Schedule 7.1) will be repaid in an
amount not to exceed $92,550,000, plus accrued interest and applicable
prepayment premium, on the Closing Date and the Recapitalization Payment will
be made on or about the Closing Date, in each case with the proceeds of the
Term Loans and the First Lien Term Loans and certain cash-on-hand of the
Company.

“Recapitalization
Payment” means the application by the Company of the proceeds of the
Term Loans, the First Lien Term Loans and cash-on-hand on or about the Closing
Date towards a dividend by the Company to Holdings in an aggregate amount not
to exceed $110,000,000, which Holdings in turn shall dividend, together with
the net proceeds of the Holdings Notes, to its shareholders.

“Register”
has the meaning assigned to that term in subsection 2.1D.

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

“Related Agreements” means, collectively,
Acquisition Agreement, the Certificate of Merger, the Contingent Tax Note, the
Management Agreements and the Management Subordination Agreements.

“Release”
means any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or
migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or into or out of
including the movement of any Hazardous Materials through the air, soil,
surface water, groundwater or property.

“Requisite Lenders” means Lenders having or holding more
than 50% of the sum of the aggregate Term Loan 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 Company
or Holdings 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 Company or Holdings now or hereafter outstanding, (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 Company or
Holdings now or hereafter outstanding, (iv) any payment or prepayment of 

 

27

 

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, the Holdings Note Documents and (v) any
payment of any Management Fees.

“Second
Priority” means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that (i) such Lien is
perfected and has priority over any other Lien on such Collateral (other than
Liens securing the First Lien Claims and other Liens permitted pursuant to
subsection 7.2) and (ii) such Lien is the only Lien (other than Liens securing
the First Lien Claims and other Liens permitted pursuant to subsection 7.2) to
which such Collateral is subject.

“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, certificated or
uncertificated, 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 Account” means an account to which a financial
asset is or may be credited in accordance with an agreement under which the
Person maintaining the account undertakes to treat the Person for whom the
account is maintained as entitled to exercise the rights that comprise the
financial asset.

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

“Security Agreement”
means the Security Agreement executed and delivered on the Closing Date,
substantially in the form of Exhibit XII annexed hereto, as such
Security Agreement may thereafter be amended, supplemented or otherwise
modified from time to time.

“Solvent”
means, with respect to any Person, that as
of the date of determination both (i)(a) the then fair saleable value of
the property of such Person is (1) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (2) not
less than the amount that will be required to pay the probable liabilities on
such Person’s then existing debts as they become absolute and due considering
all financing alternatives and potential asset sales reasonably available to
such Person; (b) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and
(c) such Person does not intend to incur, or believe (nor should it
reasonably believe) that it will incur, debts beyond its ability to pay such
debts as they become due; and (ii) such Person is “solvent” within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances.  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.

 

28

 

“Sponsors”
means, collectively, (i) Berkshire Partners or its Affiliates and (ii) JH
Partners or its Affiliates.

“Stated
Maturity Date” means February 18, 2013.

“Stockholder
Agreement” means that certain Stockholder Agreement, dated as of
June 10, 2004, by and among Holdings, JH MDB Investors, L.P., Bershire Fund VI
Investment Corp., a Massachusetts corporation, Berkshire Fund V, Limited
Partnership, Berkshire Fund VI, Limited Partnership, and Berkshire Investors
LLC.

“Subscription
Agreements” means, collectively, the (i) Stock Subscription
Agreement, dated as of June 10, 2004, by and between Holdings and Gleacher
Mezzanine Fund I, L.P., (ii) Stock Subscription Agreement, dated as of June 10,
2004, by and between Holdings and Gleacher Mezzanine Fund P, L.P., and (iii)
Stock Subscription Agreement, dated as of June 10, 2004, by and between
Holdings and York Street Mezzanine Partners, L.P.

“Subsidiary”
means, with respect to any Person, any
corporation, partnership, trust, 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 members of
the Governing Body 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.

“Subsidiary
Guarantor” means any Subsidiary of Company that executes and
delivers a counterpart of the Subsidiary Guaranty on the Closing Date or from
time to time thereafter pursuant to subsection 6.8.

“Subsidiary
Guaranty” means the Subsidiary Guaranty executed and delivered by
existing Subsidiaries of Company on the Closing Date and to be executed and
delivered by additional Subsidiaries of Company from time to time thereafter in
accordance with subsection 6.8, substantially in the form of Exhibit XI
annexed hereto, as such Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time.

“Supplemental
Collateral Agent” has the meaning assigned to that term in
subsection 9.1B.

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

“Tax”
or “Taxes” means any present or future tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed, including interest, penalties, additions to
tax and any similar liabilities with respect thereto; except that, in the case
of a 

 

29

 

Lender, there
shall be excluded (i) taxes that are imposed on the overall net income or
net profits (including franchise taxes imposed in lieu thereof) (a) by the
United States, (b) by any other Government Authority under the laws of
which such Lender is organized or has its principal office or maintains its
applicable lending office, or (c) by any jurisdiction solely as a result
of a present or former connection between such Lender and such jurisdiction
(other than any such connection arising solely from such Lender having executed,
delivered or performed its obligations or received a payment under, or
enforced, any of the Loan Documents), and (ii) any branch profits taxes imposed
by the United States or any similar tax imposed by any other jurisdiction in
which such Lender is located.

“Term Loan Commitment” means the commitment of a Lender to make
a Term Loan to Company pursuant to subsection 2.1A, and “Term Loan Commitments” means such commitments of all
Lenders in the aggregate.

“Term Loan
Exposure” with respect to any Lender, means, as of any date of
determination (i) prior to the funding of the Term Loans, that Lender’s Term
Loan Commitment, and (ii), after the funding of the Term Loans, the outstanding
principal amount of the Term Loan of that Lender.

“Term Loans”
means the Loans made by Lenders to Company pursuant to subsection 2.1A.

 “Term Notes” means any promissory notes of Company issued pursuant
to subsection 2.1E to evidence the Term Loans of any Lenders and (ii) any
promissory notes issued by Company pursuant to subsection 10.1B(i) in
connection with assignments of the Term Loan Commitments or Term Loans of any
Lenders, in each case, substantially in the form of Exhibit IV
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.

“Title
Company” means one or more title insurance companies reasonably
satisfactory to Administrative Agent.”

“Transaction
Costs” means all fees, costs, expenses, premiums, termination
payments and prepayment penalties incurred by any Loan Party on or before the
Closing Date (or promptly thereafter in connection with the transactions
occurring on the Closing Date) in connection with the transactions contemplated
by the Loan Documents and the Related Agreements, including write-off of
deferred financing costs.

“UCC”
means the Uniform Commercial Code as in effect in any applicable jurisdiction.

“Unasserted
Obligations” means, at any time, Obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities (except for the
principal of and interest on, and fees relating to, any Indebtedness) in
respect of which no claim or demand for payment has been made (or, in the case
of obligations for indemnification, no notice for indemnification has been
issued by the indemnitee) at such time.

 

30

 

1.2                               Accounting Terms;
Utilization of GAAP for Purposes of Calculations Under Agreement.

Except as otherwise
expressly provided in this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.  Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (ii), (iii)
and (xii) of subsection 6.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)).  Calculations in connection with the
definitions, covenants and other provisions of this Agreement shall utilize
GAAP as in effect on the date of determination, applied in a manner consistent
with that used in preparing the financial statements referred to in subsection
5.3. If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and Company,
Administrative Agent or Requisite Lenders shall so request, Administrative
Agent, Lenders and Company shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of Requisite Lenders), provided that,
until so amended, such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and Company shall provide to
Administrative Agent and Lenders reconciliation statements provided for in
subsection 6.1(v).

1.3                               Other Definitional
Provisions and Rules of Construction.

A.            Any of the terms defined herein may,
unless the context otherwise requires, be used in the singular or the plural,
depending on the reference.

B.            References to “Sections” and “subsections”
shall be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided.  Section
and subsection 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.

C.            An Event of Default shall “continue” or
be “continuing” until such Event of Default has been waived in accordance with
subsection 10.6 hereof or otherwise cured.

D.            The use in any of the Loan Documents 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.

E.             Any reference herein or in any other Loan
Document to any agreement, document or instrument, including this Agreement,
the Notes, the other Loan Documents and any schedules or exhibits thereto,
unless expressly noted otherwise, shall be a reference to each such agreement,
document or instrument as it may be amended, restated, supplemented or 

 

31

 

otherwise modified
from time to time in accordance with its terms and to the extent permitted (or
not restricted) hereunder or under the applicable Loan Document.

Section
2.              AMOUNTS AND TERMS OF
COMMITMENTS AND LOANS

2.1                               Commitments; Making of
Loans; the Register; Optional Notes.

A.            Commitments. 
Subject to the terms and conditions of this Agreement and in reliance
upon the representations and warranties of Company herein set forth, each
Lender hereby severally agrees to make the Loans as described in this subsection
2.1A.  Each Lender that has a Term Loan
Commitment severally agrees to lend to Company on the Closing Date an amount
not exceeding its Pro Rata Share of the aggregate amount of the Term Loan
Commitments to be used for the purposes identified in subsection 2.5A.  The amount of each Lender’s Term Loan
Commitment shall be set forth in the Register on the Closing Date and the
aggregate amount of the Term Loan Commitments is $54,500,000; provided
that the Term Loan Commitments of each Lender shall be adjusted to give effect
to any assignments of such Term Loan Commitments pursuant to subsection
10.1B.  Each Lender’s Term Loan
Commitment shall expire immediately and without further action on February 18,
2005 if the Term Loans are not made on or before that date.  Company may make only one borrowing under the
Term Loan Commitments.  Amounts borrowed
under this subsection 2.1A and subsequently repaid or prepaid may not be
reborrowed.

B.            Borrowing Mechanics. 
Loans made on the Closing Date shall be Base Rate Loans.  Company shall deliver to Administrative Agent
a duly executed Notice of Borrowing on the Closing Date.  Loans may be continued as or converted into
Base Rate Loans and LIBOR Loans in the manner provided in subsection 2.2D.  In lieu of delivering a Notice of Borrowing,
Company may give Administrative Agent telephonic notice by the required time of
any proposed borrowing under this subsection 2.1B; provided that such
notice shall be promptly confirmed in writing by delivery of a duly executed
Notice of Borrowing to Administrative Agent on or before the Closing Date.

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 an Officer or other person authorized to borrow on
behalf of Company or for otherwise acting in good faith under this subsection
2.1B or under subsection 2.2D, and upon funding of Loans by Lenders, and upon
conversion or continuation of the applicable basis for determining the interest
rate with respect to any Loans pursuant to subsection 2.2D, in each case in
accordance with this Agreement, pursuant to any such telephonic notice Company
shall have effected Loans or a conversion or continuation, as the case may be,
hereunder.

Company shall notify
Administrative Agent prior to the funding of any Loans in the event that any of
the matters to which Company is required to certify in the applicable Notice of
Borrowing is no longer true and correct as of the Closing Date, and the
acceptance by Company of the proceeds of any Loans shall constitute a
re-certification by Company, as of the 

 

32

 

Closing Date, as
to the matters to which Company is required to certify in the applicable Notice
of Borrowing.

Except as otherwise
provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Borrowing for or a
Notice of Conversion/Continuation for conversion to, or continuation of, a
LIBOR Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to make a borrowing or to effect a conversion or continuation in accordance
therewith.

Notwithstanding the
foregoing provisions of this subsection 2.1B, no LIBOR Loans may be made and no
Base Rate Loan may be converted into a LIBOR Loan until the earlier of the
seventh day after the Closing Date and the date specified by Administrative
Agent to Company on which the primary syndication of the Commitments and the
Loans has been completed.

C.            Disbursement of Funds. 
All Loans shall be made by Lenders simultaneously and proportionately to
their respective Pro Rata Shares, it being understood that neither
Administrative Agent nor any Lender shall be responsible for any default by any
other Lender in that other Lender’s obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make a Loan requested be
increased or decreased as a result of a default by any other Lender in that
other Lender’s obligation to make a Loan requested hereunder.  Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic
notice in lieu thereof), Administrative Agent shall notify each Lender of the
proposed borrowing.  Each Lender shall
make the amount of its Loan available to Administrative Agent not later than
1:00 P.M. (New York City time) on the Closing Date, in same day funds in
Dollars, at the Funding and Payment Office. 
Upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 and 4.2, Administrative Agent shall make the proceeds of the
Loans available to Company on the Closing Date by causing an amount of same day
funds in Dollars equal to the proceeds of all the Loans received by
Administrative Agent from Lenders to be credited to the account of Company at
the Funding and Payment Office.

Unless Administrative
Agent shall have been notified by any Lender prior to the Closing Date that
such Lender does not intend to make available to Administrative Agent the
amount of such Lender’s Loan requested on the Closing Date, Administrative
Agent may assume that such Lender has made such amount available to
Administrative Agent on the Closing Date and Administrative Agent may, in its
sole discretion, but shall not be obligated to, make available to Company a
corresponding amount on the Closing 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 the Closing 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 Agent together with
interest 

 

33

 

thereon, for each
day from the Closing Date until the date such amount is paid to Administrative
Agent, at the rate payable under this Agreement for Base Rate Loans.  Nothing in this subsection 2.1C shall be
deemed to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Company may have against any Lender
as a result of any default by such Lender hereunder.

D.            The Register. 
Administrative Agent, acting for these purposes solely as an agent of
Company (it being acknowledged that Administrative Agent, in such capacity, and
its officers, directors, employees, agent and affiliates shall constitute
Indemnitees under subsection 10.3), shall maintain at its address referred to
in subsection 10.8 a register for the recordation of, and shall record, the
names and addresses of Lenders and the respective amounts of the Term Loans of
each Lender from time to time (the “Register”).  Administrative Agent shall make the Register
available for inspection by the Company and the Lenders upon reasonable prior
notice at reasonable times, provided that a Lender shall only be
entitled to inspect its own entry in the Register and not that of any other
Lender.  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 Loans listed therein for all
purposes hereof; all amounts owed with respect to any 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 Loans.  Each Lender shall
record on its internal records the amount of its Loans and each payment in
respect hereof, and any such recordation shall be conclusive and binding on
Company, absent manifest error, subject to the entries in the Register, which
shall, absent manifest error, govern in the event of any inconsistency with any
Lender’s records.  Failure to make any
recordation in the Register or in any Lender’s records, or any error in such
recordation, shall not affect any Loans or any Obligations in respect of any
Loans.

E.             Optional
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 subsection
10.1) on the Closing Date (or, if such notice is delivered after the Closing
Date, promptly after Company’s receipt of such notice) a promissory note or
promissory notes to evidence such Lender’s Term Loan, substantially in the form
of Exhibit IV, annexed hereto, with appropriate insertions.

2.2                               Interest on the Loans.

A.            Rate of Interest. 
Subject to the provisions of subsections 2.6 and 2.7, each Term Loan
shall bear interest on the unpaid principal amount thereof from the date made
through maturity (whether by acceleration or otherwise) at a rate determined by
reference to the Base Rate or LIBOR.  The
basis for determining the rate of interest with respect to any Term Loan may be
changed from time to time pursuant to subsection 2.2D (subject to the last
sentence of subsection 2.1B).  If on any
day a Term Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this
Agreement 

 

34

 

specifying the
applicable basis for determining the rate of interest, then for that day that
Loan shall bear interest determined by reference to the Base Rate.

(i)            Subject
to the provisions of subsections 2.2E, 2.2G and 2.7, the Term Loans shall bear
interest through maturity as follows:

(a)           if
a Base Rate Loan, then at the sum of the Base Rate plus 5.50% per annum;
or

(b)           if
a LIBOR Loan, then at the sum of Adjusted LIBOR plus 6.50% per annum.

B.            Interest Periods. 
In connection with each Base Rate Loan, interest shall be payable
quarterly on March 31, June 30, September 30 and December 31 of each year, and
in connection with each LIBOR Loan, Company may, pursuant to the applicable
Notice of Borrowing or Notice of Conversion/Continuation, as the case may be,
select an interest period (each an “Interest
Period”) to be applicable to such Loan, which Interest Period shall
be, at Company’s option, either a one, two, three or six month period; provided
that:

(i)            in
the case of a Loan converted to a LIBOR Loan, the initial Interest Period for
any LIBOR Loan shall commence on the date specified in the applicable Notice of
Conversion/Continuation;

(ii)           in
the case of immediately successive Interest Periods applicable to a LIBOR Loan
continued as such pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;

(iii)          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; provided
that, if any Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;

(iv)          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 clause (v) of this
subsection 2.2B, end on the last Business Day of a calendar month;

(v)           no
Interest Period with respect to any portion of the Term Loans shall extend
beyond the Stated Maturity Date;

(vi)          there
shall be no more than five Interest Periods outstanding at any time; and

 

35

 

(vii)         in
the event Company fails to specify an Interest Period for any LIBOR Loan in the
applicable Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.

C.            Interest Payments. 
Subject to the provisions of subsection 2.2E, interest on each Loan
shall be payable in arrears on and to each Interest Payment Date applicable to
that Loan, upon any prepayment of that Loan (to the extent accrued on the
amount being prepaid) and at maturity (including final maturity).

D.            Conversion or
Continuation.  Subject to the provisions of subsection 2.6,
Company shall have the option (i) to convert at any time all or any part
of its outstanding Term Loans equal to $1,000,000 and multiples of $100,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any
Interest Period applicable to a LIBOR Loan, to continue all or any portion of
such Loan equal to $1,000,000 and multiples of $100,000 in excess of that
amount as a LIBOR Loan; provided, however, that a LIBOR Loan
may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto unless Company pays on such conversion date
all amounts owing to Lenders under subsection 2.6D; provided, further
that, until the earlier of the seventh day after the Closing Date and the date
specified by Administrative Agent to Company on which the primary syndication
of the Commitments and the Loan has been completed, no Base Rate Loans may be
converted into LIBOR Loans.

Company shall deliver a
duly executed Notice of Conversion/Continuation to Administrative Agent not
later than 12:00 Noon (New York City time) at least one Business Day in advance
of the proposed conversion date (in the case of a conversion to a Base Rate
Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a LIBOR Loan).  In lieu of delivering
a Notice of Conversion/Continuation, Company may give Administrative Agent
telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.2D; provided that such notice shall be promptly
confirmed in writing by delivery of a duly executed Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date.  Upon
receipt of written or telephonic notice of any proposed conversion/continuation
under this subsection 2.2D, Administrative Agent shall notify each Lender of
any Loan subject to the Notice of Conversion/Continuation.

E.             Default Rate. 
Upon the occurrence and during the continuation of any Event of Default
under any of subsection 8.1, 8.6 or 8.7, the outstanding principal amount of
all Loans and, to the extent permitted by applicable law, any interest payments
thereon not paid when due and any fees and other amounts then due and payable
hereunder, shall thereafter bear interest (including post-petition interest in
any Insolvency or Liquidation Proceeding) payable upon demand by Administrative
Agent at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement 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 under this Agreement for Base
Rate Loans); provided that, in the case of LIBOR Loans, upon the
expiration of the Interest Period in effect at the time any such increase in 

 

36

 

interest rate is
effective such LIBOR 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 under this Agreement for Base
Rate Loans.  Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E 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.

F.             Computation
of Interest.  Interest on the Loans shall be
computed 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 LIBOR
Loan, the date of conversion of such LIBOR 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 LIBOR Loan, the date of conversion of
such Base Rate Loan to such LIBOR Loan, as the case may be, shall be excluded; provided
that if a Loan is repaid on the same day on which it is made, one day’s
interest shall be paid on that Loan.

G.            Maximum Rate. 
Notwithstanding the foregoing provisions of this subsection 2.2, in no
event shall the rate of interest payable by Company with respect to any Loan
exceed the maximum rate of interest permitted to be charged under applicable
law.

2.3          Fees.  Company agrees
to pay to Administrative Agent such fees in the amounts and at the times
separately agreed upon between Company and Administrative Agent.

2.4                               Repayments and Prepayments; General
Provisions Regarding Payments; Application of Proceeds of Collateral and
Payments Under Guaranties.

A.            Scheduled Payments of Term
Loans.  Company shall make principal payments on the Term
Loans in installments on the dates and in the amounts set forth below:

	
  Date

  	
   

  	
  Scheduled Repayment

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  13,625,000

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  13,625,000

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  13,625,000

  	
   

  
	
  Stated Maturity Date

  	
   

  	
  $

  	
  13,625,000

  	
   

  
	
  TOTAL:

  	
   

  	
  $

  	
  54,500,000

  	
   

  

 

; provided that
the scheduled installments of principal of the Term Loans set forth above shall
be reduced in connection with any voluntary or mandatory prepayments of the
Term Loans in accordance with subsection 2.4B(iv); and provided, further
that the Term Loans and all other amounts owed hereunder with respect to the
Term Loans shall be paid in full no later than the 

 

37

 

Stated Maturity Date, and
the final installment payable by Company in respect of the Term Loans on such
date shall be in an amount, if such amount is different from that specified
above, sufficient to repay all amounts owing by Company under this Agreement
with respect to the Term Loans.

B.            Prepayments.

(i)          Voluntary Prepayments.  Subject to subsection 2.4B(ii), Company may,
upon not less than ten Business Days’ prior written or telephonic notice given
to Administrative Agent by 1:00 P.M. (New York City time) on the date required
and, if given by telephone, promptly confirmed in writing to Administrative
Agent, who will promptly notify each Lender whose Loans are to be prepaid of
such prepayment), at any time and from time to time prepay any Term Loans on
any Business Day in whole or in part in an aggregate minimum amount of $100,000
and multiples of $100,000 in excess of that amount; provided, however,
that a LIBOR Loan may only be prepaid on the expiration of the Interest Period
applicable thereto unless Company complies with subsection 2.6D with respect to
any breakage costs resulting from such prepayment being made on a date prior to
the expiration of the applicable Interest Period.  Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in such notice shall
become due and payable on the prepayment date specified therein.  Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iv). 
Notwithstanding the foregoing , no voluntary prepayment of the Loans
shall be made by the Company or accepted by Lenders until all First Lien Claims
have been Paid in Full; provided, however, at any time that the
Applicable Consolidated Senior Leverage Ratio does not exceed 3.00 to 1.00,
Company may make voluntary prepayments, including premium pursuant to
subsection 2.4B(ii), below, if any, with the Consolidated Excess Cash Flow not
required to be applied to prepayment of First Lien Loans pursuant to the First
Lien Credit Agreement.

