Document:

Exhibit 10(g)-2

 

EXECUTION COPY

 

ETHAN ALLEN INTERIORS INC. HAS CLAIMED CONFIDENTIAL TREATMENT OF
PORTIONS OF THIS DOCUMENT IN ACCORDANCE WITH RULE 24-B UNDER THE SECURITIES
EXCHANGE ACT OF 1934

 

 

 

CREDIT AGREEMENT

 

dated as of

 

May 29, 2009

 

Among

 

ETHAN ALLEN GLOBAL, INC.

as Borrower

 

ETHAN ALLEN INTERIORS INC.

 

The Other Loan Parties Party Hereto

 

The Lenders Party Hereto

 

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

 

JPMORGAN CHASE BANK, N.A.

as Syndication Agent

 

and

 

CAPITAL ONE LEVERAGE FINANCE CORP.

as Documentation Agent

 

 

J.P. MORGAN SECURITIES INC.

as Sole Bookrunner and Sole Lead Arranger

 

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I Definitions

  	
  1

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.02.

  	
  Classification of Loans and Borrowings

  	
  28

  
	
  SECTION 1.03.

  	
  Terms Generally

  	
  28

  
	
  SECTION 1.04.

  	
  Accounting Terms; GAAP

  	
  28

  
	
   

  	
   

  
	
  ARTICLE II The Credits

  	
  29

  
	
   

  	
   

  
	
  SECTION 2.01.

  	
  Commitments

  	
  29

  
	
  SECTION 2.02.

  	
  Loans and Borrowings

  	
  29

  
	
  SECTION 2.03.

  	
  Requests for Revolving Borrowings

  	
  29

  
	
  SECTION 2.04.

  	
  Protective Advances

  	
  30

  
	
  SECTION 2.05.

  	
  Swingline Loans and Overadvances

  	
  31

  
	
  SECTION 2.06.

  	
  Letters of Credit

  	
  32

  
	
  SECTION 2.07.

  	
  Funding of Borrowings

  	
  35

  
	
  SECTION 2.08.

  	
  Interest Elections

  	
  36

  
	
  SECTION 2.09.

  	
  Termination and Reduction of Commitments; Increase in
  Commitments

  	
  37

  
	
  SECTION 2.10.

  	
  Repayment and Amortization of Loans; Evidence of Debt

  	
  38

  
	
  SECTION 2.11.

  	
  Prepayment of Loans

  	
  39

  
	
  SECTION 2.12.

  	
  Fees

  	
  40

  
	
  SECTION 2.13.

  	
  Interest

  	
  41

  
	
  SECTION 2.14.

  	
  Alternate Rate of Interest

  	
  41

  
	
  SECTION 2.15.

  	
  Increased Costs

  	
  42

  
	
  SECTION 2.16.

  	
  Break Funding Payments

  	
  43

  
	
  SECTION 2.17.

  	
  Taxes

  	
  43

  
	
  SECTION 2.18.

  	
  Payments Generally; Allocation of Proceeds; Sharing of
  Set-offs

  	
  44

  
	
  SECTION 2.19.

  	
  Mitigation Obligations; Replacement of Lenders

  	
  47

  
	
  SECTION 2.20.

  	
  Defaulting Lenders

  	
  47

  
	
  SECTION 2.21.

  	
  Returned Payments

  	
  48

  
	
  SECTION 2.22.

  	
  Senior Debt

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Representations and Warranties

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization; Powers

  	
  49

  
	
  SECTION 3.02.

  	
  Authorization; Enforceability

  	
  49

  
	
  SECTION 3.03.

  	
  Governmental Approvals; No Conflicts

  	
  49

  
	
  SECTION 3.04.

  	
  Financial Condition; No Material Adverse Change

  	
  49

  
	
  SECTION 3.05.

  	
  Properties

  	
  50

  
	
  SECTION 3.06.

  	
  Litigation and Environmental Matters

  	
  50

  
	
  SECTION 3.07.

  	
  Compliance with Laws and Agreements

  	
  51

  
	
  SECTION 3.08.

  	
  Investment Company Status

  	
  51

  
	
  SECTION 3.09.