(ii)         Prepayment Premium.  If the Term Loans are voluntarily prepaid
prior to and including the second anniversary of the Closing Date, or if the
Term Loans become due prior to such date pursuant to Section 8 of this
Agreement, Company shall pay Lenders a prepayment premium equal to 1.00% of the
principal amount of the Term Loans being prepaid or becoming due, provided,
however, that if the Term Loans are prepaid from Net Securities Proceeds of an
initial public offering of equity Securities of Holdings, no prepayment premium
will apply.  Term Loans may be prepaid
without prepayment premium after the second anniversary of the Closing Date.

(iii)        Mandatory Prepayments.  On and after such time as the First Lien
Claims have been Paid in Full, the Loans shall be prepaid in the amounts and
under the circumstances set forth below, all such prepayments to be applied as
set forth below or as more specifically provided in subsection 2.4B(iv) and
subsection 2.4D:

(a)           Prepayments
From Net Asset Sale Proceeds.  No
later than five (5) Business Days following the receipt by Holdings, Company or
any of its Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset
Sale, 

 

38

 

Company shall either (1) prepay the Loans in an aggregate amount equal
to such Net Asset Sale Proceeds or (2), so long as no Potential Event of
Default or Event of Default shall have occurred and be continuing, deliver to
Administrative Agent an Officer’s Certificate setting forth (x) that portion of
such Net Asset Sale Proceeds that Company or such Subsidiary intends to
reinvest in equipment or other productive assets of the general type used in
the business of Company and its Subsidiaries within 270 days of such date of
receipt and (y) the proposed use of such portion of the Net Asset Sale Proceeds
and such other information with respect to such reinvestment as Administrative
Agent may reasonably request, and Company shall, or shall cause one or more of
its Subsidiaries to, promptly and diligently apply such portion to such
reinvestment purposes.  In addition,
Company shall, no later than 270 days after receipt of such Net Asset Sale
Proceeds that have not theretofore been applied to the Obligations or that have
not been so reinvested as provided above, make an additional prepayment of the
Loans in the full amount of all such Net Asset Sale Proceeds.

(b)           Prepayments
from Net Insurance/Condemnation Proceeds. 
No later than the five (5) Business Days following the receipt by
Administrative Agent or by Holdings, Company or any of its Subsidiaries of any
Net Insurance/Condemnation Proceeds that are required to be applied to prepay
the Loans pursuant to the provisions of subsection 6.4C, Company shall prepay
the Loans in an aggregate amount equal to the amount of such Net
Insurance/Condemnation Proceeds.

(c)           Prepayments
Due to Issuance of Equity Securities. 
On the date of receipt of the Net Securities Proceeds from the issuance
of any equity Securities of Holdings, Company or any other Subsidiary of
Holdings after the Closing Date (excluding, Net Securities Proceeds from (i)
the issuance of equity Securities invested in Permitted Equity Contribution
Capex, (ii) the issuance of equity Securities invested in Permitted
Acquisitions, (iii) the issuance of equity Securities by a Subsidiary to
another Subsidiary or to Company (to the extent not prohibited by this
Agreement), (iv) the issuance of Holdings Capital Stock financed by loans from
the Company pursuant to subsection 7.3(vi), and (v) Net Securities Proceeds of
up to $300,000 from the issuance of equity Securities in connection with the
exercise of stock options relating to Holdings common stock on or about the
Closing Date, Company shall prepay the Loans in an aggregate amount equal to
such Net Securities Proceeds.

(d)           Prepayments
Due to Issuance of Indebtedness.  On
the date of receipt of the Net Securities Proceeds from the issuance of any
Indebtedness of Company, Holdings or any of its other Subsidiaries after the
Closing Date (other than Indebtedness permitted pursuant to subsection 7.1), Company shall prepay the Loans in
an aggregate amount equal to such Net Securities Proceeds.

(e)           Prepayments
from Consolidated Excess Cash Flow. 
In the event that there shall be Consolidated Excess Cash Flow for any
Fiscal Year 

 

39

 

(commencing with the Fiscal Year ending on January 1, 2006), Company
shall, no later than 120 days after the end of such Fiscal Year, prepay the
Loans in an aggregate amount equal to 50% (the “Consolidated
Excess Cash Flow Percentage”) of such Consolidated Excess Cash Flow,
provided, that if the calculation of such Consolidated Excess Cash Flow
includes a deduction for voluntary prepayment of the First Lien Term Loans or
Term Loans (the “Prepaid Amount”), then (i)
Consolidated Excess Cash Flow shall be deemed increased by the Prepaid Amount
for the purposes of determining prepayments required under this subsection (e),
and (ii) Company shall receive a credit equal to the amount of the Prepaid
Amount against any prepayments required under this subsection (e) with respect
to the Fiscal Year in which such voluntary prepayment was made (such credit may
not be carried forward to subsequent years).

(f)            Calculations
of Net Proceeds Amounts; Additional Prepayments Based on Subsequent
Calculations.  Concurrently with any
prepayment of the Loans pursuant to subsections 2.4B(iii)(a)-(e), Company shall
deliver to Administrative Agent an Officer’s Certificate demonstrating the
calculation of the amount of the applicable Net Asset Sale Proceeds, Net
Insurance/Condemnation Proceeds, Net Securities Proceeds, or Consolidated
Excess Cash Flow, as the case may be, that gave rise to such prepayment.  In the event that Company shall subsequently
determine that the actual amount was greater than the amount set forth in such
Officer’s Certificate, Company shall promptly make an additional prepayment of
the Loans in an amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an Officer’s Certificate
demonstrating the derivation of the additional amount resulting in such excess.

(iv)        Application of Prepayments.

(a)           Application
of Voluntary Prepayments.  Any
voluntary prepayments pursuant to subsection 2.4B(i) or (ii) shall be applied
to repay outstanding Term Loans to the full extent thereof which shall be
applied to reduce the scheduled installments of principal of the Term Loans set
forth in subsection 2.4A on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) to each remaining scheduled installment
of principal of the Term Loans set forth in subsection 2.4A.

(b)           Application
of Mandatory Prepayments.  Except as
provided in subsection 2.4D, any amount required to be applied as a mandatory
prepayment of the Loans pursuant to subsections 2.4B(iii) shall be applied to
prepay the Term Loans to the full extent thereof which shall be applied to
reduce the scheduled installments of principal of the Term Loans set forth in
subsection 2.4A on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) to each remaining scheduled installment
of principal of the Term Loans set forth in subsection 2.4A.

 

40

 

(c)           Application
of Prepayments to Base Rate Loans and LIBOR Loans.  Any prepayment of Loans shall be applied
first to Base Rate Loans to the full extent thereof before application to LIBOR
Loans, in each case in a manner that minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D.

C.            General Provisions
Regarding Payments.

(i)          Manner and Time of Payment.  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 Funding and Payment 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.  Company hereby authorizes Administrative
Agent to charge its accounts with Administrative Agent in order to cause timely
payment to be made to Administrative Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in its
accounts for that purpose).

(ii)         Application of Payments to Principal
and Interest.  Except as provided in
subsection 2.2C, all payments in respect of the principal amount of any Loan
shall include payment of accrued interest on the principal amount being repaid
or prepaid, and all such payments shall be applied to the payment of interest
before application to principal.

(iii)        Apportionment of Payments.  Aggregate payments of principal and interest
shall be apportioned among all outstanding Loans to which such payments relate,
in each case proportionately to Lenders’ respective Pro Rata Shares.  Administrative Agent shall promptly distribute
to each Lender, at the account specified in the payment instructions delivered
to Administrative Agent by such Lender, its Pro Rata Share of all such payments
received by Administrative Agent. 
Notwithstanding the foregoing provisions of this subsection 2.4C(iii),
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation 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
LIBOR Loans, Administrative Agent shall give effect thereto in apportioning
interest payments received thereafter.

(iv)        Payments on Business Days.  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.

(v)         Notation of Payment.  Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of all Loans evidenced by
that Note and all 

 

41

 

principal payments previously made thereon and of the
date to which interest thereon has been paid; provided that the failure
to make (or any error in the making of) a notation of any Loan made under such
Note shall not limit or otherwise affect the obligations of Company hereunder
or under such Note with respect to any Loan or any payments of principal or
interest on such Note.

D.            Application of Proceeds of Collateral and Payments
after Event of Default.

Upon the occurrence and
during the continuation of an Event of Default, if requested by Requisite
Lenders, or upon acceleration of the Obligations pursuant to Section 8,
(a) all payments received by Administrative Agent, whether from Company,
Holdings or any Subsidiary Guarantor or otherwise, and (b) all proceeds
received by Administrative Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral under any Collateral
Document may, in the discretion of Administrative Agent, be held by
Administrative Agent as Collateral for, and/or (then or at any time thereafter)
applied in full or in part by Administrative Agent, in each case in the
following order of priority:

(i)          to the payment of all costs and
expenses of such sale, collection or other realization, all other expenses,
liabilities and advances made or incurred by Administrative Agent in connection
therewith, and all amounts for which Administrative Agent is entitled to
compensation (including the fees described in subsection 2.3), reimbursement
and indemnification under any Loan Document and all advances made by
Administrative Agent thereunder for the account of the applicable Loan Party,
and to the payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the Loan Documents, all in accordance with subsections
8.4, 9.2 and 9.3 and the other terms of this Agreement and the Loan Documents;

(ii)         thereafter, to the payment of the
Obligations and obligations of Loan Parties under any Lender Hedge Agreement
for the ratable benefit of the holders thereof (subject to the provisions of
subsection 2.4C(ii) hereof); and

(iii)        thereafter, to the payment to or upon
the order of such Loan Party or to whosoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.

2.5                               Use of Proceeds.

A.            Term Loans.  The proceeds of the Term Loans, together with
the proceeds of the First Lien Term Loans, shall be applied by the Company (i)
to refinance Existing Indebtedness, (ii) to make the Recapitalization Payment
and (iii) to pay for related fees and expenses.

B.            Margin Regulations. 
No portion of the proceeds of any borrowing under this Agreement shall
be used by Company or any of its Subsidiaries in any manner that might cause
the borrowing or the application of such proceeds to violate Regulation U,
Regulation T or Regulation X of the Board of Governors of the Federal
Reserve System or any other regulation 

 

42

 

of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.

2.6                               Special Provisions
Governing LIBOR Loans.

Notwithstanding any other
provision of this Agreement to the contrary, the following provisions shall
govern with respect to LIBOR Loans as to the matters covered:

A.            Determination of
Applicable Interest Rate.  On each Interest Rate
Determination Date, Administrative Agent shall determine in accordance with the
terms of this Agreement (which determination shall, absent manifest error, be
final conclusive and binding upon all parties) the interest rate that shall
apply to the LIBOR 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 applicable
Lender.

B.            Inability to Determine
Applicable Interest Rate.  In the event that
Administrative Agent shall have determined (which determination shall be final,
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date 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 LIBOR, 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 converted to LIBOR
Loans until such time as Administrative Agent notifies Company and such Lenders
that the circumstances giving rise to such notice no longer exist and
(ii) any Notice of Conversion/Continuation given by Company with respect
to the Loans in respect of which such determination was made shall be deemed to
be rescinded by Company.

C.            Illegality or
Impracticability of LIBOR Loans.  In the event
that on any date any Lender shall have determined (which determination shall be
final, 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 LIBOR Loans (i) 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)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market or the position of
such Lender in that market, 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.  Administrative Agent shall promptly notify
each other Lender of the receipt of such notice.  Thereafter (a) the obligation of the
Affected Lender to convert Loans to LIBOR Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a LIBOR Loan then being requested
by Company pursuant to a Notice of Conversion/Continuation, the Affected Lender
shall convert such Loan to a Base Rate Loan, (c) the Affected Lender’s
obligation to maintain its outstanding LIBOR Loans (the 

 

43

 

“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 (d) 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 LIBOR Loan then being requested by Company pursuant to a Notice
of Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of
Conversion/Continuation 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.  Administrative Agent
shall promptly notify each other Lender of the receipt of such notice.  Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect the obligation
of any Lender other than an Affected Lender to maintain Loans as, or to convert
Loans to, LIBOR Loans in accordance with the terms of this Agreement.

D.            Compensation For
Breakage or Non-Commencement of Interest Periods.  Company shall
compensate each Lender, upon written request by that Lender pursuant to
subsection 2.8, for all reasonable losses, expenses and liabilities (including
any interest paid by that Lender to lenders of funds borrowed by it to make or
carry its LIBOR Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds but
excluding any loss of profit such as the LIBOR Margin) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a
conversion to or continuation of any LIBOR Loan does not occur on a date
specified therefor in a Notice of Conversion/Continuation or a telephonic
request therefor, (ii) if any prepayment or other principal payment or any
conversion of any of its LIBOR Loans (including any prepayment or conversion
occasioned by the circumstances described in subsection 2.6C) occurs on a date
prior to the last day of an Interest Period applicable to that Loan, and
(iii) if any prepayment of any of its LIBOR Loans is not made on any date
specified in a notice of prepayment given by Company.

E.             Booking of LIBOR Loans. 
Any Lender may make, carry or transfer LIBOR Loans at, to, or for the
account of any of its branch offices or the office of an Affiliate of that
Lender.

F.             Assumptions Concerning
Funding of LIBOR Loans.  Calculation of all amounts
payable to a Lender under this subsection 2.6 and under subsection 2.7A shall
be made as though that Lender had funded each of its LIBOR Loans through the
purchase of a LIBOR deposit bearing interest at the rate obtained pursuant to
the definition of LIBOR in an amount equal to the amount of such LIBOR Loan and
having a maturity comparable to the relevant Interest Period, whether or not
its LIBOR Loans had been funded in such manner.

G.            LIBOR Loans After
Default.  After the occurrence of and during the
continuation of an Event of Default, if Requisite Lenders so elect,
(i) Company may not elect to have a Loan be made or maintained as, or
converted to, a LIBOR Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection
2.6D, any Notice of Conversion/Continuation given by Company with respect to a
requested 

 

44

 

borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.

2.7                               Increased Costs; Taxes;
Capital Adequacy.

A.            Compensation for
Increased Costs.  Subject to the provisions of subsection 2.7B
(which shall be controlling with respect to the matters covered thereby), in
the event that any Lender shall determine (which determination shall, 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 other Government Authority, in each case
that becomes effective after the date such Lender became a Lender, or
compliance by such Lender with any guideline, request or directive issued or
made after the date hereof by any central bank or other Government Authority
(whether or not having the force of law):

(i)            subjects
such Lender to any additional Tax with respect to this Agreement or any of its
obligations hereunder or any payments to such Lender of principal, interest,
fees or any other amount payable hereunder;

(ii)           imposes,
modifies or holds applicable any reserve, special deposit, compulsory loan,
insurance charge 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 LIBOR
Loans that are reflected in the definition of LIBOR); or

(iii)          imposes
any other condition (other than with respect to Taxes) on or affecting such
Lender 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 its Loans or Commitments or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Lender with respect thereto; then, in any such
case, Company shall promptly pay to such Lender, upon receipt of the statement
referred to in subsection 2.8A, 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 on an after-tax basis for any such
increased cost or reduction in amounts received or receivable hereunder; provided
that Company shall not be obligated to pay such additional amounts to the
extent such additional amounts are incurred more than nine (9) months prior to
the giving of such statement; provided, further, that, if such law, rule,
regulation, order, guideline, request or other legal requirement giving rise to
such increased costs or reductions is retroactive, then the nine (9) month
period referred to above shall be extended to include the period of retroactive
effect thereof.

 

45

 

B.            Taxes.

(i)            Payments
to Be Free and Clear.  All sums
payable by Company under this Agreement and the other Loan Documents shall be
paid free and clear of, and without any deduction or withholding on account of,
any Tax 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 Company 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.

(ii)           Grossing-up
of Payments.  If Company 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 Company to Administrative Agent or
any Lender under any of the Loan Documents:

(a)           Company
shall notify Administrative Agent of any such requirement or any change in any
such requirement as soon as Company becomes aware of it;

(b)           Company
shall pay any such Tax when such Tax is due, such payment to be made (if the
liability to pay is imposed on Company) 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;

(c)           the
sum payable by Company 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

(d)           within
30 days after paying any sum from which it is required by law to make any
deduction or withholding, and within 30 days after the due date of payment of
any Tax which it is required by clause (b) 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 that no such additional amount shall be
required to be paid to any Lender under clause (c) above except to the extent
that any change after the date on which such Lender became a 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 on the date on which such Lender became a Lender in
respect of payments to such Lender.

(iii)          Evidence
of Exemption from U.S. Withholding Tax.

 

46

 

(a)           Each
Non-US Lender shall deliver to
Administrative Agent and to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) 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), two original copies of Internal Revenue Service
Form W-8BEN or W-8ECI (or any successor forms) properly completed and duly
executed by such Lender, or, in the case of a Non-US Lender claiming exemption
from United States federal withholding tax under Section 871(h) or 881(c) of
the Internal Revenue Code with respect to payments of “portfolio interest”, a
form W-8BEN, and a certificate of such Lender certifying that such Lender is
not (i) a “bank” for purposes of Section 881(c) of the Internal Revenue
Code, (ii) a ten-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of Company or Holdings or
(iii) a controlled foreign corporation related to Company (within the
meaning of Section 864(d)(4) of the Internal Revenue Code), in each case
together with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to establish
that such Lender is not subject to United States withholding tax with respect
to any payments to such Lender of amounts payable under any of the Loan
Documents.

(b)           Each
Non-US Lender, to the extent it does not act or ceases to act for its own
account with respect to any portion of any sums paid or payable to such Lender
under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to Administrative Agent and to
Company, on or prior to the Closing Date (in the case of each Lender listed on
the signature pages hereof), on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), or on such later date when such Lender ceases to act for its own
account with respect to any portion of any such sums paid or payable, 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), (1)
two original copies of the forms or statements required to be provided by such
Lender under subsection 2.7B(iii)(a), properly completed and duly executed by
such Lender, to establish the portion of any such sums paid or payable with
respect to which such Lender acts for its own account that is not subject to
United States withholding tax, and (2) two original copies of Internal Revenue
Service Form W-8IMY (or any successor forms) properly completed and duly
executed by such Lender, together with any information, if any, such Lender
chooses to transmit with such form, and any other certificate or statement of
exemption required under the Internal Revenue Code or the regulations issued
thereunder, to establish that such Lender is not acting for its own account
with respect to a portion of any such sums payable to such Lender.

 

47

 

(c)           Each
Non-US Lender hereby agrees, from time to time after the initial delivery by
such Lender of such forms, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence so delivered obsolete or
inaccurate in any material respect, that such Lender shall promptly
(1) deliver to Administrative Agent and to Company two original copies of
renewals, amendments or additional or successor forms, properly completed and
duly executed by such Lender, together with any other certificate or statement
of exemption required in order to confirm or establish that such Lender is not
subject to United States withholding tax with respect to payments to such
Lender under the Loan Documents and, if applicable, that such Lender does not
act for its own account with respect to any portion of such payment, or
(2) notify Administrative Agent and Company of its inability to deliver
any such forms, certificates or other evidence.

(d)           Company
shall not be required to pay any additional amount to any Non-US Lender under
clause (c) of subsection 2.7B(ii), (1) with respect to any Tax required to be
deducted or withheld on the basis of the information, certificates or
statements of exemption such Lender chooses to transmit with an Internal
Revenue Service Form W-8IMY pursuant to subsection 2.7B(iii)(b)(2) or (2) if
such Lender shall have failed to satisfy the requirements of clause (a), (b) or
(c)(1) of this subsection 2.7B(iii); provided that if such Lender shall
have satisfied the requirements of subsection 2.7B(iii)(a) on the date such
Lender became a Lender, nothing in this subsection 2.7B(iii)(d) shall relieve
Company of its obligation to pay any amounts pursuant to subsection 2.7B(ii)(c)
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 in subsection 2.7B(iii)(a).

C.            Capital Adequacy
Adjustment.  If any Lender shall have determined that the
adoption, effectiveness, phase-in or applicability after the date hereof 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
Government Authority charged with the interpretation or administration thereof,
or compliance by any Lender with any guideline, request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Government Authority, 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 participations
therein or other obligations hereunder with respect to the Loans 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 subsection 2.8A, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such controlling

 

48

 

corporation on an
after-tax basis for such reduction; provided that Company shall not be
obligated to pay such additional amounts to the extent such additional amounts
are incurred more than nine (9) months prior to the giving of such statement; provided,
further, that, if such law, rule, regulation, order, guideline, request
or other legal requirement giving rise to such additional amounts is
retroactive, then the nine (9) month period referred to above shall be extended
to include the period of retroactive effect thereof.

2.8                               Statement of Lenders;
Obligation of Lenders to Mitigate.

A.            Statements. 
Each Lender claiming compensation or reimbursement pursuant to
subsection 2.6D, 2.7 or 2.8B shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in reasonable detail
the basis of the calculation of such compensation or reimbursement, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

B.            Mitigation. 
Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Loans of such Lender 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 subsection 2.7, it will use reasonable efforts
to make, issue, fund or maintain the Commitments of such Lender or the Loans of
such Lender Issuing Lender through another lending office of such Lender, if
(i) 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 subsection 2.7
would be materially reduced and (ii) as determined by such Lender in its sole
discretion, such action would not otherwise be disadvantageous to such Lender; provided
that such Lender will not be obligated to utilize such other lending office
pursuant to this subsection 2.8B unless Company agrees to pay all incremental
expenses incurred by such Lender as a result of utilizing such other lending
office as described above.

2.9                               Replacement of a Lender.

If Company receives a
statement of amounts due pursuant to subsection 2.8A from a Lender, a Lender (a
“Non-Consenting
Lender”) refuses to
consent to an amendment, modification or waiver of this Agreement that,
pursuant to subsection 10.6, requires consent of 100% of the Lenders or 100% of
the Lenders with Obligations directly affected or a Lender becomes an Affected
Lender (any such Lender, a “Subject Lender”),
so long as (i) no Potential Event of Default or Event of Default shall have
occurred and be continuing and Company has obtained a commitment from another
Lender or an Eligible Assignee to purchase at par the Subject Lender’s Loans
and assume the Subject Lender’s Commitments and all other obligations of the
Subject Lender hereunder, and (ii), if applicable, the Subject Lender is
unwilling to withdraw the notice delivered to Company pursuant to subsection
2.8 and/or is unwilling to remedy its default upon 10 days prior written notice
to the Subject Lender and Administrative Agent, Company may require the Subject
Lender to assign all of its Loans and Commitments to such other Lender,
Lenders, Eligible Assignee or Eligible Assignees pursuant to the provisions of
subsection 10.1B; provided that, prior to or concurrently with such
replacement, (1) the 

 

49

 

Subject Lender
shall have received payment in full of all principal, interest, fees and other
amounts (including all amounts under subsections 2.6D, 2.7 and/or 2.8B (if
applicable)) through such date of replacement and a release from its
obligations under the Loan Documents, (2) the processing fee required to be
paid by subsection 10.1B(i) shall have been paid to Administrative Agent, (3)
all of the requirements for such assignment contained in subsection 10.1B,
including, without limitation, the consent of Administrative Agent (if
required) and the receipt by Administrative Agent of an executed Assignment
Agreement and other supporting documents, have been fulfilled, and (4) in the
event such Subject Lender is a Non-Consenting Lender, each assignee shall
consent, at the time of such assignment, to each matter in respect of which
such Subject Lender was a Non-Consenting Lender and Company also requires each
other Subject Lender that is a Non-Consenting Lender to assign its Loans.  For the avoidance of doubt, if a Lender is a
Non-Consenting Lender solely because it refused to consent to an amendment,
modification or waiver that required the consent of 100% of Lenders with
Obligations directly affected thereby (which amendment, modification or waiver
did not accordingly require the consent of 100% of all Lenders), the Loans of
such Non-Consenting Lender that are subject to the assignments required by this
subsection 2.9 shall include only those Loans that constitute the
Obligations directly affected by the amendment, modification or waiver to which
such Non-Consenting Lender refused to provide its consent.

Section
3.              INTENTIONALLY OMITTED

Section
4.              CONDITIONS TO LOANS

The obligations of
Lenders to make Loans hereunder are subject to the satisfaction of the
following conditions.

4.1                               Conditions to Term Loans.

The obligations of
Lenders to make the Loans to be made on the Closing Date are, in addition to
the conditions precedent specified in subsection 4.2, subject to prior or
concurrent satisfaction of the following conditions:

A.            Loan Party Documents. 
On or before the Closing Date, Holdings and Company shall, and shall
cause each other Loan Party to, deliver to Lenders (or to Administrative Agent
with sufficient originally executed copies, where appropriate, for each Lender)
the following with respect to Holdings, Company or such Loan Party, as the case
may be, each, unless otherwise noted, dated the Closing Date:

(i)            Copies of the Organizational
Documents of such Person, certified by the Secretary of State of its
jurisdiction of organization and dated a recent date prior to the Closing Date
or, if such document is of a type that may not be so certified, certified by
the secretary or similar officer of the applicable Loan Party, together with a
good standing certificate from the Secretary of State of its jurisdiction of
organization and each other state in which such Person is qualified to do
business, each dated a recent date prior to the Closing Date;

 

50

 

(ii)           Resolutions
of the Governing Body of such Person approving and authorizing the execution,
delivery and performance of the Loan Documents and the First Lien Credit
Agreement to which it is a party, certified as of the Closing Date by the
secretary or similar officer of such Person as being in full force and effect
without modification or amendment;

(iii)          Signature
and incumbency certificates of the officers of such Person executing the Loan
Documents to which it is a party;

(iv)          Executed
originals of the Loan Documents to which such Person is a party; and

(v)           Such
other documents as Administrative Agent may reasonably request.

B.            Fees. 
Company shall have paid to Administrative Agent, for distribution (as
appropriate) to Administrative Agent and Lenders, the fees payable on the
Closing Date referred to in subsection 2.3.

C.            Corporate and Capital
Structure; Ownership.

(i)            Corporate
Structure.  The corporate
organizational structure of Holdings and its Subsidiaries after giving effect
to the Recapitalization, shall be as set forth on Schedule 4.1C annexed
hereto.

(ii)           Capital
Structure and Ownership.  The capital
structure and ownership of Holdings and Company, after giving effect to the
Recapitalization, shall be as set forth on Schedule 4.1C annexed hereto.

D.            Representations and
Warranties; Performance of Agreements.  Company shall
have delivered to Administrative Agent an Officer’s Certificate, in form and
substance reasonably satisfactory to Administrative Agent, to the effect that
the representations and warranties in Section 5 are true, correct and complete
in all material respects on and as of the Closing Date to the same extent as
though made on and as of that date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such representations
and warranties were true, correct and complete in all material respects on and
as of such earlier date) and that Company shall have performed in all material
respects all agreements and satisfied all conditions which the Loan Documents
provide shall be performed or satisfied by it on or before the Closing Date
except as otherwise disclosed to and agreed to in writing by Administrative
Agent; provided that, if a representation and warranty, covenant or
condition is qualified as to materiality, with respect to such representation
and warranty, covenant or condition the applicable materiality qualifier set
forth above shall be disregarded for purposes of this condition.

E.             Financial Statements; Pro
Forma Financial Statements.  On
or before the Closing Date, Lenders shall have received (i) audited financial
statements of Company and its Subsidiaries for Fiscal Years 2001, 2002 and
2003, consisting of consolidated balance sheets 

 

51

 

and the related
consolidated statements of income, stockholders’ equity and cash flows for such
Fiscal Years, together with the report thereon of Ernst & Young and in
reasonable detail and certified by the chief financial officer of Company that
they fairly present in all material respects the consolidated financial
condition of Company and its Subsidiaries, as at the dates indicated and the
results of their operations for the periods indicated, (ii) unaudited financial
statements of Company and its Subsidiaries as at the end of each Fiscal Quarter
ended more than 45 days prior to the Closing Date and monthly financial
statements for any monthly period ending after the most recent Fiscal Quarter
and more than 30 days prior to the Closing Date, consisting of a consolidated
balance sheet and the related consolidated statements of income and cash flows
for the periods indicated, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present in all material respects
the consolidated financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments,
(iii) pro forma consolidated balance sheets of Company and its
Subsidiaries as at January 2, 2005, reflecting the Recapitalization and the
transactions contemplated by the Loan Documents and the First Lien Credit
Agreement, and (iv) a consolidated plan and financial forecast for the six-year
period after the Closing Date, including forecasted balance sheet, consolidated
statements of income, and cash flows of Company and its Subsidiaries on a
monthly basis for Fiscal Year 2004 and on an annual basis for each Fiscal Year
thereafter during such period, together with an explanation of the assumptions
on which such forecasts are based.  Each
of the foregoing financial statements shall (1) be in form and substance
reasonably satisfactory to Administrative Agent and Lenders, (2) be substantially
consistent with any financial statements for the same periods delivered to
Administrative Agent prior to the Closing Date, and (3) in the case of such
financial statements for subsequent periods, be substantially consistent with
any projected financial results for such periods delivered to Administrative
Agent prior to the Closing Date.

F.             Opinions of Counsel to
Loan Parties.  Lenders shall have received originally
executed copies of one or more favorable written opinions of Latham &
Watkins, LLP, counsel for Loan Parties, in form and substance reasonably
satisfactory to Administrative Agent and its counsel, addressed to
Administrative Agent and Lenders and dated as of the Closing Date and setting
forth substantially the matters in the opinions designated in Exhibit VIII
annexed hereto and as to such other matters as Administrative Agent acting on
behalf of Lenders may reasonably request (this Agreement constituting a written
request by Company to such counsel to deliver such opinions to Lenders).

G.            Solvency Assurances. 
On the Closing Date, Administrative Agent and Lenders shall have
received an Officer’s Certificate of Company dated the Closing Date,
substantially in the form of Exhibit X annexed hereto and with
appropriate attachments, in each case demonstrating that, after giving effect
to the consummation of the Recapitalization and the transactions contemplated
by the Loan Documents and the First Lien Credit Agreement, (i) Holdings and its
Subsidiaries on a consolidated basis and (ii) Company and its Subsidiaries on a
consolidated basis will be Solvent.

H.            Evidence of Insurance. 
Administrative Agent shall have received a certificate from Company’s
insurance broker or other evidence reasonably satisfactory to it that 

 

52

 

all insurance
required to be maintained pursuant to subsection 6.4 is in full force and
effect and that Administrative Agent on behalf of Lenders has been named as
additional insured and/or loss payee thereunder to the extent required under
subsection 6.4.

I.              Necessary Governmental
Authorizations and Consents; Expiration of Waiting Periods, Etc. 
Company 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 Loan Documents and the First Lien Credit
Agreement and the continued operation of the business conducted by Company and
its Subsidiaries in substantially the same manner as conducted prior to the
Closing Date.  Each such Governmental
Authorization and consent shall be in full force and effect, except in a case
where the failure to obtain or maintain a Governmental Authorization or
consent, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  All applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Loan Documents and the First Lien Credit
Agreement.  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
Government Authority to take action to set aside its consent on its own motion
shall have expired.

J.             Environmental Reports. 
On or prior to the Closing Date, Company shall, or shall cause its
Subsidiaries to, deliver to Administrative Agent Phase I and letter reports and
other material documents and information, which are in the possession or
control of Company or any Subsidiary, regarding material environmental matters
relating to Holdings and its Subsidiaries and the Facilities.  These documents and information are set forth
on Schedule 4.1J  annexed hereto.

K.            Security Interests in
Personal and Mixed Property.  To the extent
not otherwise satisfied pursuant to subsection 4.1L, Administrative Agent shall
have received evidence reasonably satisfactory to it that Holdings, Company and
Subsidiary Guarantors shall have taken or caused to be taken all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items described
in clauses (ii), (iii) and (iv) below) that may be necessary or, in the opinion
of Administrative Agent, desirable in order to create in favor of
Administrative Agent, for the benefit of Lenders, a valid and (upon such filing
and recording) perfected Second Priority Lien in the entire personal and mixed
property Collateral, except as provided to the contrary in the Security
Agreement.  Such actions shall include
the following, except as provided to the contrary in the Security Agreement:

(i)            Stock
Certificates and Instruments. 
Delivery to Administrative Agent of (a) certificates (which certificates
shall be accompanied by irrevocable undated stock powers, duly endorsed in
blank and otherwise reasonably satisfactory in form and substance to
Administrative Agent) representing all Capital Stock pledged pursuant to the
Security Agreement and any Foreign Pledge Agreement and (b) all promissory
notes or 

 

53

 

other instruments (duly endorsed, where appropriate, in a manner
reasonably satisfactory to Administrative Agent) evidencing any Collateral;

(ii)           Lien
Searches and UCC Termination Statements. 
Delivery to Administrative Agent of (a) the results of a recent search,
by a Person reasonably satisfactory to Administrative Agent, of all effective
UCC financing statements and fixture filings and all judgment and tax lien
filings which may have been made with respect to any personal or mixed property
of any Loan Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements duly executed (if required) by all
applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture
filings disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding pursuant to
the terms of this Agreement);

(iii)          UCC
Financing Statements and Fixture Filings. 
Delivery to Administrative Agent of UCC financing statements and, where
appropriate, fixture filings and/or consignment filings, as the case may be,
duly executed by each applicable Loan Party (if required) with respect to all
personal and mixed property Collateral of such Loan Party, for filing in all
jurisdictions as may be necessary or, in the opinion of Administrative Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents;

(iv)          PTO
Cover Sheets, Etc.  Delivery to
Administrative Agent of all cover sheets or other documents or instruments
required to be filed with any IP Filing Office in order to create or perfect
Liens in respect of any IP Collateral, together with releases duly executed (if
necessary) of security interests by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective filings
in any IP Filing Office in respect of any IP Collateral (other than any such
filings in respect of Liens permitted to remain outstanding pursuant to the
terms of this Agreement);

(v)           Foreign
Pledge Agreements.  Execution and
delivery to Administrative Agent of Foreign Pledge Agreements with respect to
66% of the Capital Stock owned by Company or a Domestic Subsidiary of all first
tier Foreign Subsidiaries (if any) with respect to which Administrative Agent
deems a Foreign Pledge Agreement necessary or advisable to perfect or otherwise
protect the Second Priority Liens granted to Administrative Agent on behalf of
Lenders in such Capital Stock, and the taking of all such other actions under
the laws of such jurisdictions as Administrative Agent may deem necessary or
advisable to perfect or otherwise protect the Second Priority Liens; and

(vi)          Opinions
of Local Counsel.  Delivery to
Administrative Agent of an opinion of counsel (which counsel shall be
reasonably satisfactory to Administrative Agent) under the laws of the
jurisdiction of organization of any Loan Party with respect to the perfection
of the security interests in favor of Administrative Agent in personal or mixed
property Collateral and such other matters governed by the laws of such
jurisdiction regarding such security interests as Administrative Agent may
reasonably 

 

54

 

request, in each case in form and substance reasonably satisfactory to
Administrative Agent.

L.            Closing Date Mortgages;
Closing Date Mortgage Policies; Etc.  Administrative
Agent shall have received from Company and each applicable Subsidiary
Guarantor:

(i)            Closing
Date Mortgages.  Fully executed and
notarized Mortgages (each a “Closing Date Mortgage”
and, collectively, the “Closing Date Mortgages”), in proper form for recording in all appropriate places in all
applicable jurisdictions, encumbering each Real Property Asset listed in Schedule 4.1L
annexed hereto (each a “Closing Date Mortgaged Property” and, collectively, the “Closing Date Mortgaged Properties”), it being understood that no Closing Date Mortgage shall
encumber any Real Property Asset other than the Real Property Assets subject to
the first priority Lien granted pursuant to the First Lien Loan Documents;

(ii)           Opinions
of Local Counsel.  An opinion of
counsel (which counsel shall be reasonably satisfactory to Administrative
Agent) in each state in which a Closing Date Mortgaged Property is located with
respect to the enforceability of the form(s) of Closing Date Mortgages to be
recorded in such state and such other matters as Administrative Agent may
reasonably request, in each case in form and substance reasonably satisfactory
to Administrative Agent;

(iii)          Title
Insurance.  (a) ALTA mortgagee title
insurance policies or unconditional commitments therefor (the “Closing Date Mortgage
Policies”) issued by
the Title Company with respect to the Closing Date Mortgaged Properties listed
in Part A of Schedule 4.1L annexed hereto, in amounts not less than the
respective amounts designated therein with respect to any particular Closing
Date Mortgaged Properties, insuring fee simple title to each such Closing Date
Mortgaged Property vested in such Loan Party and assuring Administrative Agent
that the applicable Closing Date Mortgages create valid and enforceable Second
Priority mortgage Liens on the respective Closing Date Mortgaged Properties
encumbered thereby, subject only to a standard survey exception, which Closing
Date Mortgage Policies (1) shall include an endorsement for mechanics’ liens,
for future advances under this Agreement and for any other matters reasonably
requested by Administrative Agent and (2) shall provide for affirmative
insurance and such reinsurance as Administrative Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to
Administrative Agent; and (b) evidence satisfactory to Administrative Agent
that such Loan Party has (i) delivered to the Title Company all certificates
and affidavits required by the Title Company in connection with the issuance of
the Closing Date Mortgage Policies and (ii) paid to the Title Company or to the
appropriate Governmental Authorities all expenses and premiums of the Title
Company in connection with the issuance of the Closing Date Mortgage Policies
and all recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Closing Date Mortgages in the
appropriate real estate records;

 

55

 

(iv)          Title
Reports.  With respect to each
Closing Date Mortgaged Property listed in Part B of Schedule 4.1L
annexed hereto, a title report issued by the Title Company with respect
thereto, dated not more than 30 days prior to the Closing Date and satisfactory
in form and substance to Administrative Agent;

(v)           Copies
of Documents Relating to Title Exceptions. 
Copies of all recorded documents listed as exceptions to title or
otherwise referred to in the Closing Date Mortgage Policies or in the title
reports delivered pursuant to subsection 4.1L(iv);

(vi)          Matters
Relating to Flood Hazard Properties. 
(a) Evidence, which may be in the form of a letter from an insurance
broker or a municipal engineer, as to whether (1) any Closing Date
Mortgaged Property is a Flood Hazard Property and (2) the community in
which any such Flood Hazard Property is located is participating in the
National Flood Insurance Program, (b) if there are any such Flood Hazard
Properties, such Loan Party’s written acknowledgement of receipt of written
notification from Administrative Agent (1) as to the existence of each
such Flood Hazard Property and (2) as to whether the community in which
each such Flood Hazard Property is located is participating in the National
Flood Insurance Program, and (c) in the event any such Flood Hazard Property is
located in a community that participates in the National Flood Insurance
Program, evidence that Company has obtained flood insurance in respect of such
Flood Hazard Property to the extent required under the applicable regulations
of the Board of Governors of the Federal Reserve System; and

(vii)         Environmental
Indemnity.  If requested by
Administrative Agent, an environmental indemnity agreement, satisfactory in
form and substance to Administrative Agent and its counsel, with respect to the
indemnification of Administrative Agent and Lenders for any liabilities that
may be imposed on or incurred by any of them as a result of any Hazardous
Materials Activity.

M.           Matters
Relating to Existing Indebtedness of Company and its Subsidiaries.

(i)            Termination
of Existing Credit Agreement and Related Liens.  On the Closing Date, Company and its
Subsidiaries shall have (a) repaid in full all Indebtedness outstanding under
the Existing Credit Agreement (the aggregate principal amount of which
Indebtedness shall not exceed $65,550,000), (b) terminated any commitments to
lend or make other extensions of credit thereunder, (c) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing Indebtedness or other obligations of Company and its
Subsidiaries thereunder, and (d) made arrangements satisfactory to
Administrative Agent with respect to the cancellation of any letters of credit
outstanding thereunder or the issuance of letters of credit under the First
Lien Credit Agreement to support the obligations of Company and its
Subsidiaries with respect thereto.

 

56

 

(ii)           Repayment
of Company Subordinated Notes.  On
the Closing Date, Company shall have repaid in full the Company Subordinated
Notes referenced in the Existing Credit Agreement.

(iii)          Existing
Indebtedness to Remain Outstanding. 
The Existing Indebtedness described in Schedule 7.1 annexed hereto shall
remain outstanding.

N.            Agreements
in Full Force and Effect; Consummation of the Recapitalization.

(i)            Agreements
in Full Force and Effect. 
Administrative Agent shall have received a fully executed or conformed
copy of each Related Agreement, First Lien Loan Document and Holdings Note
Document (each in form and substance reasonably satisfactory to Administrative Agent)
certified as of the Closing Date by the secretary or similar officer of the
Company as being in full force and effect without modification, waiver or
amendment.

(ii)           Consummation
of the Recapitalization.

(a)           (1)
Company shall have received, on the Closing Date, gross proceeds from the First
Lien Term Loans of at least $155,000,000, (2) Holdings shall have received, on
the Closing Date, gross proceeds from the Holdings Notes of at least
$15,000,000, and (3)  the
Recapitalization Payment shall not exceed $125,000,000.

(b)           There
shall not be an Event of Default or Potential Event of Default after giving
effect to the Recapitalization.

(iii)          Officer’s
Certificate.  On the Closing Date,
Company shall have delivered to Administrative Agent an Officer’s Certificate
of Company certifying that the conditions set forth in subsection 4.1N(ii) have
been met.

O.            No
Material Adverse Change. Since December 31, 2003, nothing shall have occurred (and the Lenders
shall have become aware of no facts or conditions not previously known) which
Administrative Agent determines could reasonably be expected to have a Material
Adverse Effect.

P.            Litigation. 
No litigation by any entity (private or governmental) shall be pending
or, to the knowledge of Holdings, Company or their respective Subsidiaries,
threatened with respect to this Agreement, any other Loan Document, any Related
Agreement, the First Lien Credit Agreement or any other documentation executed
in connection herewith or with respect to the transactions contemplated hereby,
or which the Administrative Agent shall determine could reasonably be expected
to have a Material Adverse Effect.

Q.            Intentionally
Omitted.

 

57

 

R.            Certificate
Regarding Financial Covenant.  On the Closing
Date, Company shall have delivered to Administrative Agent an Officer’s
Certificate executed by the chief financial officer of the Company certifying
that the Consolidated EBITDA for the twelve-month period ending January 2,
2005, calculated on a pro-forma basis
as if the Recapitalization and the other transactions consummated on the
Closing Date had occurred at the beginning of such period is not less than
$46,000,000 together with calculations demonstrating the foregoing in form and
substance reasonably satisfactory to Administrative Agent.

S.            Completion of
Proceedings.  All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be reasonably
satisfactory in form and substance to Administrative Agent and such counsel,
and Administrative Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.

4.2                               Additional Conditions.

The obligation of each
Lender to make Loans on the Closing Date are subject to the following further
conditions precedent:

A.            Administrative Agent shall have received
on or before the Closing Date, in accordance with the provisions of subsection
2.1B, a duly executed Notice of Borrowing, in each case signed by a duly
authorized Officer of Company.

B.            As of the Closing Date:

(i)            The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of the
Closing 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, correct and complete in all material respects on and as of such earlier
date; provided, that, if a representation and warranty, covenant or
condition is qualified as to materiality, with respect to such representation
and warranty, covenant or condition the applicable materiality qualifier set
forth above shall be disregarded for purposes of this condition;

(ii)           No
event shall have occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Notice of Borrowing that
would constitute an Event of Default or a Potential Event of Default;

(iii)          Each
Loan Party shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date; and

 

58

 

(iv)          No
order, judgment or decree of any arbitrator or Government Authority shall
purport to enjoin or restrain such Lender from making the Loans to be made by
it on the Closing Date; and

Section
5.              COMPANY’S REPRESENTATIONS
AND WARRANTIES

In order to induce
Lenders to enter into this Agreement and to make the Loans, Company and
Holdings represents and warrants to each Lender as of the Closing Date:

5.1                               Organization, Powers,
Qualification, Good Standing, Business and Subsidiaries.

A.            Organization and Powers. 
Each of Holdings and its Subsidiaries is a corporation, partnership or
limited liability company duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization as specified in Schedule
5.1 annexed hereto.  Each of Holdings
and its Subsidiaries 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 Loan Documents and the Second Lien Term Loan
Agreement to which it is a party and to carry out the transactions contemplated
thereby.

B.            Qualification and Good
Standing.  Each of Holdings and its Subsidiaries 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, except in jurisdictions where the failure to be so qualified or in
good standing has not had and could not reasonably be expected to result in a
Material Adverse Effect.

C.            Conduct of Business. 
Holdings and its Subsidiaries are engaged only in the businesses
permitted to be engaged in pursuant to subsection 7.11.