  	
  Taxes

  	
  51

  
	
  SECTION 3.10.

  	
  ERISA

  	
  51

  
	
  SECTION 3.11.

  	
  Disclosure

  	
  51

  
	
  SECTION 3.12.

  	
  Material Agreements

  	
  52

  

 

i

 

	
  SECTION 3.13.

  	
  Solvency

  	
  52

  
	
  SECTION 3.14.

  	
  Insurance

  	
  52

  
	
  SECTION 3.15.

  	
  Capitalization and Subsidiaries

  	
  52

  
	
  SECTION 3.16.

  	
  No Burdensome Restrictions

  	
  52

  
	
  SECTION 3.17.

  	
  Federal Reserve Regulations

  	
  52

  
	
  SECTION 3.18.

  	
  Security Interest in Collateral

  	
  52

  
	
  SECTION 3.19.

  	
  Employment Matters

  	
  53

  
	
  SECTION 3.20.

  	
  Common Enterprise

  	
  53

  
	
  SECTION 3.21.

  	
  Credit Card Processors

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Conditions

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Effective Date

  	
  53

  
	
  SECTION 4.02.

  	
  Each Credit Event

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Affirmative Covenants

  	
  56

  
	
   

  	
   

  
	
  SECTION 5.01.

  	
  Financial Statements; Borrowing Base and Other Information

  	
  56

  
	
  SECTION 5.02.

  	
  Notices of Material Events

  	
  60

  
	
  SECTION 5.03.

  	
  Existence; Conduct of Business

  	
  60

  
	
  SECTION 5.04.

  	
  Payment of Obligations

  	
  60

  
	
  SECTION 5.05.

  	
  Maintenance of Properties

  	
  61

  
	
  SECTION 5.06.

  	
  Books and Records; Inspection Rights

  	
  61

  
	
  SECTION 5.07.

  	
  Compliance with Laws

  	
  61

  
	
  SECTION 5.08.

  	
  Use of Proceeds

  	
  61

  
	
  SECTION 5.09.

  	
  Insurance

  	
  61

  
	
  SECTION 5.10.

  	
  Casualty and Condemnation

  	
  61

  
	
  SECTION 5.11.

  	
  Appraisals

  	
  61

  
	
  SECTION 5.12.

  	
  Field Examinations

  	
  62

  
	
  SECTION 5.13.

  	
  [Intentionally Omitted]

  	
  62

  
	
  SECTION 5.14.

  	
  Credit Card Processors

  	
  62

  
	
  SECTION 5.15.

  	
  Additional Collateral; Further Assurances

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Negative Covenants

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Indebtedness

  	
  64

  
	
  SECTION 6.02.

  	
  Liens

  	
  66

  
	
  SECTION 6.03.

  	
  Fundamental Changes

  	
  67

  
	
  SECTION 6.04.

  	
  Investments, Loans, Advances, Guarantees and Acquisitions

  	
  68

  
	
  SECTION 6.05.

  	
  Asset Sales

  	
  69

  
	
  SECTION 6.06.

  	
  Sale and Leaseback Transactions

  	
  70

  
	
  SECTION 6.07.

  	
  Swap Agreements

  	
  70

  
	
  SECTION 6.08.

  	
  Restricted Payments; Certain Payments of Indebtedness

  	
  70

  
	
  SECTION 6.09.

  	
  Transactions with Affiliates

  	
  71

  
	
  SECTION 6.10.

  	
  Restrictive Agreements

  	
  71

  
	
  SECTION 6.11.

  	
  Amendment of Material Documents

  	
  72

  
	
  SECTION 6.12.

  	
  Financial Covenants

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII Events of Default

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII The Administrative Agent

  	
  75

  

 

ii

 

	
  ARTICLE IX Miscellaneous

  	
  79

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Notices

  	
  79

  
	
  SECTION 9.02.

  	
  Waivers; Amendments

  	
  80

  
	
  SECTION 9.03.

  	
  Expenses; Indemnity; Damage Waiver

  	
  82

  
	
  SECTION 9.04.

  	
  Successors and Assigns

  	
  83

  
	
  SECTION 9.05.