D.            Subsidiaries. 
All of the Subsidiaries of Holdings and their jurisdictions of
organization are identified in Schedule 5.1 annexed hereto, as said
Schedule 5.1 may be supplemented from time to time pursuant to the
provisions of subsection 6.1(xv).  The
Capital Stock of each of the Subsidiaries of Holdings identified in Schedule 5.1
annexed hereto (as so supplemented) is duly authorized, validly issued, fully
paid and nonassessable and none of such Capital Stock constitutes Margin
Stock.  Each of the Subsidiaries of
Holdings identified in Schedule 5.1 annexed hereto (as so
supplemented) is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization set forth therein, has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and 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 except where failure to be so qualified or in good standing or a lack
of such power and authority has not had and could not reasonably be expected to
result in a Material Adverse Effect.  Schedule 5.1
annexed hereto (as so supplemented) correctly sets forth the ownership interest
of Holdings and each of its Subsidiaries in each of the Subsidiaries of
Holdings identified therein.

 

59

 

5.2                               Authorization of
Borrowing, etc.

A.            Authorization of
Borrowing.  The execution, delivery and performance of
the Loan Documents and the First Lien Credit Agreement have been duly
authorized by all necessary action on the part of each Loan Party that is a
party thereto.

B.            No Conflict. 
The execution, delivery and performance by Loan Parties of the Loan
Documents and the First Lien Loan Documents to which they are parties and the
consummation of the transactions contemplated by the Loan Documents and the
First Lien Loan Documents do not and will not (i) violate any provision of
any law or any governmental rule or regulation applicable to Holdings or any of
its Subsidiaries, the Organizational Documents of Holdings or any of its
Subsidiaries or any order, judgment or decree of any court or other Government
Authority binding on Holdings or any of its Subsidiaries, (ii) 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 Holdings or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Holdings or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of the Administrative Agent on behalf of Lenders and the First Lien Loan
Documents in favor of the First Lien Administrative Agent under the First Lien
Credit Agreement on behalf of the lenders party thereto), or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Holdings 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, in each case, to the extent such
violation, conflict, Lien or failure to obtain such approval or consent could
not reasonably be expected to result in a Material Adverse Effect.

C.            Governmental Consents. 
The execution, delivery and performance by Loan Parties of the Loan
Documents and the First Lien Loan Documents to which they are parties and the
consummation of the transactions contemplated by the Loan Documents and the
First Lien Loan Documents do not and will not require any Governmental
Authorization, except as have been obtained.

D.            Binding Obligation. 
Each of the Loan Documents and the First Lien Loan Documents has been
duly executed and delivered by each Person that is a party thereto and is the
legally valid and binding obligation of such Person, enforceable against such
Loan 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.

E.             Valid
Issuance of Holdings Common Stock.  The Holdings
Common Stock to be sold on or before the Closing Date, when issued and
delivered, will be duly and validly issued, fully paid and nonassessable.  The issuance and sale of such Holdings Common
Stock upon such issuance and sale, will either (a) have been registered or
qualified under applicable federal and state securities laws or (b) be exempt
therefrom.

 

60

 

F.             Valid
Execution of First Lien Loan Documents.  Each of
Holdings, Company and each Subsidiary party to any First Lien Loan Document has
the corporate power and authority to enter in the First Lien Loan Documents to
which it is a party.

5.3                               Financial Condition.

Company has heretofore
delivered to Lenders, at Lenders’ request, the financial statements and
information described in subsection 4.1E. 
All such statements other than pro
forma financial statements were prepared in conformity with GAAP and
fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as
at the 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, (a) in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments and
(b) in the case of interim financials, the absence of footnotes.  None of Holdings, Company or any of its
Subsidiaries have (and none of Holdings, Company or any of its Subsidiaries
will have following the funding of the initial Loans) any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that, as of the periods reported for
such financial statements, is not reflected in the foregoing financial
statements or the notes thereto, if any, and that, in any such case, is
material in relation to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company and any of its Subsidiaries
taken as a whole.

5.4                               No Material Adverse
Change; No Restricted Junior Payments.

Since December 31,
2003, no event or change has occurred that has resulted in or evidences, either
in any case or in the aggregate, a Material Adverse Effect.  Neither Company nor any of its Subsidiaries
has directly or indirectly 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 by subsection 7.5.

5.5                               Title to Properties;
Liens; Real Property; Intellectual Property.

A.            Title to Properties;
Liens.  Company and its Subsidiaries have (i) good,
sufficient and legal 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), or (iii) good title to (in the case of all other
personal property), all of their respective properties and assets reflected in
the financial statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in each case except
for assets disposed of since the date of such financial statements in the
ordinary course of business or as otherwise permitted under subsection
7.7.  Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.

B.            Real Property. 
As of the Closing Date, Schedule 5.5B annexed hereto contains a
true, accurate and complete list of (i) all fee interests in any Real Property
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 Property Asset, 

 

61

 

regardless of
whether a Loan Party is the landlord or tenant (whether directly or as an
assignee or successor in interest) under such lease, sublease or
assignment.  As of the Closing Date,
except as specified in Schedule 5.5B annexed hereto, each agreement
listed in clause (ii) of the immediately preceding sentence is in full force
and effect and Company does not have knowledge of any default that has occurred
and is continuing thereunder, and each such agreement constitutes the legally
valid and binding obligation of each applicable Loan Party, enforceable against
such Loan Party in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors’ rights generally or by equitable principles.

C.            Intellectual Property. 
As of the Closing Date, Company and its Subsidiaries own or have the
right to use, all Intellectual Property used in the conduct of their business,
except where the failure to own or have such right to use in the aggregate
could not reasonably be expected to result in a Material Adverse Effect.  No claim has been asserted and is pending by
any Person challenging or questioning the use of any such Intellectual Property
or the validity or effectiveness of any such Intellectual Property, nor does
Company know of any valid basis for any such claim, except for such claims that
in the aggregate could not reasonably be expected to result in a Material
Adverse Effect.  To the Company’s
knowledge, the use of such Intellectual Property by Company and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  All federal and state and all foreign
registrations of and applications for Intellectual Property, and all
unregistered Intellectual Property, that are owned or licensed by Company or
any of its Subsidiaries on the Closing Date are described on Schedule 5.5C
annexed hereto.

5.6                               Litigation; Adverse
Facts.

There are no Proceedings
(whether or not purportedly on behalf of Holdings, Company or any of its
Subsidiaries) at law or in equity, or before or by any court or other
Government Authority (including any Environmental Claims) that are pending or,
to the knowledge of Company, threatened against or affecting any Loan Party or
any property of any Loan Party and that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.  Neither Holdings nor Company nor any of its
Subsidiaries (i) is in violation of any applicable laws (including
Environmental Laws) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, or (ii) is subject to or
in default with respect to any final judgments, writs, injunctions, decrees,
rules or regulations of any court or other Government Authority that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.

5.7                               Payment of Taxes.

Except to the extent
permitted by subsection 6.3, all material tax returns and reports of Holdings
and its Subsidiaries required to be filed by any of them have been timely
filed, and all taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon Holdings and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises that are due and payable have been paid 

 

62

 

when due and
payable (subject to valid extensions). 
Company knows of no proposed tax assessment against Holdings or any of
its Subsidiaries that is not being actively contested by Holdings or such
Subsidiary in good faith and by appropriate proceedings; provided that
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor and in the case
of a Lien with respect to any portion of the Collateral, such contest
proceedings operate to stay the sale of any portion of the Collateral on
account of such Lien.

5.8                               Performance of
Agreements; Material Contracts.

A.            Neither Holdings nor Company 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 that, with the giving of
notice or the lapse of time or both, would constitute such a default, except
where the consequences, direct or indirect, of such default or defaults, if
any, could not reasonably be expected to result in a Material Adverse Effect.

B.            Neither Holdings nor Company nor any of
its Subsidiaries is a party to or is otherwise subject to any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.

5.9                               Governmental Regulation.

Neither
Holdings nor Company nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce 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 any portion of the
Obligations unenforceable.

5.10                        Securities Activities.

A.            Neither Holdings nor Company 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.

B.            Following application of the proceeds of
each Loan, not more than 25% of the value of the assets (either of Company only
or of Company and its Subsidiaries on a consolidated basis) subject to the
provisions of subsection 7.2 or 7.7 or subject to any restriction contained in
any agreement or instrument, between Company and any Lender or any Affiliate of
any Lender, relating to Indebtedness and within the scope of subsection 8.2,
will be Margin Stock.

5.11                        Employee Benefit Plans.

A.            Company, each of its Subsidiaries and,
solely for purposes of Section 4980B of the Internal Revenue Code and Title IV
of ERISA, each of their respective ERISA 

 

63

 

Affiliates are in
compliance with all applicable provisions and requirements of ERISA or
applicable Law 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 as would not reasonably be expected to
cause a Material Adverse Effect.  Each
Employee Benefit Plan that 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 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.

B.            No ERISA Event has occurred or is
reasonably expected to occur which would result in a liability in excess of
$1,000,000 or is reasonably likely to result in a
Lien.

C.            Except to the extent required under
Section 4980B of the Internal Revenue Code or otherwise required by law, no
Employee Benefit Plan provides health or welfare benefits (through the purchase
of insurance or otherwise) for any retired or former employee of Company, any
of its Subsidiaries or any of their respective ERISA Affiliates the liability
for which would cause a Material Adverse Effect.

D.            As of the most recent valuation date for
any Pension Plan, the amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension
Plans (determined based on assumptions used for purposes of GAAP) excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed an amount which, if payable, could
reasonably be expected to result in a Material Adverse Effect.

5.12                        Certain Fees.

No broker’s or finder’s
fee or commission will be payable with respect to this Agreement or any of the
transactions contemplated hereby, and Company hereby indemnifies Lenders
against, and agrees that it will hold Lenders harmless from, any claim, demand
or liability for any such broker’s or finder’s fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.

5.13                        Environmental Protection.

Except for such
exceptions as individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect:

(i)            neither
Company nor any of its Subsidiaries nor any of their respective Facilities or
operations are subject to any outstanding written order, consent decree or settlement
agreement with any Person relating to (a) any Environmental Law,
(b) any Environmental Claim, or (c) any Hazardous Materials Activity;

 

64

 

(ii)           neither
Company nor any of its Subsidiaries has received any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state
law;

(iii)          there
are and, to Company’s knowledge, have been no conditions, occurrences, or
Hazardous Materials Activities that could reasonably be expected to form the
basis of an Environmental Claim against Company or any of its Subsidiaries; and

(iv)          Company
and its Subsidiaries have been and are in compliance with all current or reasonably
foreseeable future requirements pursuant to or under Environmental Laws, except
where any non-compliance would not, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect.

5.14                        Employee Matters.

There is no strike or
work stoppage in existence or threatened involving Company or any of its
Subsidiaries that could reasonably be expected to result in a Material Adverse
Effect.

5.15                        Solvency.

Holdings and its
Subsidiaries on a consolidated basis, and Company and its Subsidiaries on a
consolidated basis are and, upon the incurrence of any Obligations on any date
on which this representation is made, will be, Solvent.

5.16                        Matters Relating to
Collateral.

A.            Creation, Perfection and
Priority of Liens.  The execution and delivery of the Collateral
Documents by Loan Parties, together with (i) the actions taken to date pursuant
to subsections 4.1K, 4.1L, 6.8 and 6.9 and (ii) the delivery to Administrative
Agent of any Pledged Collateral not delivered to Administrative Agent at the
time of execution and delivery of the applicable Collateral Document (all of
which Pledged Collateral has been so delivered) are effective to create in
favor of Administrative Agent, for the benefit of Lenders, as security for the
Obligations, a valid Second Priority Lien on all of the Collateral (except as
provided to the contrary in the Security Agreement), and all filings and other
actions necessary or desirable to perfect and maintain the perfection and
priority status of such Liens have been duly made or taken and remain in full
force and effect, other than the filing of any UCC financing statements
delivered to Administrative Agent for filing (but not yet filed) and the
periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.

B.            Governmental
Authorizations.  No authorization, approval or other action
by, and no notice to or filing with, any Government Authority is required for
either (i) the pledge or grant by any Loan Party of the Liens purported to
be created in favor of Administrative Agent pursuant to any of the Collateral
Documents or (ii) the exercise by Administrative Agent 

 

65

 

of any rights or
remedies in respect of any Collateral (whether specifically granted or created
pursuant to any of the Collateral Documents or created or provided for by
applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.

C.            Absence of Third-Party
Filings.  Except for filings perfecting Liens permitted
under subsection 7.2A and Liens securing the First Lien Claims and filings
naming Administrative Agent as secured party, in accordance with this Agreement
and the other Loan Documents, (i) no effective UCC financing statement, fixture
filing or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office and (ii) no effective
filing covering all or any part of the IP Collateral is on file in any IP
Filing Office.

D.            Margin Regulations. 
The pledge of the Pledged Collateral pursuant to the Collateral
Documents does not violate Regulation T, U or X of the Board of Governors of
the Federal Reserve System.

5.17                        Disclosure.

No representation or
warranty of any Loan Party contained in the Confidential Information
Memorandum, in any Loan Document or in any other document, certificate or
written statement furnished to Lenders by or on behalf of any Loan Party or any
of its Subsidiaries for use in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact (known to Company, in the case of any document not
furnished by it) 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 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.  There are no facts known (or which should
upon the reasonable exercise of diligence be known) to Company (other than
matters of a general economic nature) that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect and that
have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.

5.18                        Second Lien Claims.

The Obligations
constitute “Second Lien Claims” under the Intercreditor Agreement.

Section
6.              AFFIRMATIVE COVENANTS

Each of Holdings and
Company covenants and agrees that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and 

 

66

 

other Obligations
(other than Unasserted Obligations), unless Requisite Lenders shall otherwise
give prior written consent, each of Holdings and Company shall perform, and
shall cause each of its Subsidiaries to perform, all covenants in this
Section 6.

6.1                               Financial Statements and
Other Reports.

Holdings will maintain,
and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP.  Company will deliver to Administrative Agent
(and Lenders through Administrative Agent):

(i)            Events
of Default, etc.:  promptly upon any
officer of Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming aware
that any Lender has given any notice (other than to Administrative Agent) or
taken any other action with respect to a claimed Event of Default or Potential
Event of Default, (b) that any Person has given any notice to Company or
any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2, (c) of
any condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on Form 8-K
if Company were required to file such reports under the Exchange Act, or (d) of
the occurrence of any event or change that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, an Officer’s
Certificate specifying the nature and period of existence of such condition,
event or change, or specifying the notice given or action taken by any such
Person and the nature of such claimed Event of Default, Potential Event of
Default, default, event or condition, and what action Company has taken, is
taking and proposes to take with respect thereto;

(ii)           Monthly
and Quarterly Financials:  as soon as
available and in any event within 30 days after the end of each month and
within 60 days after the end of each Fiscal Quarter, (a) the consolidated
balance sheet of Holdings and its Subsidiaries as at the end of such fiscal
period and the related consolidated statements of income, stockholders’ equity
and cash flows of Holdings and its Subsidiaries for such fiscal period and for
the period from the beginning of the then current Fiscal Year to the end of
such fiscal period, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the Financial Plan for the current Fiscal
Year, to the extent prepared for such fiscal period, all in detail reasonably
satisfactory to Administrative Agent and certified by the chief financial
officer of Company that they fairly present, in all material respects, the
financial condition of Holdings 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, and (b) a narrative report describing the operations of
Holdings and its Subsidiaries for such fiscal period and for the period from
the beginning of the then current Fiscal Year to the end of such fiscal
quarter;

 

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(iii)          Year-End
Financials:  as soon as available and
in any event within 120 days after the end of each Fiscal Year, (a) the
consolidated balance sheet of Holdings and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated statements of income,
stockholders’ equity and cash flows of Holdings and its Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures from the
Financial Plan for the Fiscal Year covered by such financial statements, all in
reasonable detail and certified by the chief financial officer of Company that
they fairly present, in all material respects, the financial condition of  Holdings and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, (b) a narrative report describing the operations of
Holdings and its Subsidiaries for such Fiscal Year in a form reasonably
satisfactory to Administrative Agent, and (c) in the case of such
consolidated financial statements, a report thereon of Ernst & Young or
other independent certified public accountants of recognized national standing
selected by Company and satisfactory to Administrative Agent, which report
shall be unqualified, shall express no doubts, assumptions or qualifications
concerning the ability of Holdings and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Holdings 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;

(iv)          Compliance
Certificates:  together with each
delivery of financial statements pursuant to subdivisions (ii) and (iii) above,
(a) an Officer’s Certificate of Company stating that the signers have reviewed
the terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of
Holdings and its Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signers do not
have knowledge of the existence as at the date of such Officer’s Certificate,
of any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action Company
has taken, is taking and proposes to take with respect thereto; (b) a
Compliance Certificate demonstrating in reasonable detail compliance during and
at the end of the applicable accounting periods with the restrictions contained
in subsection 7.6, in each case to the extent compliance with such
restrictions is required to be tested at the end of the applicable accounting
period;

(v)           Reconciliation
Statements:  if, as a result of any
change in accounting principles or any material change in accounting policies
from those used in the preparation of the audited financial statements referred
to in subsection 5.3, the consolidated financial statements of Holdings and its
Subsidiaries delivered pursuant to 

 

68

 

subdivisions (ii), (iii) or (xii) of this subsection 6.1 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 or any material change in accounting policies been made, then
(a) together with the first delivery of financial statements pursuant to
subdivision (ii), (iii) or (xii) of this subsection 6.1 following such change,
consolidated financial statements of Holdings and its Subsidiaries for
(y) the current Fiscal Year to the effective date of such change and
(z) the two full Fiscal Years immediately preceding the Fiscal Year in
which such change is made, in each case prepared on a pro forma basis as if such change had been
in effect during such periods, and (b) together with each delivery of
financial statements pursuant to subdivision (ii), (iv) or (xii) of this
subsection 6.1 following such change, if required pursuant to subsection 1.2, a
written statement of the chief accounting officer or chief financial officer of
Company setting forth the differences (including any differences that would
affect any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;

(vi)          Accountants’
Certification:  together with each
delivery of consolidated financial statements pursuant to subdivision (iii)
above, a written statement by the independent certified public accountants
giving the report thereon (a) stating that their audit examination has included
a review subsection 7.6 of this Agreement, and (b) stating whether, in
connection with their audit examination, any condition or event that
constitutes an Event of Default or Potential Event of Default has come to their
attention under subsection 7.6 and, if such a condition or event has come to
their attention, specifying the nature and period of existence thereof; provided
that such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that would
not be disclosed in the course of their audit examination;

(vii)         Accountants’
Reports:  promptly upon receipt
thereof (unless restricted by applicable professional standards), copies of all
reports submitted to Holdings or Company or any of its Subsidiaries by
independent certified public accountants in connection with each annual,
interim or special audit of the financial statements of Holdings, Company and
its Subsidiaries made by such accountants, including any comment letter
submitted by such accountants to management in connection with their annual
audit;

(viii)        SEC
Filings and Press Releases:  promptly
upon their becoming available, copies of (a) all financial statements,
reports, notices and proxy statements sent or made available generally by
Holdings or Company to its security holders or by any Subsidiary of Company to
its security holders other than Holdings, Company or another Subsidiary of
Company, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if any,
filed by Holdings or Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any governmental or
private regulatory authority, and (c) all press releases and other statements
made available generally by Company or any of its 

 

69

 

Subsidiaries to the public concerning material developments in the
business of Holdings or Company or any of its Subsidiaries;

(ix)           Litigation
or Other Proceedings: 
(a) promptly upon any Officer of Company obtaining knowledge of (1)
the institution of, or non-frivolous threat of, any Proceeding against or
affecting Holdings, Company or any of its Subsidiaries or any property of Holdings,
Company or any of its Subsidiaries not previously disclosed in writing by
Company to Lenders or (2) any material development in any Proceeding that, in
any case:

                (x)            if
adversely determined, has a reasonable possibility of giving rise to a Material
Adverse Effect; or

                (y)           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 available to Company
to enable Lenders and their counsel to evaluate such matters; and
(b) within twenty days after the end of each Fiscal Quarter, a schedule of
all Proceedings involving an alleged liability of, or claims against or
affecting, Holdings, Company or any of its Subsidiaries equal to or greater
than $500,000, and promptly after request by Administrative Agent such other
information as may be reasonably requested by Administrative Agent to enable
Administrative Agent and its counsel to evaluate any of such Proceedings;

(x)            ERISA
Events:  promptly upon becoming aware
of the occurrence or forthcoming occurrence of any ERISA Event, a written
notice specifying the nature thereof, what action Company, any of its
Subsidiaries or any of their then-existing 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;

(xi)           ERISA
Notices:  with reasonable promptness,
copies of (a) all notices received by Company, any of its Subsidiaries or any
of their then-existing ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (b) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;

(xii)          Financial
Plans:  as soon as practicable and in
any event no later than 30 days after the beginning of each Fiscal Year, a
consolidated plan and financial forecast for such Fiscal Year and the next
succeeding Fiscal Year (the “Financial Plan”
for such Fiscal Year), including (a) a forecasted consolidated balance sheet
and forecasted consolidated statements of income and cash flows of Company and
its Subsidiaries for each such Fiscal Year prepared on a monthly basis,
together with a pro forma
Compliance Certificate for each such Fiscal Year and an explanation of the
assumptions

 

70

 

on which such forecasts are based and (b) such other information and
projections as any Lender may reasonably request;

(xiii)         Insurance:  together with the financial statements
delivered pursuant to clause (iii) above, a certificate in form and substance reasonably
satisfactory to Administrative Agent (which shall be from an insurance broker
and consistent with past practices) outlining all material insurance coverage
maintained as of the date of such certificate by Company and its Subsidiaries
and all material insurance coverage planned to be maintained by Company and its
Subsidiaries in the immediately succeeding Fiscal Year and confirming the
status of Administrative Agent as additional insured and/or loss payee under
all such insurance to the extent required by subsection 6.4;

(xiv)        Governing
Body:  with reasonable promptness,
written notice of any change in the Governing Body of Holdings or Company;

(xv)         New
Subsidiaries:  promptly upon any
Person becoming a Subsidiary of Company, a written notice setting forth with
respect to such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule 5.1
annexed hereto with respect to all Subsidiaries of Company (it being understood
that such written notice shall be deemed to supplement Schedule 5.1
annexed hereto for all purposes of this Agreement);

(xvi)        Material
Contracts:  promptly, and in any
event within ten Business Days after any Material Contract of Company or any of
its Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new Material
Contract is entered into, a written statement describing such event with copies
of such material amendments or new contracts, and an explanation of any actions
being taken with respect thereto;

(xvii)       Notice
from Holders of First Lien Loans: 
promptly, upon receipt, copies of all default, event of default or
acceleration notices from holders of First Lien Loans or a trustee, agent or
other representative of such a holder;

(xviii)      Intentionally
Omitted.