  	
  Survival

  	
  86

  
	
  SECTION 9.06.

  	
  Counterparts; Integration; Effectiveness

  	
  86

  
	
  SECTION 9.07.

  	
  Severability

  	
  87

  
	
  SECTION 9.08.

  	
  Right of Setoff

  	
  87

  
	
  SECTION 9.09.

  	
  Governing Law; Jurisdiction; Consent to Service of Process

  	
  87

  
	
  SECTION 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  87

  
	
  SECTION 9.11.

  	
  Headings

  	
  88

  
	
  SECTION 9.12.

  	
  Confidentiality

  	
  88

  
	
  SECTION 9.13.

  	
  Several Obligations; Nonreliance; Violation of Law

  	
  89

  
	
  SECTION 9.14.

  	
  USA PATRIOT Act

  	
  89

  
	
  SECTION 9.15.

  	
  Disclosure

  	
  89

  
	
  SECTION 9.16.

  	
  Appointment for Perfection

  	
  89

  
	
  SECTION 9.17.

  	
  Interest Rate Limitation

  	
  89

  
	
  SECTION 9.18.

  	
  Conflicts

  	
  90

  
	
   

  	
   

  	
   

  
	
  ARTICLE X Loan Guaranty

  	
  90

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
  Guaranty

  	
  90

  
	
  SECTION 10.02.

  	
  Guaranty of Payment

  	
  90

  
	
  SECTION 10.03.

  	
  No Discharge or Diminishment of Loan Guaranty

  	
  90

  
	
  SECTION 10.04.

  	
  Defenses Waived

  	
  91

  
	
  SECTION 10.05.

  	
  Rights of Subrogation

  	
  91

  
	
  SECTION 10.06.

  	
  Reinstatement; Stay of Acceleration

  	
  91

  
	
  SECTION 10.07.

  	
  Information

  	
  92

  
	
  SECTION 10.08.

  	
  Termination

  	
  92

  
	
  SECTION 10.09.

  	
  Taxes

  	
  92

  
	
  SECTION 10.10.

  	
  Maximum Liability

  	
  92

  
	
  SECTION 10.11.

  	
  Contribution

  	
  92

  
	
  SECTION 10.12.

  	
  Liability Cumulative

  	
  93

  

 

SCHEDULES:

 

Schedule
2.01 — Commitments

Schedule
2.06 — Existing Letters of Credit

Schedule
3.06 — Disclosed Matters

Schedule
3.14 — Insurance

Schedule
3.15 — Capitalization and Subsidiaries 

Schedule
3.21 — Credit Card Processors

Schedule
6.01 — Existing Indebtedness

Schedule
6.02 — Existing Liens

Schedule
6.04 — Existing Investments

Schedule
6.10 — Existing Restrictions

 

iii

 

EXHIBITS:

 

Exhibit A
— Form of Assignment and Assumption

Exhibit B
— Forms of Opinions of Loan Parties’ Counsels

Exhibit C
— Form of Borrowing Base Certificate

Exhibit D
— Form of Compliance Certificate

Exhibit E
— Joinder Agreement

Exhibit F
— List of Closing Documents

 

iv

 

CREDIT AGREEMENT dated as of
May 29, 2009 (as it may be amended or modified from time to time, this “Agreement”),
among ETHAN ALLEN GLOBAL, INC., ETHAN ALLEN INTERIORS INC., the other Loan
Parties party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent, JPMORGAN CHASE BANK, N.A., as Syndication Agent and
CAPITAL ONE LEVERAGE FINANCE CORP., as Documentation Agent.

 

The parties hereto agree as
follows:

 

ARTICLE I

 

Definitions

 

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

 

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

 

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

 

“Account Debtor” means any Person obligated
on an Account.

 

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

 

“Administrative Agent” means JPMorgan Chase Bank,
N.A., in its capacity as administrative agent for the Lenders hereunder.

 

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

 

“Affected Foreign Subsidiary” means any
Foreign Subsidiary to the extent greater than 65% of the Equity Interests of
such Foreign Subsidiary being pledged to support the Secured Obligations would
cause a Deemed Dividend Problem.

 

“Affiliate” means, with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.

 

“Aggregate Commitment” the aggregate of the Commitments of all of the
Lenders, as reduced from time to time pursuant to the terms and conditions
hereof.

 

“Aggregate Credit Exposure” means, at any
time, the aggregate Credit Exposure of all the Lenders.

 

“Alternate Base Rate” means, for any day, a rate
per annum equal to the greatest of (a) the Prime Rate in effect on such
day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the
Adjusted LIBO Rate for a one month Interest Period on such day (or if such day
is not a Business Day, the immediately preceding Business Day) plus 1%; provided
that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be
based on the rate appearing on the Reuters Screen 

 

 

LIBOR01 Page (or on any successor or
substitute page of such page) at approximately 11:00 a.m. London time
on such day (without any rounding).  Any
change in the Alternate Base Rate due to a change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from
and including the effective date of such change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate, respectively.

 

“Applicable Percentage” means, with respect to any
Lender, (a) with respect to Revolving Loans, LC Exposure, Swingline Loans
or Overadvances, a percentage equal to a fraction the numerator of which is
such Lender’s Commitment and the denominator of which is the aggregate
Commitment of all Lenders (if the Commitments have terminated or expired, the
Applicable Percentages shall be determined based upon such Lender’s share of
the aggregate Revolving Exposures at that time); provided that in the
case of Section 2.20 when a Defaulting Lender shall exist, any such
Defaulting Lender’s Commitment shall be disregarded in the calculation and (b) with
respect to Protective Advances or with respect to the Aggregate Credit
Exposure, a percentage based upon its share of the Aggregate Credit Exposure
and the unused Commitments; provided that in the case of Section 2.20
when a Defaulting Lender shall exist, any such Defaulting Lender’s Commitment
shall be disregarded in the calculation.

 

“Applicable Pledge Percentage” means 100% but
65% in the case of a pledge by Holdings, the Borrower or any Domestic
Subsidiary of its Equity Interests in a Foreign Subsidiary that is an Affected
Foreign Subsidiary due to a Deemed Dividend Problem.

 

“Applicable Rate” means, for any day, with
respect to any ABR Loan or Eurodollar Revolving Loan, or with respect to the
commitment fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption “ABR Spread”, “Eurodollar
Spread” or “Commitment Fee Rate”, as the case may be, based upon the
Average Quarterly Availability during the most recently ended fiscal quarter of
Holdings:

 

	
   

  	
   

  	
  Average Quarterly

  Availability

  	
   

  	
  Commitment Fee

  Rate

  	
   

  	
  Eurodollar Spread

  	
   

  	
  ABR Spread

  	
   

  
	
  Category
  1

  	
   

  	
  Greater than

  $40,000,000

  	
   

  	
  0.50

  	
  %

  	
  3.25

  	
  %

  	
  2.25

  	
  %

  
	
  Category
  2

  	
   

  	
  Less than or equal to

  $40,000,000 but

  greater than

  $20,000,000

  	
   

  	
  0.50

  	
  %

  	
  3.75

  	
  %

  	
  2.75

  	
  %

  
	
  Category
  3

  	
   

  	
  Less than or equal to

  $20,000,000

  	
   

  	
  0.50

  	
  %

  	
  4.25

  	
  %

  	
  3.25

  	
  %

  

 

For purposes of the
foregoing, (a) the Applicable Rate shall be determined as of the end of
each fiscal quarter of Holdings based upon the Borrowing Base Certificates and
related information that are delivered from time to time pursuant to Section 5.01
and (b) each change in the Applicable Rate resulting from a change in
Average Quarterly Availability shall be effective during the period commencing
on and including the date of delivery to the Administrative Agent as of the end
of the most recent fiscal quarter and ending on the date immediately preceding
the effective date of the next such change, provided that the Average
Quarterly Availability shall be deemed to be (i) in Category 2 during the
period from the Effective Date to the date of delivery to the Administrative
Agent of the Borrowing Base Certificate for the fiscal quarter ending on or
about September 30, 2009 and (ii) in Category 3 (A) at 

 