(xix)         Environmental
Audits and Reports:  as soon as
practicable following receipt thereof, copies of all significant non-privileged
environmental audits and reports, whether prepared by personnel of Holdings,
Company or any of its Subsidiaries or by independent consultants, with respect
to significant environmental matters at any Facility or which relate to an
Environmental Claim in either case which could reasonably be expected to result
in a Material Adverse Effect;

(xx)          First
Lien Loan Documents and Related Agreements: 
promptly upon execution and delivery thereof, copies of any material
amendment, restatement, supplement or other modification to or waiver of any
First Lien Loan Documents or Related Agreement entered into after the date
hereof; and

 

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(xxi)         Other
Information:  with reasonable
promptness, such other information and data with respect to Holdings, Company
or any of its Subsidiaries as from time to time may be reasonably requested by
any Lender.

6.2                               Existence, etc.

Except as permitted under
subsection 7.7, Company will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its existence in the
jurisdiction of organization specified on Schedule 5.1 and all rights
and franchises material to its business; provided, however that
neither Company nor any of its Subsidiaries shall be required to preserve any
such right or franchise if the Governing Body of Company or such Subsidiary
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Company or such Subsidiary, as the case may be, and
that the loss thereof is not disadvantageous in any material respect to
Company, such Subsidiary or Lenders.

6.3                               Payment of Taxes and Claims; Tax

A.            Company will, and will cause each of its
Subsidiaries to, pay all material taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or in respect of any
of its income, businesses or franchises before any penalty 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 that no such tax,
assessment, charge or claim need be paid if it is being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted, so
long as (i) such reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor and (ii) in the
case of a Tax or claim, which has or may become a Lien against any of the
Collateral, such proceedings conclusively operate to stay the sale of any
portion of the Collateral to satisfy such charge or claim.

B.            Company will not, 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 Company or any of its
Subsidiaries).

6.4                               Maintenance of Properties; Insurance;
Application of Net Insurance/ Condemnation Proceeds

A.            Maintenance of
Properties.  Company 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 Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.

B.            Insurance. 
Company 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 

 

72

 

liabilities,
losses or damage in respect of the assets, properties and businesses of Company
and its Subsidiaries as may customarily be carried or maintained under similar
circumstances by corporations 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 corporations similarly situated in the
industry.  Without limiting the
generality of the foregoing, Company will maintain or cause to be maintained
(i) 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, (ii) 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 satisfactory to Administrative Agent in its
commercially reasonable judgment, and (iii) “key-man” life insurance with
respect to Leslie A. Blodgett on such terms and amounts as are consistent with
such “key-man” life insurance in effect as of the Closing Date. Each such policy
of insurance shall (a) name Administrative Agent for the benefit of Lenders as
an additional insured thereunder as its interests may appear and (b) in the
case of each business interruption and casualty insurance policy, contain a
lender (or, as the case may be, mortgagee) loss payable clause or endorsement,
reasonably satisfactory in form and substance to Administrative Agent, that
names Administrative Agent for the benefit of Lenders as the lender (or, as the
case may be, mortgagee) loss payee thereunder for any covered loss in excess of
$250,000 and provides for at least 30 days prior written notice to
Administrative Agent of any modification or cancellation of such policy.

C.            Application of Net
Insurance/Condemnation Proceeds.

(i)            Business
Interruption Insurance.  On and after
such time as the First Lien Claims have been Paid in Full, upon receipt by
Holdings, Company or any of its Subsidiaries of any business interruption
insurance proceeds constituting Net Insurance/Condemnation Proceeds,
(a) so long as no Event of Default under any of subsection 8.1, 8.6 or 8.7
shall have occurred and be continuing, Company or such Subsidiary may retain
and apply such Net Insurance/Condemnation Proceeds for working capital
purposes, and (b) if an Event of Default under any of subsection 8.1, 8.6 or
8.7 shall have occurred and be continuing, Company shall apply an amount equal
to such Net Insurance/Condemnation Proceeds to prepay the Loans as provided in
subsections 2.4B and 2.4D;

(ii)           Net
Insurance/Condemnation Proceeds Received by Administrative Agent or Loan
Parties.  On and after such time as
the First Lien Claims have been Paid in Full, upon receipt by (a)
Administrative Agent or (b) Holdings or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds (other than any business interruption insurance
proceeds pursuant to clause (i) above), in the case of clause (a), Company
hereby authorizes Administrative Agent to apply, and in the case of clause (b),
Company shall apply, an amount equal to such Net Insurance/Condemnation
Proceeds, to prepay the Loans as provided in subsection 2.4B; provided, however,
that if (1) no Event of Default or Potential Event of Default shall have
occurred and is continuing and (2) the aggregate amount of such Net
Insurance/Condemnation Proceeds received during such Fiscal Year 

 

73

 

does not exceed $400,000, the Loans shall not be required to be
prepaid; provided, further, that if (1) no Event of Default or
Potential Event of Default shall have occurred and is continuing and (2) the
aggregate amount of such Net Insurance/Condemnation Proceeds received during
such Fiscal Year exceeds $400,000, if Company delivers to Administrative Agent
an Officer’s Certificate setting forth (A) that portion of such Net
Insurance/Condemnation Proceeds (the “Proposed Insurance
Reinvestment Proceeds”) that Holdings or such Subsidiary intends to
use within 270 days of such date of receipt to pay or reimburse the costs of
repairing, restoring or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received and (B) the proposed use of the
Proposed Insurance Reinvestment Proceeds and such other information with
respect to such proposed use as Administrative Agent may reasonably request
(all of the foregoing, collectively, “Restoration and Repair”)
in respect of which such Proposed Insurance Reinvestment Proceeds were
received; provided, further, that at the end of such 270 day
period, (i) Company shall provide to Administrative Agent an Officer’s
Certificate, together with such evidentiary documentation as Administrative
Agent may request, setting forth the amount, if any, by which the Proposed
Reinsurance Reinvestment Proceeds exceeded the total costs of such Restoration
and Repair (such excess, the “Unused Insurance Proceeds
Amount”) and (ii) the Loans shall be repaid by an amount equal to
any Unused Insurance Proceeds Amount in accordance with subsection 2.4B(iv).

6.5                               Inspection Rights;
Lender Meeting.

A.            Inspection Rights. 
Company shall, and shall cause each of the other Loan Parties to, permit
(i) any authorized representatives designated by Administrative Agent (which
may be accompanied by representatives of any Lender at such Lender’s expense)
to visit and inspect any of the properties of any Loan Party, to inspect, copy
and take extracts from its and their financial and accounting records at
Company’s expense, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants (provided that
Holdings or any of its Subsidiaries may, if it so chooses, be present at or
participate in any such discussion), and (ii) any authorized representatives
designated by Administrative Agent to conduct one audit or appraisal of all Collateral
of Loan Parties during each Fiscal Year ending after the Closing Date
(exclusive of the audits and appraisals conducted by Administrative Agent prior
to the Closing Date (collectively, the “Base Audit”))
or more frequently if reasonably requested by Administrative Agent and at
Administrative Agent’s expense provided that after the occurrence and
during the continuance of an Event of Default Company shall, and shall cause
its Subsidiaries to permit such additional audits as Administrative Agent may deem
necessary or advisable, each such audit or appraisal to be substantially
similar in scope and substance to the Base Audit, and at Company’s expense, all
upon reasonable notice and at such reasonable times during normal business
hours and as often as may reasonably be requested.

B.            Lender Meeting. 
Without in any way limiting the foregoing, Company will, upon the
request of Administrative Agent or Requisite Lenders, participate in a meeting
of Administrative Agent and Lenders at least once during each Fiscal Year to be
held at Company’s 

 

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principal offices
(or at such other location as may be agreed to by Company and Administrative
Agent) at such time as may be agreed to by Company and Administrative Agent.

6.6                               Compliance with Laws,
etc.

Company shall comply, and
shall cause each of its Subsidiaries and all other Persons on or occupying any
Facilities to comply, with the requirements of all applicable laws, rules,
regulations and orders of any Government Authority (including all Environmental
Laws), noncompliance with which could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.

6.7                               Environmental Matters.

A.            Environmental Disclosure. 
Company will deliver to Administrative Agent and Lenders:

(i)            Environmental
Audits and Reports.  As soon as
practicable following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether prepared
by personnel of Company or any of its Subsidiaries or by independent
consultants, governmental authorities or any other Persons, with respect to
significant environmental matters at any Facility that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
or with respect to any Environmental Claims that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

(ii)           Notice
of Certain Releases, Remedial Actions, Etc. 
Promptly upon the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported to any federal, state
or local governmental or regulatory agency under any applicable Environmental
Laws, and (b) any remedial action taken by Company or any other Person in
response to (1) any Hazardous Materials Activities the existence of which
could reasonably be expected to result in one or more Environmental Claims
having, individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.

(iii)          Written
Communications Regarding Environmental Claims, Releases, Etc.  As soon as practicable following the sending
or receipt thereof by Company or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, (b) any Release required to be reported to any
federal, state or local governmental or regulatory agency, and (c) any
request for information from any governmental agency that suggests such agency
is investigating whether Company or any of its Subsidiaries may be potentially
responsible for any Hazardous Materials Activity.

 

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(iv)          Notice
of Certain Proposed Actions Having Environmental Impact.  Prompt written notice describing in
reasonable detail (a) any proposed acquisition of stock, assets, or
property by Company or any of its Subsidiaries that could reasonably be
expected to (1) expose Company or any of its Subsidiaries to, or result in,
Environmental Claims that could reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect or (2) affect the ability of
Company or any of its Subsidiaries to maintain in full force and effect all
material Governmental Authorizations required under any Environmental Laws for
their respective operations and (b) any proposed action to be taken by
Company or any of its Subsidiaries to commence manufacturing or other
industrial operations or to modify current operations in a manner that could
reasonably be expected to subject Company or any of its Subsidiaries to any
material additional obligations or requirements under any Environmental Laws
that could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.

B.            Company’s Actions
Regarding Hazardous Materials Activities, Environmental Claims and Violations
of Environmental Laws.

(i)            Remedial
Actions Relating to Hazardous Materials Activities.  Company shall, in compliance with all
applicable Environmental Laws, promptly undertake, and shall cause each of its
Subsidiaries promptly to undertake, any and all investigations, studies,
sampling, testing, abatement, cleanup, removal, remediation or other response
actions necessary to remove, remediate, clean up or abate any Hazardous
Materials Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim.

(ii)           Actions
with Respect to Environmental Claims and Violations of Environmental Laws.  Company shall promptly take, and shall cause
each of its Subsidiaries promptly to take, any and all actions necessary to (i)
cure any material violation of applicable Environmental Laws by Company or its
Subsidiaries that could reasonably be expected to result in, individually or in
the aggregate, a Material Adverse Effect and (ii) make an appropriate response
to any Environmental Claim against Company or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where failure to
do so could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.

6.8                               Execution of Subsidiary
Guaranty and Personal Property Collateral Documents After the Closing Date.

A.            Execution
of Subsidiary Guaranty and Personal Property Collateral Documents. 
In the event that any Person becomes a Domestic Subsidiary of Company
after the date hereof, Company will promptly notify Administrative Agent of
that fact and cause such Domestic Subsidiary to execute and deliver to
Administrative Agent a counterpart of the Subsidiary Guaranty and Security
Agreement and to take all such further actions and execute all such further
documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1K) as may be necessary or, in
the opinion of Administrative Agent, desirable to create in favor of
Administrative Agent, for the benefit of 

 

76

 

Lenders, a valid
and perfected Second Priority Lien on all of the personal and mixed property
assets of such Domestic Subsidiary except as provided to the contrary in the
Collateral Documents.  In addition, as
provided in the Security Agreement, Company shall, or shall cause the Subsidiary
that owns the Capital Stock of such Person, to execute and deliver to
Administrative Agent a supplement to the Security Agreement and to deliver to
Administrative Agent all certificates representing such Capital Stock of such
Person (accompanied by irrevocable undated stock powers, duly endorsed in
blank).

B.            Foreign Subsidiaries. 
In the event that any Person becomes a Foreign Subsidiary of Company
after the date hereof, Company will promptly notify Administrative Agent of
that fact and, if such Subsidiary is directly owned by Company or a Domestic
Subsidiary, cause such Subsidiary to execute and deliver to Administrative
Agent such documents and instruments and take such further actions (including
actions, documents and instruments comparable to those described in subsection
4.1K) as may be necessary, or in the reasonable opinion of Administrative
Agent, desirable to create in favor of Administrative Agent, for the benefit of
the Lenders, a valid and perfected Second Priority Lien on 66% of the Capital
Stock of such first tier Foreign Subsidiary.

C.            Subsidiary
Organizational Documents, Legal Opinions, Etc.  Company shall
deliver to Administrative Agent, together with such Loan Documents,
(i) certified copies of such Subsidiary’s Organizational Documents,
together with, if such Subsidiary is a Domestic Subsidiary, a good standing
certificate from the Secretary of State of the jurisdiction of its organization
and each other state in which such Person is qualified to do business and, to
the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, each to be dated a
recent date prior to their delivery to Administrative Agent, (ii) a
certificate executed by the secretary or similar officer of such Subsidiary as
to (a) the fact that the attached resolutions of the Governing Body of
such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the
officers of such Subsidiary executing such Loan Documents, (iii) an
executed supplement to the Security Agreement evidencing the pledge of the Capital Stock of such Subsidiary by
Company or a Subsidiary of Company that owns such Capital Stock, accompanied by
all certificates evidencing such Capital Stock, together with an irrevocable
undated stock powers duly endorsed in blank and satisfactory in form and substance
to Administrative Agent, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance satisfactory to Administrative Agent and its
counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such
Subsidiary of such Loan Documents, (c) the enforceability of such Loan
Documents against such Subsidiary and (d) such other matters (including
matters relating to the creation and perfection of Liens in any Collateral pursuant
to such Loan Documents) as Administrative Agent may reasonably request, all of
the foregoing to be satisfactory in form and substance to Administrative Agent
and its counsel.

 

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6.9                               Matters Relating to
Additional Real Property Collateral.

A.            Additional Mortgages,
Etc.  From and after the Closing Date, in the event
that (i) Company or any Subsidiary Guarantor acquires any fee interest in
real property or (ii) at the time any Person becomes a Subsidiary Guarantor,
such Person owns or holds any fee interest in real property, (a) in each case,
reasonably determined by Administrative Agent to be of material value as
Collateral or of a material importance to the operations of Company and its
Subsidiaries, and (b) in the case of clause (ii), excluding any such Real
Property Asset the encumbrancing of which requires the consent of any
then-existing senior lienholder, where Company and its Subsidiaries have
attempted in good faith, but are unable, to obtain such or senior lienholder’s
consent (any such non-excluded Real Property Asset described in the foregoing
clause (i) or (ii) being an “Additional
Mortgaged Property”), Company or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property or becomes a Subsidiary Guarantor,
as the case may be, a fully executed and notarized Mortgage (an “Additional Mortgage”), in proper form for
recording in all appropriate
places in all applicable jurisdictions, encumbering the interest of such Loan
Party in such Additional Mortgaged Property; and such opinions, appraisal,
documents, title insurance, environmental reports that would have been
delivered on the Closing Date if such Additional Mortgaged Property were a
Closing Date Mortgaged Property or that may be reasonably required by
Administrative Agent.

B.            Real Estate Appraisals. 
Company shall, and shall cause each of its Subsidiaries to, permit an
independent real estate appraiser satisfactory to Administrative Agent, upon
reasonable notice, to visit and inspect any Additional Mortgaged Property for
the purpose of preparing an appraisal of such Additional Mortgaged Property
satisfying the requirements of any applicable laws and regulations (in each
case to the extent required under such laws and regulations as determined by
Administrative Agent in its discretion).

6.10                        Interest Rate Protection.

At all times after the
date that is 180 days after the Closing Date, Company shall maintain in effect
for three years after the Closing Date one or more Interest Rate Agreements in
an aggregate notional principal amount of not less than 40% of the aggregate
principal amount of the Term Loans and the First Lien Term Loans outstanding,
each such Interest Rate Agreement to be in form and substance satisfactory to
Administrative Agent; provided that Company shall not be obligated to maintain
in effect any such Interest Rate Agreements at any time that the Applicable
Consolidated Leverage Ratio is less than or equal to 2.00:1:00.  For purposes of clarification, while the
above described Interest Rate Agreements are required to be maintained during
the above described periods, each individual Interest Rate Agreement is not
required to be of such duration.

6.11                        Deposit Accounts,
Securities Accounts and Cash Management Systems.

Company shall, and shall
cause each of its Subsidiaries to, use and maintain its Deposit Accounts,
Securities Accounts and cash management systems in a manner reasonably
satisfactory to Administrative Agent. 
From and after the date which is 30 days after the Closing 

 

78

 

Date, Company shall not permit any of such
Deposit Accounts and Securities Accounts at any time to have a principal balance
in excess of $500,000 unless
Company or such Subsidiary, as the case may be, has (i) executed and
delivered to Administrative Agent a Control Agreement, and (ii) taken all
other steps necessary or, in the opinion of Administrative Agent, desirable to
ensure that Administrative Agent has a perfected security interest in such
account, including without limitation, an opinion of counsel reasonably
requested by Administrative Agent; provided that, if Company or such
Subsidiary is unable to obtain a Control Agreement from the financial
institution at which the Deposit Account or Securities Account is maintained,
Company shall, or shall cause such Subsidiary to transfer all amounts in the
applicable Deposit Account to a Deposit Account maintained at a financial
institution from which Company or such Subsidiary has obtained a Control
Agreement.  From and after the date which
is 30 days after the Closing Date, Company shall not permit the aggregate
principal balance of all Deposit Accounts and Securities Accounts of Company
and of its Subsidiaries (other than Deposit Accounts and Securities Accounts
subject to a Control Agreement) at any time to exceed $2,000,000.

 

6.12                        Collateral Assignment of
Life Insurance Policy.

Company shall no later
than 45 days after the Closing Date, deliver to Administrative Agent, a “Collateral
Assignment of Life Insurance Policy” relating to Leslie A. Blodget’s “Key-Person”
life insurance.

6.13                        Financial Assistance to
Second Lien Term Loans. 

In the event that any
Loan Party or any Affiliate of any Loan Party establishes or issues a
guarantee, letter of comfort or other financial or credit support to the
holders of any First Lien Loans such Loan Party shall, or shall cause such
Affiliate to, promptly establish or issue a guarantee, letter of comfort or
other financial or credit support to Administrative Agent on behalf of the
Lenders pursuant to documentation substantially identical (with appropriate
changes) to the documentation executed in favor of the holders of such First
Lien Loans together with (unless waived by Requisite Lenders in their sole
discretion) an opinion of counsel to such Loan Party or such Affiliate (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of such documentation).

Section
7.              NEGATIVE COVENANTS

Each of Holdings and
Company covenants and agrees that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations (other than Unasserted Obligations), unless Requisite Lenders shall
otherwise give prior written consent, each of Holdings and Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 7.

 

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7.1                               Indebtedness.

Each of Holdings and
Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:

(i)            Company
may become and remain liable with respect to the Obligations;

(ii)           Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations permitted by subsection 7.4 and, upon any matured obligations
actually arising pursuant thereto, the Indebtedness corresponding to the
Contingent Obligations so extinguished;

(iii)          Company
and its Subsidiaries may become and remain liable with respect to Indebtedness
in respect of Capital Leases or to finance the purchase price of equipment,
fixtures, inventory and other similar property of Company and its Subsidiaries
aggregating not in excess of $15,000,000;

(iv)          Company
may become and remain liable with respect to Indebtedness to any Subsidiary,
and any Subsidiary may become and remain liable with respect to Indebtedness to
Company or any other Subsidiary; provided that (a) a Lien on all
such intercompany Indebtedness shall have been granted to Administrative Agent
for the benefit of Lenders, (b) if such intercompany Indebtedness is evidenced
by a promissory note or other instrument, such promissory note or other
instrument shall have been pledged to Administrative Agent pursuant to the
Security Agreement and (c) if Company or any Subsidiary Guarantor becomes
liable with respect to Indebtedness to any Subsidiary which is not a Subsidiary
Guarantor, such Indebtedness shall be subordinated in right of payment to the
Obligations in a manner and to an extent reasonably satisfactory to
Administrative Agent;

(v)           Company
and its Subsidiaries, as applicable, may remain liable with respect to
Indebtedness described in Schedule 7.1 annexed hereto, including
any refinancings, refundings, renewals or extensions thereof (without any
increase in the principal amount thereof or any shortening of the maturity of
any principal amount thereof);

(vi)          Company
and its Subsidiaries may become liable with respect to the First Lien Claims, provided, however,
that the sum of the principal amount of loans and unfunded loan commitments
under the First Lien Credit Agreement shall not exceed $170,000,000, provided further, however,
that such limit may be exceeded by an additional $5,000,000 if the Company
delivers an Officer’s Certificate to the Administrative Agent certifying that
no Event of Default exists and that the Company will be in compliance with its
covenants under subsection 6.6 after giving effect to the proposed increase;

 

80

 

(vii)         Foreign
Subsidiaries may become and remain liable with respect to Indebtedness to
Company or any of its Subsidiaries;

(viii)        Foreign
Subsidiaries of Company may become and remain liable with respect to additional
Indebtedness to finance working capital and otherwise in an aggregate principal
amount not to exceed $6,000,000 at any time outstanding;

(ix)           Holdings
may remain liable with respect to any promissory note issued in exchange for
Holdings Capital Stock in transactions otherwise permitted by subsection
7.5(v); provided that such promissory notes shall be subordinated to the
Obligations on terms reasonably satisfactory to Administrative Agent;

(x)            Holdings
may become and remain liable with respect to Indebtedness under the Holdings
Note Documents;

(xi)           Holdings
may become and remain liable with respect to other Indebtedness in an aggregate
principal amount not to exceed $10,000,000 at any time outstanding.