2

 

any time that an Event of Default has
occurred and is continuing or (B) at the option of the Administrative
Agent or at the request of the Required Lenders if Holdings or the Borrower
fail to deliver any Borrowing Base Certificate or related information that is
required to be delivered by them pursuant to Section 5.01, during the
period from the expiration of the time for delivery thereof until each such
Borrowing Base Certificate and related information pursuant to Section 5.01
is so delivered; provided further that if any Borrowing Base Certificate
is at any time restated or otherwise revised or if the information set forth in
any Borrowing Base Certificate otherwise proves to be false or incorrect such
that the Applicable Rate would have been higher than was otherwise in effect
during any period, without constituting a waiver of any Default or Event of
Default arising as a result thereof, the Applicable Rate shall be immediately
recalculated at such higher rate for any applicable periods and shall be due
and payable on demand.

 

“Approved Fund” has the meaning assigned to
such term in Section 9.04.

 

“Assignment and Assumption” means an
assignment and assumption agreement entered into by a Lender and an assignee
(with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A
or any other form approved by the Administrative Agent.

 

“Availability” means, at any time, an amount
equal to (a) the lesser of (i) the Aggregate Commitment and (ii) the
Borrowing Base minus (b) the Revolving Exposure of all Lenders.

 

“Availability Period” means the period from and
including the Effective Date to but excluding the earlier of the Maturity Date
and the date of termination of the Commitments.

 

“Availability Trigger” shall be in effect at any time that the average
Availability for the most recently ended calendar month is less than an amount
equal to the greater of (i) 20% of the Aggregate Commitment at such time
and (ii) $10,000,000.

 

“Available Commitment” means, at any time, the
Aggregate Commitment then in effect minus the Revolving
Exposure of all Lenders at such time; it being understood and agreed that any
Lender’s Swingline Exposure shall not be deemed to be a component of the
Revolving Exposure for purposes of calculating the commitment fee under Section 2.12(a).

 

“Average Quarterly
Availability” means, for any fiscal quarter, an amount equal to the average
daily Availability during such quarter.

 

“Banking Services” means each and any of the
following bank services provided to any Loan Party by any Lender or any of its
Affiliates: (a) credit cards for commercial customers (including, without
limitation, “commercial credit cards” and purchasing cards), (b) stored
value cards and (c) treasury management services (including, without
limitation, controlled disbursement, automated clearinghouse transactions,
return items, overdrafts and interstate depository network services).

 

“Banking Services Obligations” of the Loan
Parties means any and all obligations of the Loan Parties, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor) in connection with Banking Services.

 

“Banking Services Reserves” means all
Reserves which the Administrative Agent from time to time establishes in its
Permitted Discretion for Banking Services then provided or outstanding.

 

3

 

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

 

“Borrower” means Ethan Allen Global, Inc., a
Delaware corporation.

 

“Borrowing” means (a) Revolving Loans of the same
Type, made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect, (b) a
Swingline Loan, (c) a Protective Advance and (d) an Overadvance.

 

“Borrowing Base” means, at any time, the sum
of (a) up to 90% of the Eligible Credit Card Receivables, plus (b) up
to 85% of the Eligible Accounts at such time, plus (b) the lesser
of (i) up to 70% of the Eligible Inventory, valued at the lower of cost or
market value, determined on a first-in-first-out basis, at such time and (ii) the
product of up to 85% multiplied  by the Net Orderly Liquidation
Value percentage identified in the most recent inventory appraisal ordered by
the Administrative Agent multiplied  by the Eligible Inventory,
valued at the lower of cost or market value, determined on a first-in-first-out
basis, at such time, minus (c) Reserves.  The Administrative Agent may, in its
Permitted Discretion, reduce the advance rates set forth above, adjust Reserves
or reduce one or more of the other elements used in computing the Borrowing
Base.

 

“Borrowing Base Certificate” means a
certificate, signed and certified as accurate and complete by a Financial
Officer of the Borrower, in substantially the form of Exhibit C or
another form which is acceptable to the Administrative Agent in its Permitted
Discretion.

 

“Borrowing Request” means a request by the
Borrower for a Revolving Borrowing in accordance with Section 2.03.