7.2                               Liens and Related Matters.

A.            Prohibition on Liens. 
Each of Holdings and Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts receivable)
of Holdings or any of its Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any such property, asset, income or profits under
the UCC or under any similar recording or notice statute, except:

(i)            Permitted
Encumbrances;

(ii)           Liens
described in Schedule 7.2 annexed hereto;

(iii)          Liens
securing Indebtedness incurred pursuant to subsection 7.1(iii); provided
that such Liens shall not in the aggregate secure Indebtedness in excess of
$15,000,000 at any time;

(iv)          Liens
securing the First Lien Claims; and

(v)           Other
Liens in an aggregate amount not to exceed $500,000 at any time outstanding.

Notwithstanding the
foregoing, Holdings and its Subsidiaries shall not enter into, or suffer to
exist, any control agreements (as such term is defined in the UCC), other than
Control Agreements entered into pursuant to subsection 6.11 or the
Security Agreement.

 

81

 

B.            Equitable
Lien in Favor of Lenders.  If Holdings or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.

C.            No Further Negative
Pledges.  Except as set forth in the First Lien Credit
Agreement, neither Holdings nor any of its Subsidiaries shall enter into any
agreement (other than the Loan Documents) prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired, except with respect to (i) restrictions by reason of
customary provisions restricting assignment, 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),
(ii) purchase money Indebtedness and Capital Leases permitted to be incurred
under this subsection, Permitted Encumbrances described in clause (iii) of such
defined term or Liens permitted under subsection 7.2(ii) and restrictions in
the agreements relating thereto that limit the right of the Company to dispose
of or transfer the assets subject to such Liens, (iii) restrictions imposed by
customary provisions in partnership agreements, limited liability company
organizational governance documents, joint venture agreements and other similar
agreements that restrict the transfer of ownership interests in such
partnership, limited liability company, joint venture or similar Person, (iv) specific property encumbered to secure payment of
particular Indebtedness or to be sold pursuant to an executed agreement with
respect to a permitted Asset Sale and other permitted sales of assets,
(v) restrictions contained in agreements with respect to Indebtedness
incurred by any Foreign Subsidiary in accordance with this Agreement; provided
that such restrictions are limited to the property or assets of such Foreign
Subsidiary, and (vi) provisions limiting the disposition or distribution of
assets or property in joint venture agreements, sale-leaseback agreements,
stock sale agreements and other similar agreements, which limitation is
applicable only to the assets that are the subject of such agreements.

D.            No Restrictions on
Subsidiary Distributions to Company or Other Subsidiaries. 
Except as provided in the Loan Documents, the First Lien Loan Documents,
and the Holdings Note Documents, Holdings and Company will not, and will not
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 such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary’s Capital Stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by
such Subsidiary to Company or any other Subsidiary of Company, (iii) make
loans or advances to Company or any other Subsidiary of Company, or
(iv) transfer any of its property or assets to Company or any other
Subsidiary of Company, except (a) as provided in this Agreement or in the First
Lien Credit Agreement, (b) as may be provided in an agreement with respect to a
permitted Asset Sale and other permitted sales of assets, (c) by reason of customary provisions 

 

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restricting assignments, subletting or
other transfers contained in leases, licenses, joint venture agreements and
similar agreements entered into in the ordinary course of business (provided
that such restrictions are limited to the property or assets subject to such leases,
licenses, joint venture agreements or similar agreements, as the case may be),
(d) that are or were created by virtue of any transfer of, agreement to
transfer or option or right with respect to any property, assets or Capital
Stock not otherwise prohibited under this Agreement, (e) in any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness or Capital Stock was incurred in connection with
or in contemplation of such acquisition), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired; provided
that, in the case of Indebtedness, such Indebtedness was permitted by
subsection 7.1 to be incurred, (f) in any agreement for the sale or other
disposition of a Subsidiary that restricts distributions by that Subsidiary
pending the sale or other disposition, (g) restrictions on the disposal of or
transfer of assets subject to Liens relating to purchase money Indebtedness and
Capital Leases and (h) in provisions in agreements or instruments which
prohibit the payment of dividends or the making of other distributions with
respect to any class of Capital Stock of a Person other than on a pro rata
basis.

7.3                               Investments; Acquisitions.

Holdings shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, make or
own any Investment in any Person, including any Joint Venture, or acquire, by
purchase or otherwise, all or substantially all the business, property or fixed
assets of, or Capital Stock or other ownership interest of any Person, or any
division or line of business of any Person except:

(i)            Company
and its Subsidiaries may make and own Investments in Cash Equivalents;

(ii)           Company
and Subsidiary Guarantors may make and own equity Investments in other
Subsidiary Guarantors and Holdings may own the Investments owned by it in
Company;

(iii)          Company
and its Subsidiaries may make intercompany loans to the extent permitted under
subsection 7.1(iv);

(iv)          Company
and its Subsidiaries may make Consolidated Capital Expenditures permitted by
subsection 7.8;

(v)           Company
and its Subsidiaries may continue to own the Investments owned by them and
described in Schedule 7.3 annexed hereto;

(vi)          Holdings,
Company or any Subsidiary may make loans to their respective employees for the
purchase of shares of the Capital Stock of Holdings; provided that the
aggregate principal amount of all such loans at any time outstanding does not
exceed 

 

83

 

$15,000,000 during the term of the Agreement; and that such Person
pledges any notes evidencing such loans to Administrative Agent for the benefit
of Lenders pursuant to the Security Agreement, and that the proceeds of the
sale of such Capital Stock are promptly contributed by Holdings to Company;

(vii)         Company
and its Subsidiaries may acquire Securities in connection with the satisfaction
or enforcement of Indebtedness or claims due or owing to Company or any of its
Subsidiaries or as security for any such Indebtedness or claim;

(viii)       
Company and its Subsidiaries may receive Investments in connection with permitted
Asset Sales pursuant to subsection 7.7(iii) and other permitted sales of assets
under subsection 7.7(v); provided that all such Investments are pledged to
Administrative Agent for the benefit of Lenders pursuant to the Security
Agreement;

(ix)           Holdings
may repurchase shares of Holdings Capital Stock (or any options or rights to
acquire such Capital Stock) from any former or current employee of Holdings or
its Subsidiaries to the extent permitted under subsection 7.5;

(x)            Company
and its Subsidiaries may acquire assets (including Capital Stock and including
Capital Stock of Subsidiaries formed in connection with any such acquisition)
(in each case, a “Permitted Acquisition”)
and continue to own such assets after the acquisition thereof; provided
that (i) the aggregate amount of Cash Consideration paid by Company and its
Subsidiaries for Permitted Acquisitions shall not exceed $20,000,000 in the
aggregate, and (ii) the aggregate amount of consideration consisting of equity
Securities paid by Company and its Subsidiaries for Permitted Acquisitions
shall not exceed $7,500,000; and provided further that (i) Company
shall, and shall cause its Subsidiaries to, comply with the requirements of
subsections 6.8 and 6.9 with respect to each such acquisition that results in a
Person becoming a Subsidiary, (ii) Company shall have delivered a disclosure
statement updating each of the Schedules to this Agreement and the other Loan
Documents to reflect any factual revisions or modifications to the information
set forth therein resulting from such acquisition; provided that any
such update which alters the substantive effect of any representation or
warranty, covenant or any other term or condition of this Agreement or any
other Loan Document or which discloses an event or circumstance that, in any
case, would otherwise require the consent of Administrative Agent, Requisite
Lenders or Lenders to such modification, event or circumstance, shall not
constitute a modification of this Agreement or any other Loan Document or a
permitted disclosure hereunder or thereunder, and shall not excuse any Event of
Default or Potential Event of Default which may otherwise arise in connection
therewith, without written consent required hereunder of Administrative Agent,
Requisite Lenders or Lenders, as the case may be; (iii) after giving effect to
such acquisition, Company and its Subsidiaries (1) shall not be engaged in any
business not permitted by subsection 7.11, (2) shall be in compliance on a pro
forma basis after giving effect to such acquisition with each of the financial
covenants contained in subsection 7.6, (3) no Event of Default or Potential
Event of Default shall have occurred and be continuing or would result from
such acquisition, (4) the representations and warranties in Section 5
hereof  (as supplemented in accordance
with (ii) above) shall be true, correct 

 

84

 

and complete in all material respects on and as of the Permitted
Acquisition closing date to the same extent as though made on and as of that
date (or, to the extent such representations and warranties specifically relate
to an earlier date, such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier date),
and (5) Company shall have delivered to Administrative Agent and the Lenders an
Officer’s Certificate to the effect set forth in the foregoing clauses (1)
through (4) and a Compliance Certificate to evidence clause (2); and (iv) on or
before the Permitted Acquisition closing date, Lenders shall have received from
Company such other documents and information (including financial information)
in respect of such Permitted Acquisition as any Lender may (through
Administrative Agent) reasonably request;

(xi)           Company  and its Subsidiaries may make and own
Investments deemed to arise out of guaranties which are otherwise permitted by
this Agreement;

(xii)          Company
and the Subsidiary Guarantors may make and own Investments in Foreign
Subsidiaries, provided that the amount of all such Investments made from and
after the Closing Date minus the amount of all cash dividends, distributions
and other payments received by Company or any of the Subsidiary Guarantors in
respect of such Investments after the Closing Date shall not at any time exceed
$7,500,000;

(xiii)         Foreign
Subsidiaries may make and own Investments in the Company or any of its
Subsidiaries; and

(xiv)        Company
and the Subsidiary Guarantors may make and own other Investments in addition to
the Investments otherwise permitted in this subsection 7.3; provided
that the aggregate amount of such Investments does not exceed $2,000,000.

7.4                               Contingent Obligations.

Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, create or
become or remain liable with respect to any Contingent Obligation, except:

(i)            Subsidiaries
of Company may become and remain liable with respect to Contingent Obligations
in respect of the Subsidiary Guaranty;

(ii)           Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of letters of credit issued under the First Lien Credit
Agreement;

(iii)          Company
may become and remain liable with respect to Contingent Obligations under (a)
First Lien Hedge Agreement obligations and (b) Hedge Agreements required under
subsection 6.10;

(iv)          Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of customary indemnification and purchase price 

 

85

 

adjustment obligations incurred in connection with Asset Sales or other
sales of assets, in each case, permitted hereunder;

(v)           Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations under guarantees in the ordinary course of business of the
obligations of suppliers, customers, franchisees and licensees of Company and
its Subsidiaries, in an aggregate amount not to exceed at any time $1,500,000;

(vi)          Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of any Indebtedness of Company or any of its
Subsidiaries permitted by subsection 7.1 or any other obligations of the
Company and its Subsidiaries are not prohibited hereby;

(vii)         Company
and its Subsidiaries, as applicable, may remain liable with respect to
Contingent Obligations described in Schedule 7.4 annexed hereto;

(viii)        Company
and its Subsidiaries may become and remain liable with respect to other
Contingent Obligations; provided that the maximum aggregate liability,
contingent or otherwise, of Company and its Subsidiaries in respect of all such
Contingent Obligations shall at no time exceed $4,000,000; and

(ix)           Company
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations under take-or pay contracts in an aggregate amount not too exceed
at any time $12,000,000.

7.5                               Restricted Junior
Payments.

Neither Company nor
Holdings shall, nor shall either permit any of its Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment; provided that (i) Company may on the Closing Date
make a dividend to Holdings in the amount of the Recapitalization Payment, and
Holdings may make a dividend in the amount of the Recapitalization Payment plus
the net proceeds of the Holdings Notes to its shareholders, (ii)  Company
may make Restricted Junior Payments to Holdings (a) in an aggregate amount not
to exceed $300,000 in any Fiscal Year, to the extent necessary to permit
Holdings to pay general administrative costs and expenses (other than
Management Fees), and (b) to the extent necessary to permit Holdings to
discharge the consolidated tax liabilities of Holdings and its Subsidiaries, in
each case so long as Holdings applies the amount of any such Restricted Junior
Payment for such purpose, (iii) so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing or shall be caused
thereby, Company may make Restricted Junior Payments to Holdings to the extent
necessary to permit Holdings to repurchase Holdings Capital Stock (or any
options rights to acquire such Capital Stock) from any former or current
employee of Holdings or its Subsidiaries so long as the aggregate amount of all
such repurchases shall not exceed $10,000,000 in the aggregate, and Holdings
may repurchase such Capital Stock using the proceeds of such Restricted Junior
Payments by Company or, if such Restricted Payments are not made by Company in
sufficient amounts to effect such repurchase, Holdings may issue promissory
notes in exchange for such Capital Stock and may 

 

86

 

subsequently
redeem such promissory notes, and (iv) so long as no Event of Default under any
of subsection 8.1, 8.6 or 8.7 shall have occurred and be continuing, Company
may pay Management Fees with respect to and as provided under the terms of the
Management Agreements.

7.6                               Maximum Leverage Ratio.  

Company shall not permit
the Consolidated Leverage Ratio as of the last day of the most recently ended
Fiscal Quarter ending during any of the periods set forth below to exceed the
correlative ratio indicated:

	
  Period

  	
   

  	
  Maximum Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2nd Fiscal
  Quarter 2005 through 4th Fiscal Quarter 2005

  	
   

  	
  5.50:1.00

  	
   

  
	
  1st Fiscal Quarter 2006
  through 4th Fiscal Quarter 2006

  	
   

  	
  5.00:1.00

  	
   

  
	
  1st Fiscal Quarter 2007
  and thereafter

  	
   

  	
  4.50:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

7.7                               Restriction on
Fundamental Changes; Asset Sales.

Company shall not, and
shall not permit any of its Subsidiaries to, alter the corporate, capital or
legal structure of Company or any of its Subsidiaries, or 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,
property or assets (including its notes or receivables and Capital Stock of a
Subsidiary, whether newly issued or outstanding), whether now owned or
hereafter acquired, except:

(i)            any
Subsidiary of Company may be merged with or into Company or any Subsidiary
Guarantor, 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 Subsidiary Guarantor; provided that, in the case of such
a merger, Company or such Subsidiary Guarantor shall be the continuing or
surviving Person;

(ii)           any
Foreign Subsidiary that is not a Subsidiary Guarantor may be merged with or
into any Subsidiary or be liquidated, wound up or dissolved;

(iii)          Company
and its Subsidiaries may sell or otherwise dispose of assets in transactions
that do not constitute or are excluded from the definition of Asset Sales; provided
that the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;

(iv)          Company
and its Subsidiaries may dispose of obsolete, worn out or surplus property in
the ordinary course of business, including the abandonment of any 

 

87

 

trademarks, trade names or other intellectual property no longer useful
in the business of the Loan Parties;

(v)           Company
and its Subsidiaries may make Asset Sales of assets having an aggregate,
cumulative fair market value not in excess of $1,000,000 per
Fiscal Year; provided that (a) the consideration received for such
assets shall be in an amount at least equal to the fair market value thereof;
(b)  the consideration received shall be at
least 75% cash; and (c) the proceeds of such Asset Sales shall be applied
as required by subsection 2.4B(iii)(a) or subsection 2.4D;

(vi)          in
order to resolve disputes that occur in the ordinary course of business,
Company and its Subsidiaries may discount or otherwise compromise for less than
the face value thereof, notes or accounts receivable;

(vii)         Company
or a Subsidiary may sell or dispose of shares of Capital Stock of any of its
Subsidiaries in order to qualify members of the Governing Body of the
Subsidiary if required by applicable law; and

(viii)        Any
Person may be merged with or into Company or any Subsidiary if the acquisition
of the Capital Stock of such Person by Company or such Subsidiary would have
been permitted pursuant to subsection 7.3; provided that (a) in the case of Company, Company shall
be the continuing or surviving Person, (b) if
a Subsidiary is not the surviving or continuing Person, the surviving Person
becomes a Subsidiary and complies with the provisions of subsection 6.8 and (c)
no Potential Event of Default or Event of Default shall have occurred or be
continuing after giving effect thereto.

7.8                               Consolidated Capital Expenditures.

Company shall not, and
shall not permit its Subsidiaries to, make or incur Consolidated Capital
Expenditures (other than a Permitted Equity Contribution Capex) in any Fiscal
Year indicated below, in an aggregate amount in excess of the corresponding
amount (the “Maximum Consolidated Capital Expenditures
Amount”) set forth below opposite such Fiscal Year; provided
that the Maximum Consolidated Capital Expenditures Amount for any Fiscal Year
shall be increased by an amount equal to the excess, if any, (but in no event
more than $3,000,000) of the Maximum Consolidated Capital Expenditures Amount
for the previous Fiscal Year (as adjusted in accordance with this proviso) over
the actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year; provided, further that in no event shall the amount of such
increase exceed 50% of the Maximum Consolidated Capital Expenditures Amount for
such previous Fiscal Year:

	
  Fiscal Year

  	
   

  	
  Maximum Consolidated

  Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  $

  	
  9,000,000

  	
   

  
	
  2006 and each Fiscal Year
  thereafter

  	
   

  	
  $

  	
  6,000,000

  	
   

  

 

 

88

 

7.9                               Transactions with
Shareholders and Affiliates.

Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, 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 5%
or more of any class of equity Securities of Company or with any Affiliate of
Company or of any such holder, on terms that are less favorable to Company or
that Subsidiary, as the case may be, than those that might be obtained at the
time from Persons who are not such a holder or Affiliate; provided that
the foregoing restriction shall not apply to (i) any transaction between
Company and any of its wholly-owned Subsidiaries or between any of its
wholly-owned Subsidiaries, (ii) reasonable and customary fees paid to
independent members of the Governing Bodies of Company and its Subsidiaries,
(iii) employment agreements in the ordinary course, (iv) performance under the
Related Agreements and the Equity Documents (to the extent the same is not
otherwise prohibited by this Agreement), (v) payments of fees to Sponsors
and their Affiliates on the Closing Date and reimbursement of expenses to
Sponsors on the Closing Date, (vi) reimbursement of reasonable
out-of-pocket expenses of Sponsors incurred in connection with the Business of
Holdings and its Subsidiaries, (vii) reimbursement of Transaction Costs,
(viii) distributions to Holdings to permit Holdings to repurchase its Capital
Stock as permitted by subsection 7.3(ix) and subsection 7.5(iv), (ix)
transactions pursuant to the Management Agreements which are not otherwise
prohibited hereunder, (x) the payment of the CEO Payment Amount, or (xi)
transactions set forth on Schedule 7.9 annexed hereto.

7.10                        Sales and Lease-Backs.

Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, become or
remain liable as lessee or as a guarantor or other surety with respect to any
lease, whether an Operating Lease or a Capital Lease, of any property (whether
real, personal or mixed), whether now owned or hereafter acquired,
(i) that Company or any of its Subsidiaries has sold or transferred or is
to sell or transfer to any other Person (other than Company or any of its
Subsidiaries that is a Subsidiary Guarantor) or (ii) that Company or any
of its Subsidiary Guarantors intends to use for substantially the same purpose
as any other property that has been or is to be sold or transferred by Company
or any of its Subsidiary Guarantors to any Person (other than Company or any of
its Subsidiaries that is a Subsidiary Guarantor) in connection with such lease;
provided that Company and its Subsidiaries may become and remain liable
as lessee, guarantor or other surety with respect to any such lease if and to
the extent that Company or any of its Subsidiaries would be permitted to enter
into, and remain liable under, such lease to the extent that the transaction
would be permitted under subsection 7.1, assuming the sale and lease back
transaction constituted Indebtedness in a principal amount equal to the gross
proceeds of the sale.

7.11                        Conduct of Business.

From and after the
Closing Date, Company shall not, and shall not permit any of its Subsidiaries
to, engage in any businesses other than (i) the personal care business
engaged in 

 

89

 

by Company and its
Subsidiaries on the Closing Date and similar or related businesses and (ii)
such other lines of business as may be consented to by Requisite Lenders.  From and after the Closing Date, Holdings
shall not (i) engage in any business other than entering into and performing
its obligations under and in accordance with the Loan Documents, the First Lien
Loan Documents, the Related Agreements, the Equity Documents and the Holdings
Note Documents to which it is a party (including, without limitation, the
payment of Transaction Costs) and other activities incidental thereto
(including the issuance of notes (which are subordinated to the Obligations on
terms reasonably satisfactory to Administrative Agent) in payment of redemption
price for Holdings’ Capital Stock (or any option rights to acquire such Capital
Stock) from any former or current employer of any Loan Party) or (ii) own any
assets other than (a) the Capital Stock of Company and (b) Cash and Cash
Equivalents in an amount not to exceed $400,000.

7.12                        Amendments or Waivers of
Certain Agreements; Amendments of Holdings Note Documents.

A.            Amendments or Waivers of
Certain Agreements.  Neither Company nor any of its Subsidiaries
will agree to any amendment to, or waive any of its rights under, any Related
Agreements after the Closing Date without in each case obtaining the prior
written consent of Requisite Lenders to such amendment or waiver, if the effect
of such amendment or waiver, together with all other amendments or waivers,
would be materially adverse to Company or Lenders.

B.            Amendments of the
Holdings Note Documents.  Company shall not, nor shall
it permit Holdings or any of its Subsidiaries to, amend or otherwise change or
supplement the terms of any Holdings Note Document.  No Loan Party shall grant or permit to be
granted any security or guaranty with respect to the Holdings Note Documents.

7.13                        Fiscal Year.

Company shall not and
shall not permit any of its Subsidiaries to, change their respective Fiscal
Year-end or their respective Fiscal Quarter-ends from that in effect on the
Closing Date.

7.14                        OFAC.

Neither Company nor any
Subsidiary of Company: (i) will become a person whose property or interests in
property are blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg.
49079(2001)), (ii) will engage in any dealings or transactions prohibited by
Section 2 of such executive order, or be otherwise associated with any such
person in any manner violative of Section 2, or (iii) will otherwise become a
person on the list of Specially Designated Nationals and Blocked Persons or
subject to the limitations or prohibitions under any other OFAC regulation or
executive order.

 

 

90

 

Section
8.              EVENTS OF DEFAULT

If any of the following
conditions or events (“Events of Default”)
shall occur:

8.1                               Failure to Make Payments When Due.

Failure by Company to pay
any installment of principal of any Loan when due, whether at stated maturity,
by acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or failure by Company to pay any interest on any Loan or any fee or
any other amount due under this Agreement within five days after the date due;
or

8.2                               Default in Other Agreements.

(i)            Failure
of Holdings, Company or any of its 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 subsection 8.1) or
Contingent Obligations in an individual principal amount of $2,500,000 or more
or with an aggregate principal amount of $2,500,000 or more, in each case
beyond the end of any grace period provided therefor; or

(ii)           breach
or default by Holdings, Company or any of its Subsidiaries with respect to any
other material term of (a) one or more items of Indebtedness or Contingent
Obligations in the individual or aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness or Contingent Obligation(s),
if the effect of such breach or default is to cause that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior to its
stated maturity or the stated maturity of any underlying obligation, as the
case may be; or

8.3                               Breach of Certain Covenants.

Failure of Company to
perform or comply with any term or condition contained in subsection 2.5, 6.2
or Section 7 of this Agreement; or

8.4                               Breach of Warranty.

Any representation,
warranty, certification or other statement made by Holdings, Company or any of
its Subsidiaries in any Loan Document or in any statement or certificate at any
time given by Holdings, Company or any of its Subsidiaries in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false in any
material respect on the date as of which made; or

8.5                               Other Defaults Under Loan Documents.

Any Loan Party shall
default in the performance of or compliance with any term contained in this
Agreement or any of the other Loan Documents, other than any such term referred
to in any other subsection of this Section 8, and such default shall not
have been 

 

91

 

remedied or waived
within 30 days after the earlier of (i) an Officer of Holdings, Company or
such Loan Party becoming aware of such default or (ii) receipt by Company or such Loan Party
of notice from Administrative Agent or any Lender of such default; or

8.6                               Involuntary Bankruptcy; Appointment
of Receiver, etc.

(i)            A
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of Holdings Company 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 Holdings, Company 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 Holdings, Company 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 Holdings, Company 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 Holdings, Company or any of its Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; provided that each of Holdings and Company
(for itself and its Subsidiaries) hereby expressly authorizes Administrative
Agent and Lenders to appear in any court conducting any relevant case or
proceeding during such 60-day period to preserve, protect and defend their
rights under the Loan Documents; or

8.7                               Voluntary Bankruptcy; Appointment of
Receiver, etc.

(i)            Holdings,
Company or any of its Subsidiaries shall have an order for relief entered with
respect to it or 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 Holdings, Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or

(ii)           Holdings,
Company 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 Governing Body of Holdings, Company 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 in clause (i) above or this
clause (ii); or

 

92

 

8.8                               Judgments and
Attachments.

Any money judgment, writ
or warrant of attachment or similar process involving (i) in any
individual case an amount in excess of $2,500,000 or (ii) in the aggregate
at any time an amount in excess of $2,500,000, in either case to the extent not
adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage, shall be entered or filed against
Holdings, Company or any of its Subsidiaries or any of their respective assets
and shall remain undischarged, unvacated, unbonded or unstayed for a period of
60 days (or in any event later than five days prior to the date of any proposed
sale thereunder); or

8.9                               Dissolution.

Any order, judgment or
decree shall be entered against Holdings, Company or any of its Subsidiaries
decreeing the dissolution or split up of Holdings, Company or that Subsidiary
and such order shall remain undischarged or unstayed for a period in excess of
30 days; or

8.10                        Employee Benefit Plans.

There shall occur one or
more ERISA Events that individually or in the aggregate result in or could
reasonably be expected to result in liability of Company, any of its
Subsidiaries (including any such liability of their respective ERISA Affiliates
for which the Company or its Subsidiaries are jointly and severally liable) in
excess of $3,000,000 during the term of this Agreement; or

8.11                        Change in Control.

A Change in Control shall
have occurred; or

8.12                        Invalidity of Loan
Documents; Failure of Security; Repudiation of Obligations.

At any time after the
execution and delivery thereof, (i) any Loan Document or any provision thereof,
for any reason, other than the satisfaction in full of all Obligations, shall
cease to be in full force and effect (other than in accordance with its terms)
or shall be declared to be null and void, (ii) any Collateral Document shall
cease to be in full force and effect (other than by reason of a release of
Collateral thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or Administrative Agent shall not have or shall cease
to have a valid and perfected Second Priority Lien in any Collateral purported
to be covered thereby (other than in accordance with its terms), in each case
for any reason other than the failure of Administrative Agent or any Lender to
take any action within its control, or (iii) any Loan Party shall contest the
validity or enforceability of any Loan Document or any provision thereof in
writing or deny in writing that it has any further liability, including with
respect to future advances by Lenders, under any Loan Document to which it is a
party:

 

93

 

THEN (i) upon the occurrence of any
Event of Default described in subsection 8.6, 8.7 or 8.11, each of (a) the
unpaid principal amount of and accrued interest on the Loans, and (b) all
other Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which
are hereby expressly waived by Company, and the obligation of each Lender to
make any Loan hereunder shall thereupon terminate, and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written
consent of Requisite Lenders, by written notice to Company, declare all or any
portion of the amounts described in clauses (a) and (b) above to be, and the
same shall forthwith become, immediately due and payable, and the obligation of
each Lender to make any Loan hereunder shall thereupon terminate.

Notwithstanding
anything contained in the second preceding paragraph, if at any time within 60
days after an acceleration of the Loans pursuant to clause (ii) of such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due other than as a result of such
acceleration (with interest on principal and, to the extent permitted by law,
on overdue interest, at the rates specified in this Agreement) and all Events
of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 10.6, then Requisite Lenders, by written notice to Company, may
at their option rescind and annul such acceleration and its consequences; but
such action shall not affect any subsequent Event of Default or Potential Event
of Default or impair any right consequent thereon.  The provisions of this paragraph are intended
merely to bind Lenders to a decision which may be made at the election of
Requisite Lenders and are not intended, directly or indirectly, to benefit
Company, and such provisions shall not at any time be construed so as to grant
Company the right to require Lenders to rescind or annul any acceleration
hereunder or to preclude Administrative Agent or Lenders from exercising any of
the rights or remedies available to them under any of the Loan Documents, even
if the conditions set forth in this paragraph are met.

Section
9.              ADMINISTRATIVE AGENT

9.1                               Appointment.

A.            Appointment
of Administrative Agent.  BNP Paribas is hereby appointed
Administrative Agent hereunder and under the other Loan Documents.  Each Lender hereby authorizes Administrative
Agent to act as Administrative Agent in accordance with the terms of this
Agreement and the other Loan Documents. 
Administrative Agent agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable.  The provisions of this Section 9 are
solely for the benefit of Administrative Agent and Lenders and no Loan Party
shall have rights as a third party beneficiary of any of the provisions
thereof.  In performing its functions and
duties under this Agreement, Administrative Agent (other than as provided in
subsection 2.1D) 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 Company or any other Loan Party.

 

94

 

B.            Appointment
of Supplemental Collateral Agents.  It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as Administrative
Agent or trustee in such jurisdiction. 
It is recognized that in case of litigation under this Agreement or any
of the other Loan Documents, and in particular in case of the enforcement of
any of the Loan Documents, or in case Administrative Agent deems that by reason
of any present or future law of any jurisdiction it may not exercise any of the
rights, powers or remedies granted herein or in any of the other Loan Documents
or take any other action which may be desirable or necessary in connection
therewith, it may be necessary that Administrative Agent appoint an additional
individual or institution as a separate trustee, co-trustee, collateral agent
or collateral co-agent (any such additional individual or institution being
referred to herein individually as a “Supplemental Collateral
Agent” and collectively as “Supplemental Collateral
Agents”).

In the event that
Administrative Agent appoints a Supplemental Collateral Agent with respect to
any Collateral, (i) each and every right, power, privilege or duty expressed or
intended by this Agreement or any of the other Loan Documents to be exercised
by or vested in or conveyed to Administrative Agent with respect to such
Collateral shall be exercisable by and vest in such Supplemental Collateral
Agent to the extent, and only to the extent, necessary to enable such
Supplemental Collateral Agent to exercise such rights, powers and privileges
with respect to such Collateral and to perform such duties with respect to such
Collateral, and every covenant and obligation contained in the Loan Documents
and necessary to the exercise or performance thereof by such Supplemental
Collateral Agent shall run to and be enforceable by Administrative Agent or
such Supplemental Collateral Agent, and (ii) the provisions of this Section 9 and
of subsections 10.2 and 10.3 that refer to Administrative Agent shall inure to
the benefit of such Supplemental Collateral Agent and all references therein to
Administrative Agent shall be deemed to be references to Administrative Agent
and/or such Supplemental Collateral Agent, as the context may require.

Should any instrument in
writing from Company or any other Loan Party be required by any Supplemental
Collateral Agent so appointed by Administrative Agent for more fully and
certainly vesting in and confirming to him or it such rights, powers,
privileges and duties, Company shall, or shall cause such Loan Party to,
execute, acknowledge and deliver any and all such instruments promptly upon
request by Administrative Agent.  In case
any Supplemental Collateral Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Collateral Agent, to the extent permitted by
law, shall vest in and be exercised by Administrative Agent until the
appointment of a new Supplemental Collateral Agent.

C.            Control. Each
Lender and Administrative Agent hereby appoint each other Lender as agent for
the purpose of perfecting Administrative Agent’s security interest in assets
that, in accordance with the UCC, can be perfected by possession or control.

 

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9.2                               Powers and Duties;
General Immunity.

A.            Powers; Duties Specified. 
Each Lender irrevocably authorizes of Administrative Agent to take such
action on such Lender’s behalf and to exercise such powers, rights and remedies
hereunder and under the other Loan Documents as are specifically delegated or
granted to Administrative Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto.  Administrative Agent shall have only those
duties and responsibilities that are expressly specified in this Agreement and
the other Loan Documents.  Administrative
Agents may exercise such powers, rights and remedies and perform such duties by
or through its agents or employees. 
Administrative Agent shall not have, by reason of this Agreement or any
of the other Loan Documents, a fiduciary relationship in respect of any Lender
or Company; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.  Administrative Agent is further authorized by
the Lenders to enter into agreements supplemental hereto with any Loan Party
for the purpose of curing any formal defect, in consistency, omission or
ambiguity in this Agreement or any Loan Document to which it is a party
(without any consent or approval by the Lenders).

B.            No Responsibility for
Certain Matters.  Administrative Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Loan 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 Administrative Agent to Lenders or by or on behalf of
Sponsors, Holdings, Company or any of its Subsidiaries to Administrative Agent
or any Lender in connection with the Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of
Sponsors, Holdings, Company or any of its Subsidiaries or any other Person
liable for the payment of any Obligations, nor shall Administrative 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 Loan 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 Potential Event of
Default.  Anything contained in this
Agreement to the contrary notwithstanding, Administrative Agent shall have no
liability arising from confirmations of the amount of outstanding Loans or the
component amounts thereof.

C.            Exculpatory Provisions. 
Neither Administrative Agent nor any of its officers, directors,
employees or agents shall be liable to Lenders for any action taken or omitted
by Administrative Agent under or in connection with any of the Loan Documents
except to the extent caused by Administrative Agent’s gross negligence or
willful misconduct.  Administrative Agent
shall be entitled to refrain from any act or the taking of any action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents or from the exercise of any power, discretion
or authority vested in it hereunder or thereunder unless and until
Administrative Agent shall have received instructions in respect thereof from Requisite
Lenders (or such other Lenders as may be required to give such instructions
under subsection 10.6) and, upon receipt of such instructions from Requisite
Lenders (or such other Lenders, as 

 

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the case may be),
Administrative 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; provided that Administrative Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose Administrative Agent to liability or that is contrary to any Loan
Document or applicable law.  Without
prejudice to the generality of the foregoing, (i) Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication (including any electronic message, Internet or intranet website
posting or other distribution), 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 Holdings, Company
and its Subsidiaries), accountants, experts and other professional advisors
selected by it; and (ii) no Lender shall have any right of action
whatsoever against Administrative Agent as a result of Administrative Agent
acting or (where so instructed) refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).

D.            Administrative Agent
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, Administrative Agent in its individual capacity as
a Lender hereunder.  With respect to its
participation in the Loans, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not performing the duties and functions delegated to it hereunder, and the
term “Lender” or “Lenders” or any similar term shall, unless the context
clearly otherwise indicates, include Administrative Agent in its individual
capacity.  Administrative Agent and its
Affiliates may accept deposits from, lend money to, acquire equity interests in
and generally engage in any kind of commercial banking, investment banking,
trust, financial advisory or other business with Company 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
with this Agreement and otherwise without having to account for the same to
Lenders.

9.3                               Independent
Investigation by Lenders; No Responsibility For Appraisal of Creditworthiness.

Each Lender agrees that
it has made its own independent investigation of the financial condition and
affairs of Holdings, Company and its Subsidiaries in connection with the making
of the Loans hereunder and that it has made and shall continue to make its own
appraisal of the creditworthiness of Holdings, Company and its Subsidiaries.
Administrative Agent shall have no 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 Administrative Agent shall
have no responsibility with respect to the accuracy of or the completeness of
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9.4                               Right to Indemnity.

Each Lender, in
proportion to its Pro Rata Share, severally agrees to indemnify Administrative
Agent and its officers, directors, employees, agents, attorneys, professional
advisors and Affiliates to the extent that any such Person shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements and fees and disbursements of any
financial advisor engaged by Administrative Agent) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent or such other Person in exercising the powers, rights and
remedies of Administrative Agent or performing duties of Administrative Agent
hereunder or under the other Loan Documents or otherwise in its capacity as
Administrative Agent in any way relating to or arising out of this Agreement or
the other Loan Documents; provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of Administrative
Agent resulting solely from such Administrative Agent’s gross negligence, bad
faith or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.  If any indemnity
furnished to Administrative Agent or any other such Person for any purpose
shall, in the opinion of Administrative Agent, be insufficient or become
impaired, Administrative Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional
indemnity is furnished.

9.5          Resignation of Administrative Agent;
Successor Administrative Agent. 
Administrative Agent may resign at any time by giving 30 days’ prior
written notice thereof to Lenders and Company. 
Upon any such notice of resignation by Administrative Agent, Requisite
Lenders shall have the right, upon five Business Days’ notice to Company, to
appoint a successor Administrative Agent. 
If no such successor shall have been so appointed by Requisite Lenders
and shall have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, the retiring Administrative Agent may,
on behalf of Lenders, appoint a successor Administrative Agent.  If Administrative Agent shall notify Lenders
and Company that no Person has accepted such appointment as successor
Administrative Agent, such resignation shall nonetheless become effective in
accordance with Administrative Agent’s notice and (i) the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents, except that any Collateral held by Administrative Agent
will continue to be held by it until a Person shall have accepted the
appointment of successor Administrative Agent, and (ii) all payments,
communications and determinations provided to be made by, to or through
Administrative Agent shall instead be made by, to or through each Lender
directly, until such time as Requisite Lenders appoint a successor
Administrative Agent in accordance with this subsection 9.5A.  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
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement (if not already discharged
as set forth above).  After any retiring
Administrative Agent’s 

 

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resignation hereunder, 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 an Administrative Agent under this Agreement.

9.6                               Intercreditor Agreement;
Collateral Documents and Guaranties.

Each Lender (which term
shall include, for purposes of this subsection 9.6, any Lender in its capacity
as a counterparty to a Hedge Agreement with Company or one of its Subsidiaries)
hereby further authorizes Administrative Agent, on behalf of and for the
benefit of Lenders, to enter into each Collateral Document as secured party and
to be the agent for and representative of Lenders under the Intercreditor
Agreement and each Guaranty, and each Lender agrees to be bound by the terms of
each Collateral Document, the Intercreditor Agreement, the Holdings Subordination
Agreement and each Guaranty; provided that Administrative Agent shall
not (i) enter into or consent to any material amendment, modification,
termination or waiver of or departure from any provision contained in any
Collateral Document, the Intercreditor Agreement, the Holdings Subordination
Agreement or the Guaranties or (ii) release any Collateral (except as otherwise
expressly permitted or required pursuant to the terms of this Agreement or the
applicable Collateral Document), in each case without the prior written consent
of Requisite Lenders (or, if required pursuant to subsection 10.6, all
Lenders); provided further, however, that, without
further written consent or authorization from Lenders, Administrative Agent may
execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented, (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the Capital Stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Company) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders have otherwise
consented or (c) subject to the Intercreditor Agreement, subordinate the
Liens of Administrative Agent, on behalf of Lenders, to any Liens permitted by
subsection 7.2; provided that, in the case of a sale of such item of
Collateral or stock referred to in subdivision (a) or (b), the requirements of
subsection 10.14 are satisfied.  Anything
contained in any of the Loan Documents to the contrary notwithstanding,
Company, Administrative Agent and each Lender hereby agree that (1) no Lender
shall have any right individually to realize upon any of the Collateral under
any Collateral Document or to enforce any Guaranty, it being understood and
agreed that all powers, rights and remedies under the Collateral Documents, the
Intercreditor Agreement and the Guaranties may be exercised solely by
Administrative Agent for the benefit of Lenders in accordance with the terms
thereof, and (2) in the event of a foreclosure by Administrative Agent on any
of the Collateral pursuant to a public or private sale, Administrative Agent or
any Lender may be the purchaser of any or all of such Collateral at any such
sale and Administrative Agent, as agent for and representative of Lenders (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 Administrative Agent at such sale.  Without limiting the foregoing, in the event
the First Lien Credit Agreement is refinanced or replaced following the Closing
Date, Administrative Agent is authorized by Lenders to, enter into a
replacement Intercreditor Agreement substantially similar to the Intercreditor
Agreement as in effect on the 

 

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Closing Date, or
as subsequently amended, restated, supplemented or modified pursuant to the
terms hereof and thereof.

Without derogating from
any other authority granted to Administrative Agent herein or in the Collateral
Documents or any other document relating thereto, each Lender hereby specifically
(i) authorizes Administrative Agent to enter into pledge agreements pursuant to
this subsection 9.6 with respect to the Capital Stock of all existing and
future Foreign Subsidiaries, which pledge agreements may be governed by the
laws of each of the jurisdictions of formation of such Foreign Subsidiaries, as
agent on behalf of each of Lenders, with the effect that Lenders each become a
secured party thereunder or, where relevant as agent and trustee with the
effect that the Lenders each become beneficiaries of the trust and
Administrative Agent has all the rights, powers, discretions, protections and
exemptions from liability set out in the pledge agreements and (ii) except in
connection with any such pledge agreement where Administrative Agent holds the
security as agent and trustee for the Lenders, appoints Administrative Agent as
its attorney-in-fact granting it the powers to execute each such pledge
agreement and any registrations of the security interest thereby created, in
each case in its name and on its behalf, with the effect that each Lender
becomes a secured party thereunder.  With
respect to each such pledge agreement, Administrative Agent has the power to
sub-delegate to third parties its powers as attorney-in-fact of each Lender.

9.7                               Duties of Other Agents.

To the extent that any
Lender is identified in this Agreement as a co-agent, documentation agent or
syndication agent, such Lender shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. 
Without limiting the foregoing, none of such Lenders shall have or be
deemed to have a fiduciary relationship with any Lender.

9.8                               Administrative Agent May
File Proofs of Claim.

In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
Holdings, Company or any of the Subsidiaries of Holdings or Company,
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether Administrative Agent shall have made any demand on
Company) shall be entitled and empowered, by intervention in such proceeding or
otherwise:

(i)            to file and prove a claim for the
whole amount of principal and interest owing and unpaid in respect of the Loans
and any other Obligations that are owing and unpaid and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of Lenders and Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of Lenders and
Administrative Agent and their agents and counsel and all other amounts due
Lenders and Administrative Agent under subsections 2.3 and 10.2) allowed in
such judicial proceeding, and

 

 

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

and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make
such payments to Administrative Agent and, in the event that Administrative
Agent shall consent to the making of such payments directly to Lenders, to pay
to Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of Administrative Agent and its agents and
counsel, and any other amounts due to Administrative Agent under subsections
2.3 and 10.2.

Nothing herein contained
shall be deemed to authorize Administrative Agent to authorize or consent to or
accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights
of any Lenders or to authorize Administrative Agent to vote in respect of the
claim of any Lender in any such proceeding.

Section 10.            MISCELLANEOUS

10.1                        Successors and Assigns;
Assignments and Participations in Loans and Letters of Credit.

A.            General. 
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 the successors and assigns of Lenders (it being understood that
Lenders’ rights of assignment are subject to the further provisions of this
subsection 10.1).  Neither Company’s
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders (and any
attempted assignment or transfer by Company without such consent shall be null
and void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Affiliates of each of Administrative
Agent and Lenders and Indemnitees) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

B.            Assignments.

(i)            Amounts
and Terms of Assignments.  Any Lender
may assign to one or more Eligible Assignees all or any portion of its rights
and obligations under this Agreement; provided that (a), except
(1) in the case of an assignment of the entire remaining amount of the
assigning Lender’s rights and obligations under this Agreement or (2) in
the case of an assignment to a Lender or an Affiliate of a Lender or an
Approved Fund of a Lender, the aggregate amount of Term Loan Exposure of the
assigning Lender and the assignee subject to each such assignment shall not be
less than $1,000,000 (or $250,000 in the case of any assignment of a Term Loan
by a Lender or an Approved Fund to a Lender or an Approved Fund that in each
case has, or is affiliated with or managed by a Lender with Affiliates and/or
Approved Funds that collectively have, 

 

101

 

aggregate Term Loan Exposure of not less than $1,000,000), unless
Administrative Agent otherwise consents (such consent not to be unreasonably
withheld or delayed), (b) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan assigned,
(c) the parties to each assignment shall execute and deliver to
Administrative Agent an Assignment Agreement, together with a processing and
recordation fee of $3,500 (unless the assignee is an Affiliate or an Approved
Fund of the assignor, in which case no fee shall be required), and the Eligible
Assignee, if it shall not be a Lender, shall deliver to Administrative Agent
information reasonably requested by Administrative Agent, including 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 subsection
2.7B(iii) and (d) except in the case of an assignment to another Lender, an
Affiliate of a Lender or an Approved Fund of a Lender, Administrative Agent,
and, if no Event of Default has occurred and is continuing, Company, shall have
consented thereto (which consent shall not be unreasonably withheld or
delayed).

                                Upon such
execution, and delivery and consent, from and
after the effective date specified in such Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from its
obligations under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto.  The assigning Lender shall, upon
the effectiveness of such assignment or as promptly thereafter as practicable,
surrender its Notes, if any, to Administrative Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee and/or the assigning
Lender in accordance with subsection 2.1E, be issued to the assignee and/or to
the assigning Lender, substantially in the form of Exhibit IV annexed
hereto, with appropriate insertions, to reflect the amounts of the outstanding
Term Loans of the assignee and/or the assigning Lender.  Other than as provided in subsection 10.5,
any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection 10.1B shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection 10.1C.  Notwithstanding the foregoing, in the case of
an assignment to an Eligible Assignee which is, immediately prior to such
assignment, an Affiliate of the assigning Lender or an Approved Fund of the
assigning Lender, such assignment shall be effective between such assigning
Lender and its Affiliate or Approved Fund (as the case may be) immediately
without compliance with the conditions for assignment under this subsection 10.1B,
but shall not be effective with respect to Company, Administrative Agent, any
Issuing Lender or any Lender, and Company, Administrative Agent, each Issuing
Lender and each 

 

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Lender shall be
entitled to deal solely and directly with such assigning Lender under any such
assignment, in each case, until the conditions for assignment under this
subsection 10.1B have been complied with.