 

“Burdensome Restrictions” means any consensual encumbrance or restriction of
the type described in clause (a) or (b) of Section 6.10.

 

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

 

“Capital Expenditures” means, without duplication,
any expenditure or commitment to expend money for any purchase or other
acquisition of any asset which would be classified as a fixed or capital asset
on a consolidated balance sheet of Holdings and its Subsidiaries prepared in
accordance with GAAP.

 

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

 

“Change in Control” means (a) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission thereunder as in
effect on the date hereof), of Equity Interests representing more than 50% of
the aggregate ordinary voting power represented by the issued and outstanding
Equity Interests of Holdings; (b) occupation of a majority of the seats
(other than vacant seats) on the board of directors of Holdings by Persons who
were neither (i) nominated by the 

 

4

 

board of directors of the Borrower nor (ii) appointed
by directors so nominated; or (c) the acquisition of direct or indirect
Control of Holdings by any Person or group; (d) the occurrence of a change
in control, or other similar provision, as defined in any agreement or
instrument evidencing any Material Indebtedness (triggering a default or
mandatory prepayment, which default or mandatory prepayment has not been waived
in writing); or (e) Holdings shall cease to own, directly or (through
another Loan Party) indirectly, 100% of the capital stock of the Borrower.

 

“Change in Law” means (a) the adoption
of any law, rule or regulation after the date of this Agreement, (b) any
change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender or the Issuing Bank (or, for
purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

 

“Chase” means JPMorgan Chase Bank, N.A., a national
banking association, in its individual capacity, and its successors.

 

“Class”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are Revolving Loans, Swingline Loans, Protective Advances or Overadvances.

 

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

 

“Collateral” means any and all property owned, leased or
operated by any Loan Party, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or Lien in favor of the
Administrative Agent, on behalf of itself and the Secured Parties, to secure
the Secured Obligations; provided that “Collateral” shall not
include any Excluded Assets.

 

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

 

“Collateral Documents” means, collectively, the
Security Agreement and any other documents granting a Lien upon property as
security for payment of the Secured Obligations.

 

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

 

“Commercial LC Exposure” means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Commercial Letters of Credit at
such time plus (b) the aggregate amount of all LC Disbursements relating
to Commercial Letters of Credit that have not yet been reimbursed by or on
behalf of the Borrower at such time.  The
Commercial LC Exposure of any Lender at any time shall be its Applicable Percentage
of the total Commercial LC Exposure at such time.

 

“Commercial Letters of Credit” means all Letters of Credit
other than standby Letters of Credit.

 

“Commitment” means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit, Protective Advances, Overadvances and
Swingline Loans hereunder, expressed as an amount representing the maximum
possible aggregate amount of such Lender’s Revolving Exposure hereunder, as
such commitment may be reduced or increased from time to time pursuant to (a) Section 2.09
and (b) assignments by or to such 

 

5

 

Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption or other documentation contemplated hereby pursuant to which such
Lender shall have assumed its Commitment, as applicable.

 

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

 

“Controlled Disbursement Account” means any
accounts of any Loan Party maintained with the Administrative Agent as a zero
balance, cash management account pursuant to and under any agreement between
the such Loan Party and the Administrative Agent, as modified and amended from
time to time, and through which all disbursements of such Loan Party, any Loan
Party and any designated Subsidiary of Holdings are made and settled on a daily
basis with no uninvested balance remaining overnight.

 

“Credit Card Account Receivables” means any receivables due to
any Loan Party on a non-recourse basis (it being understood, for the avoidance
of doubt, that normal return policies of any Loan Party shall not be deemed to
be with recourse) in connection with purchases from and other goods and
services provided by such Loan Party from: Visa, MasterCard, American Express
and such other Credit Card Processor acceptable to the Administrative Agent in
its Permitted Discretion, in each case which have been earned by performance by
such Loan Party but not yet paid to such Loan Party by the Credit Card
Processor; provided, that Credit Card Account
Receivables shall be calculated net of fees and chargebacks owed to credit card
processors and deposits, holdbacks or escrows held by credit card processors.