(ii)           Acceptance
by Administrative Agent; Recordation in Register.  Upon its receipt of an Assignment Agreement
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) (if required) and any forms, certificates or other
evidence with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Administrative Agent pursuant
to subsection 2.7B(iii), Administrative Agent shall, if Administrative Agent
and Company have consented to the assignment evidenced thereby (in each case to
the extent such consent is required pursuant to subsection 10.1B(i)),
(a) accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment), (b) record the information
contained therein in the Register, and (c) give prompt notice thereof to
Company.  Administrative Agent shall
maintain a copy of each Assignment Agreement delivered to and accepted by it as
provided in this subsection 10.1B(ii).

(iii)          Deemed
Consent by Company.  If the consent
of Company to an assignment or to an Eligible Assignee is required hereunder
(including a consent to an assignment which does not meet the minimum
assignment thresholds specified in subsection 10.1B(i)), Company shall be
deemed to have given its consent five Business Days after the date notice
thereof has been delivered by the assigning Lender (through Administrative
Agent) unless such consent is expressly refused by Company prior to such fifth
Business Day.

C.            Participations. 
Any Lender may, without the consent of, or notice to, Company or
Administrative Agent, sell participations to one or more Persons (other than a
natural Person or Company or any of its Affiliates) in all or a portion of such
Lender’s rights and/or obligations under this Agreement; provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) Company, Administrative Agent and
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
directly affecting (i) the extension of the scheduled final maturity date
of any Loan allocated to such participation or (ii) a reduction of the
principal amount of or the rate of interest payable on any Loan allocated to
such participation.  Subject to the
further provisions of this subsection 10.1C, Company agrees that each Participant
shall be entitled to the benefits of subsections 2.6D and 2.7 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection 10.1B.  To the
extent permitted by law, each Participant also shall be entitled to the
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Participant agrees
to be subject to subsection 10.5 as though it were a Lender.  A Participant shall not be entitled to receive
any greater payment under subsections 2.6D and 2.7 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. 
A Participant that would be a Non-US Lender if it were a Lender shall
not be entitled to the benefits of subsection 2.7 unless Company is notified of
the participation sold to such Participant and such Participant agrees, for the
benefit of Company, to comply with subsection 2.7B(iii) as though it were a
Lender.

D.            Pledges
and Assignments.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its Loans, and the other Obligations
owed to such Lender, to secure obligations of such Lender, including without
limitation any pledge or assignment to secure obligations to any Federal
Reserve Bank; provided that (i) no Lender shall be relieved of any
of its obligations hereunder as a result of any such assignment or pledge and
(ii) in no event shall any assignee or pledgee be considered to be a “Lender” or be entitled to require the assigning Lender to
take or omit to take any action hereunder.

E.             Information. 
Each Lender may furnish any information concerning Holdings, Company and
its Subsidiaries in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject to subsection 10.19.

F.             Agreements
of Lenders.  Each Lender listed on the signature pages
hereof hereby agrees, and each Lender that becomes a party hereto pursuant to
an Assignment Agreement shall be deemed to agree, (i) that it is an Eligible
Assignee described in clause (A) of the definition thereof; (ii) that it has
experience and expertise in the making of or purchasing loans such as the
Loans; and (iii) that it will make or purchase Loans for its own account in the
ordinary course of its business and without a view to distribution of such
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 subsection 10.1, the disposition of such Loans or any interests therein
shall at all times remain within its exclusive control).

10.2                        Expenses.

Whether or not the
transactions contemplated hereby shall be consummated, Company agrees to pay
promptly (i) all reasonable costs and expenses of negotiation, preparation
and execution of the Loan Documents and any consents, amendments, waivers or
other modifications thereto; (ii) all costs and expenses of furnishing all
opinions by counsel for Company (including any opinions requested by
Administrative Agent or Lenders as to any legal matters arising hereunder) and
of Company’s performance of and compliance with all agreements and conditions
on its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) all reasonable
fees, expenses and disbursements of counsel to Administrative Agent (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and any consents,
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documents or matters requested by Company; (iv) all costs and
expenses of creating and perfecting Liens in favor of Administrative Agent on behalf
of Lenders pursuant to any Collateral Document, 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 Administrative Agent and of counsel providing any opinions that
Administrative Agent or Requisite Lenders may request in respect of the
Collateral Documents or the Liens created pursuant thereto; (v) all costs
and expenses (including the reasonable fees, expenses and disbursements of any
auditors, accountants or appraisers and any environmental or other consultants,
advisors and agents employed or retained by Administrative Agent or its
counsel) of obtaining and reviewing any appraisals provided for under this
Agreement and any environmental audits or reports provided for under this
Agreement; (vi) all costs and expenses incurred by Administrative Agent in
connection with the custody or preservation of any of the Collateral;
(vii) all other costs and expenses incurred by Administrative Agent in
connection with the syndication of the Commitments; (viii) all costs and
expenses, including reasonable attorneys’ fees (including allocated costs of
internal counsel) and fees, costs and expenses of accountants, advisors and
consultants, incurred by Administrative Agent and its counsel relating to
efforts to (a) evaluate or assess any Loan Party, its business or financial
condition and (b) protect, evaluate, assess or dispose of any of the
Collateral; and (ix) all costs and expenses, including reasonable attorneys’
fees (including allocated costs of internal counsel), fees, costs and expenses
of accountants, advisors and consultants and costs of settlement, incurred by
Administrative Agent and Lenders in enforcing any Obligations of or in
collecting any payments due from any Loan Party hereunder or under the other
Loan Documents (including in connection with the sale of, collection from, or
other realization upon any of the Collateral or the enforcement of the Loan
Documents) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings.

10.3                        Indemnity.

In addition to the
payment of expenses pursuant to subsection 10.2, whether or not the
transactions contemplated hereby shall be consummated, Company agrees to defend
(subject to Indemnitees’ selection of counsel), indemnify, pay and hold
harmless Administrative Agent and Lenders, and the officers, directors,
trustees, employees, agents, advisors and Affiliates of Administrative Agent
and Lenders (collectively called the “Indemnitees”),
from and against any and all Indemnified Liabilities (as hereinafter defined); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of
that Indemnitee as determined by a final judgment of a court of competent
jurisdiction.

As used herein, “Indemnified Liabilities” means, collectively, any and all
liabilities, obligations, losses, damages (including natural resource damages),
penalties, actions, judgments, suits, claims (including Environmental Claims),
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),
expenses and disbursements of any kind or nature whatsoever (including the 

 

105

 

reasonable fees
and disbursements of counsel for Indemnitees (including allocated costs of
internal counsel) 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
including any such proceeding initiated by or on behalf of a Loan Party, 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, the other Loan Documents or
the Related Agreements or the transactions contemplated hereby or thereby
(including Lenders’ agreement to make the Loans hereunder or the use or
intended use of the proceeds thereof, or any enforcement of any of the Loan
Documents (including any sale of, collection from, or other realization upon
any of the Collateral enforcement of the Guaranties)), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto, or (iii) any Environmental Claim or any Hazardous Materials
Activity relating to or arising from, directly or indirectly, any past or
present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries.

To the extent that the
undertakings to defend, indemnify, pay and hold harmless set forth in this
subsection 10.3 may be unenforceable in whole or in part because they are
violative of any law or public policy, Company 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.

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 continuation of any Event
of Default and consultation with Administrative Agent, each of Lenders and
their Affiliates is hereby authorized by Company at any time or from time to
time, without notice to Company or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, time or demand, provisional or final, 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 that Lender or any Affiliate of that Lender to or for the credit or
the account of Company and each other Loan Party against and on account of the
Obligations of Company or any other Loan Party to that Lender (or any Affiliate
of that Lender) or to any other Lender (or any Affiliate of any other Lender)
under this Agreement and the other Loan Documents, including all claims of any
nature or description arising out of or connected with this Agreement or any
other Loan Document, irrespective of whether or not (i) that Lender shall have
made any demand hereunder or (ii) the principal of or the interest on the Loans
or any other amounts due hereunder shall have become due and payable pursuant
to Section 8 and although said obligations and liabilities, or any of
them, may be contingent or unmatured.

 

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10.5                        Ratable Sharing.

Lenders hereby agree
among themselves that if any of them shall, whether by voluntary or mandatory
payment (other than a payment or prepayment of Loans made and applied in
accordance with the terms of this Agreement), by realization upon security,
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 Loan Documents
(including any bid or purchase at public or private sale) 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, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to such Lender) that 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, unless such proportionately greater payment is required
by the terms of this Agreement, (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of
such payment to purchase assignments (which it shall be deemed to have
purchased from each seller of an assignment simultaneously upon the receipt by
such seller of its portion of such payment) of 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
that (A) 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 assignments shall be returned
to such purchasing Lender ratably to the extent of such recovery, but without
interest and (B) the foregoing provisions shall not apply to (1) any payment
made by Company pursuant to and in accordance with the express terms of this
Agreement or (2) any payment obtained by a Lender as consideration for the
assignment (other than an assignment pursuant to this subsection 10.5) of or
the sale of a participation in any of its Obligations to any Eligible Assignee
or Participant pursuant to subsection 10.1B. 
Company expressly consents to the foregoing arrangement and agrees that
any purchaser of an assignment so purchased may exercise any and all rights of
a Lender as to such assignment as fully as if that Lender had complied with the
provisions of subsection 10.1B with respect to such assignment.  In order to further evidence such assignment
(and without prejudice to the effectiveness of the assignment provisions set
forth above), each purchasing Lender and each selling Lender agree to enter
into an Assignment Agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.

10.6                        Amendments and Waivers.

A.            No amendment, modification, termination
or waiver of any provision of this Agreement or of the Notes or any other Loan
Documents (other than Hedge Agreements), and no consent to any departure by
Loan Party or any other Person therefrom, shall in any event be effective
without the prior written concurrence of Requisite Lenders; provided
that any such amendment, modification, termination, waiver or consent which:

(a)           extends
the final scheduled maturity of any Loan or Note, or reduces the rate or extends
the time of payment of interest or fees thereon (except 

 

107

 

in connection with a waiver of applicability of any post-default
increase in interest rates), or reduces the principal amount thereof (except to
the extent repaid in cash) shall not be effective without the prior written
consent of each Lender directly affected thereby; or

(b)           (i)
releases all or substantially all of (x) the Collateral (except as expressly
provided in the Loan Documents) under all the Collateral Documents, or (y) the
Loan Parties (except as expressly provided in the Loan Documents) from their
obligations under any of the Guaranties; (ii) amends, modifies or waives any
provision of this subsection 10.6; (iii) reduces the percentage specified in
the definition of “Requisite Lenders”;
and (iv) consents to the assignment or transfer by Company of any of its rights
and obligations under this Agreement or any other Loan Document shall be
effective only if evidenced in a prior writing signed by or on behalf of all
Lenders.

In addition, (i) no
amendment, modification, termination or waiver which shall increase the
Commitment of any Lender over the amount then in effect or postpone the
scheduled date of expiration of the Commitment of any Lender shall be effective
without the prior written consent of such Lender (it being understood that,
waivers or modifications of conditions precedent, covenants, Potential Events
of Default or Events of Default shall not constitute an increase of the Commitment
of any Lender) and (ii) no amendment, modification, termination or waiver of
any provision of Section 9 or of any other provision of this Agreement which,
by its terms, expressly requires the approval or concurrence of Administrative
Agent shall be effective without the written concurrence of Administrative
Agent.

B.            Administrative Agent may, but shall have
no obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that 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 Company
in any case shall entitle Company 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 subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.

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 an Event of Default or Potential
Event of Default if such action is taken or condition exists.

10.8                        Notices; Effectiveness of
Signatures.

Unless otherwise
specifically provided herein, any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served, or
sent 

 

108

 

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, upon receipt of telefacsimile
in complete and legible form, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed; provided
that notices to Administrative Agent and any Issuing Lender shall not be
effective until received.  For the
purposes hereof, the address of each party hereto shall be as set forth under
such party’s name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to
each other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.  Electronic mail and Internet and intranet
websites may be used to distribute routine communications, such as financial
statements and other information, and to distribute agreements and other
documents to be signed by Administrative Agent, Lenders and the Loan
Parties.  Administrative Agent or Company
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.

Loan Documents and
notices under the Loan Documents may be transmitted and/or signed by
telefacsimile and by signatures delivered in ‘PDF’ format by electronic mail; provided,
however, that no signature with respect to any notice, request,
agreement, waiver, amendment or other document that is intended to have binding
effect may be sent by electronic mail. 
The effectiveness of any such documents and signatures shall, subject to
applicable law, have the same force and effect as an original copy with manual
signatures and shall be binding on all Loan Parties, Administrative Agent and
Lenders.  Administrative Agent may also
require that any such documents and signature be confirmed by a manually-signed
copy thereof; provided, however, that the failure to request or
deliver any such manually-signed copy shall not affect the effectiveness of any
facsimile document or signature.

10.9                        Survival of Representations, Warranties and
Agreements.

A.            All representations, warranties and
agreements made herein shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.

B.            Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of Company set forth
in subsections 2.6D, 2.7, 10.2, 10.3, 10.4, 10.17 and 10.18 and the agreements
of Lenders set forth in subsections 9.2C, 9.4, 10.5 and 10.18 shall survive the
payment of the Loans and the termination of this Agreement.

10.10                 Failure or Indulgence Not
Waiver; Remedies CumulativeError! Bookmark
not defined..

No failure or delay on
the part of Administrative Agent or any Lender in the exercise of any power,
right or privilege hereunder or under any other Loan 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.  All
rights and 

 

109

 

remedies existing
under this Agreement and the other Loan Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

10.11                 Marshalling; Payments Set
Aside.

Neither Administrative
Agent nor any Lender shall be under any obligation to marshal any assets in
favor of Company or any other party or against or in payment of any or all of
the Obligations.  To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit 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 (and whether as a result of any demand,
settlement, litigation or otherwise), 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.

10.12                 Severability.

In case any provision in
or obligation under this Agreement or the Notes 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.

10.13                 Obligations Several;
Independent Nature of Lenders’ Rights; Damage Waiver.

The obligations of
Lenders hereunder are several and no Lender shall be responsible for the
obligations or Commitments of any other Lender hereunder.  Nothing contained herein or in any other Loan
Document, and no action taken by Lenders pursuant hereto or thereto, shall be
deemed to constitute Lenders, or Lenders and Company, 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
of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.

To the extent permitted
by law, Company shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with or as a result of this Agreement (including, without
limitation, subsection 2.1C hereof), any other Loan Document, any transaction
contemplated by the Loan Documents, any Loan or the use of proceeds
thereof.  No Indemnitee shall be liable
for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through

 

 

110

 

telecommunications,
electronic or other information transmission systems in connection with the
Loan Documents or the transactions contemplated thereby.

10.14                 Release of Security
Interest or Guaranty.

Subject to the terms of
the Intercreditor Agreement, upon the proposed sale or other disposition of any
Collateral to any Person (other than an Affiliate of Company) that is permitted
by this Agreement or to which Requisite Lenders have otherwise consented, or
the sale or other disposition of all of the Capital Stock of a Subsidiary
Guarantor to any Person (other than an Affiliate of Company) that is permitted
by this Agreement or to which Requisite Lenders have otherwise consented, for
which a Loan Party desires to obtain a security interest release or a release
of the Subsidiary Guaranty from Administrative Agent, such Loan Party shall
deliver an Officer’s Certificate (i) stating that the Collateral or the Capital
Stock subject to such disposition is being sold or otherwise disposed of in
compliance with the terms hereof and (ii) specifying the Collateral or Capital
Stock being sold or otherwise disposed of in the proposed transaction.  Upon the receipt of such Officer’s
Certificate, Administrative Agent shall, at such Loan Party’s expense, so long
as Administrative Agent (a) has no reason to believe that the facts stated in
such Officer’s Certificate are not true and correct and (b), if the sale or
other disposition of such item of Collateral or Capital Stock constitutes an
Asset Sale, shall have received evidence satisfactory to it that arrangements
satisfactory to it have been made for delivery of the Net Asset Sale Proceeds
if and as required by subsection 2.4, execute and deliver such releases of its
security interest in such Collateral or such Subsidiary Guaranty, as may be
reasonably requested by such Loan Party.

10.15                 Applicable Law.

THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN ANY SUCH LOAN DOCUMENT),
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION
5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

10.16                 Construction of Agreement;
Nature of Relationship.

Each of the parties
hereto acknowledges that (i) it has been represented by counsel in the
negotiation and documentation of the terms of this Agreement, (ii) it has had
full and fair opportunity to review and revise the terms of this Agreement,
(iii) this Agreement has been drafted jointly by all of the parties hereto, and
(iv) neither Administrative Agent nor any Lender or Administrative Agent has
any fiduciary relationship with or duty to Company arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
Company, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor.  

 

111

 

Accordingly, each
of the parties hereto acknowledges and agrees that the terms of this Agreement
shall not be construed against or in favor of another party.

10.17                 Consent to Jurisdiction
and Service of Process.

ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY OBLIGATIONS HEREUNDER AND THEREUNDER, 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, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY

(I)            ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

(II)           WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

(III)         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 COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SUBSECTION 10.8;

(IV)         AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY
IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT;

(V)          AGREES THAT LENDERS RETAIN THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND

(VI)         AGREES THAT THE PROVISIONS OF THIS
SUBSECTION 10.17 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

10.18                 Waiver of Jury Trial.

EACH OF
THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE 

 

112

 

LENDER/BORROWER
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 their related future dealings. 
Each party hereto further warrants and 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
SUBSECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN 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.

10.19                 Confidentiality.

Each Lender shall hold
all non-public information of a confidential nature obtained pursuant to the
requirements of this Agreement in accordance with such Lender’s customary
procedures for handling confidential information of this nature, it being
understood and agreed by Company that in any event a Lender may
make disclosures (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (b) to the extent requested by any
Government Authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this subsection 10.19, to
(i) any Eligible Assignee of or participant in, or any prospective
Eligible Assignee of or Participant in, any of its rights or obligations under
this Agreement or (ii) any direct or indirect contractual counterparty or
prospective counterparty (or such contractual counterparty’s or prospective
counterparty’s professional advisor) to any credit derivative transaction
relating to obligations of Company, (g) with the consent of Company,
(h) to the extent such information (i) becomes publicly available
other than as a result of a breach of this subsection 10.19 or
(ii) becomes available to Administrative Agent or any Lender on a
nonconfidential basis from a source other than Company or (i) to the
National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires access to
information about a Lender’s or its Affiliates’ investment portfolio in
connection with ratings issued with respect to such Lender or its Affiliates; provided
that, unless specifically prohibited by applicable law or court order, each
Lender shall notify 

 

113

 

Company of any
request by any Government Authority or representative thereof (other than any
such request in connection with any examination of the financial condition or
other routine examinations or inquiries of such Lender by such Government
Authority) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further that in no
event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.  In addition, Administrative Agent and Lenders
may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to Administrative Agent and Lenders, and
Administrative Agent or any of its Affiliates may place customary “tombstone”
advertisements (which may include any of Company’s or its Subsidiaries’ trade
names or corporate logos) in publications of its choice (including without
limitation “e-tombstones” published or otherwise circulated in electronic form and related hyperlinks to any of
Company’s or its Subsidiaries’ corporate websites) at its own expense.

10.20                 USA Patriot Act.

                                Each
Lender hereby notifies Company that pursuant to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to
obtain, verify and record information that identifies Loan Parties, which
information includes the name and address of each Loan Party and other
information that will allow such Lender to identify such Loan Party in
accordance with the Act.

 

10.21                 Counterparts;
Effectiveness.

This Agreement and any
amendments, waivers, consents or supplements hereto or in connection herewith
may be executed in any number of 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 shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.

10.22      Intercreditor
Agreement.

EACH LENDER HEREUNDER (A)
ACKNOWLEDGES THAT IT HAS RECEIVED A COPY OF THE INTERCREDITOR AGREEMENT, (B)
CONSENTS TO THE SUBORDINATION OF LIENS PROVIDED FOR IN THE INTERCREDITOR
AGREEMENT, (C) AGREES THAT IT WILL BE BOUND BY AND WILL TAKE NO ACTIONS
CONTRARY TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT AND (D) AUTHORIZES
AND INSTRUCTS THE COLLATERAL AGENT TO ENTER INTO THE INTERCREDITOR AGREEMENT AS
COLLATERAL AGENT AND ON BEHALF OF SUCH LENDER. 
THE FOREGOING PROVISIONS ARE INTENDED AS AN INDUCEMENT TO THE LENDERS
UNDER THE FIRST LIEN CREDIT AGREEMENT TO EXTEND CREDIT TO COMPANY AND SUCH 

 

114

 

LENDERS
ARE INTENDED THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS.

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

 

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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.

 

	
  COMPANY:

  	
  MD BEAUTY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie A. Blodgett

  
	
   

  	
   

  	
  Name:

  	
  Leslie A. Blodgett

  
	
   

  	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
  425 Bush Street

  
	
   

  	
   

  	
  San Francisco, CA 94108

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HOLDINGS:

  	
  STB BEAUTY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie A. Blodgett

  
	
   

  	
   

  	
  Name:

  	
  Leslie A. Blodgett

  
	
   

  	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
  c/o Berkshire Partners
  LLC

  
	
   

  	
   

  	
  One Boston Place

  
	
   

  	
   

  	
  Suite 3300

  
	
   

  	
   

  	
  Boston, MA 02108

  
	
   

  	
   

  	
   

  

 

 

	
  LENDERS:

  	
   

  	
   

  
	
   

  	
  BNP Paribas,

  
	
   

  	
  individually and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amy Kirschner

  
	
   

  	
   

  	
  Name:

  	
  Amy Kirschner

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Finkelman

  
	
   

  	
   

  	
  Name:

  	
  M. Finkelman

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
  787 Seventh Avenue, 32nd
  Floor

  
	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
   

  	
  Attention: Amy
  Kirschner

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]