 

“Credit Card Processor” means a Person that provides credit card processing
services for any merchant.

 

“Credit Exposure” means, as to any Lender at
any time, the sum of (a) such Lender’s Revolving Exposure at such time, plus
(b) an amount equal to its Applicable Percentage, if any, of the aggregate
principal amount of Protective Advances outstanding at such time.

 

“Deemed Dividend Problem” means, with respect to any
Foreign Subsidiary, such Foreign Subsidiary’s accumulated and undistributed
earnings and profits being deemed to be repatriated to Holdings, the Borrower
or the applicable parent Domestic Subsidiary under Section 956 of the Code
and the effect of such repatriation causing materially adverse tax consequences
to Holdings, the Borrower or such parent Domestic Subsidiary, in each case as
determined by Holdings and the Borrower in their commercially reasonable
judgment acting in good faith and in consultation with their legal and tax
advisors.

 

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

 

“Defaulting Lender” means any Lender, as
determined by the Administrative Agent, that has (a) failed to fund any
portion of its Loans or participations in Letters of Credit or Swingline Loans
within three (3) Business Days of the date required to be funded by it
hereunder, (b) notified the Borrower, the Administrative Agent, the
Issuing Bank, the Swingline Lender or any Lender in writing that it does not
intend to comply with any of its funding obligations under this Agreement or
has made a public statement to the effect that it does not intend to comply
with its funding obligations under this Agreement or under other agreements in
which it commits to extend credit, (c) failed, within three (3) Business
Days after request by the Administrative Agent, to confirm that it will comply
with the terms of 

 

6

 

this Agreement relating to its obligations to
fund prospective Loans and participations in then outstanding Letters of Credit
and Swingline Loans, (d) otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid
by it hereunder within three (3) Business Days of the date when due,
unless the subject of a good faith dispute, or (e) (i) become or is
insolvent or has a parent company that has become or is insolvent or (ii) become
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with reorganization or liquidation of its business or
custodian appointed for it, or has taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in any such proceeding
or appointment or has a parent company that has become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment.

 

“Disclosed Matters” means the actions, suits
and proceedings and the environmental matters disclosed in Schedule 3.06.

 

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

 

“Documentation Agent” means Capital One Leverage
Finance Corp. in its capacity as documentation agent for the credit facility
evidenced by this Agreement.

 

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

 

“Domestic Subsidiary” means a Subsidiary
organized under the laws of a jurisdiction located in the United States of
America.

 

“EBITDA” means, for any period, Net Income for such
period, before giving effect to any extraordinary gains or losses or any gains
or losses resulting from sales of assets (other than sales of inventory in the
ordinary course of business), plus, to the
extent deducted in computing such Net Income, the sum of (a) income tax
expense (whether paid or deferred), (b) Interest Expense, (c) depreciation
and amortization and (d) any non-cash charges resulting from any
restructuring or consolidation of operations or any grant, exercise or
cancellation of stock options or warrants.

 

“Effective Date” means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in
accordance with Section 9.02).

 

“Eligible Accounts” means, at any time, the
Accounts of any Loan Party which the Administrative Agent determines in its
Permitted Discretion are eligible as the basis for the extension of Revolving
Loans, Swingline Loans and the issuance of Letters of Credit hereunder.  Without limiting the Administrative Agent’s
discretion provided herein, Eligible Accounts shall not include any Account:

 

(a)           which is not subject to a first
priority perfected security interest in favor of the Administrative Agent;

 

(b)           which is subject to any Lien other
than (i) a Lien in favor of the Administrative Agent and (ii) a
Permitted Encumbrance which does not have priority over the Lien in favor of
the Administrative Agent;

 

7

 

(c)           which (i) is unpaid more than 90
days after the date of the original invoice therefor or more than 60 days after
the original due date, or (ii) has been written off the books of such Loan
Party or otherwise designated as uncollectible;

 

(d)           which is owing by an Account Debtor
for which more than 50% of the Accounts owing from such Account Debtor and its
Affiliates are ineligible hereunder;

 

(e)           which is owing by an Account Debtor
to the extent the aggregate amount of Accounts owing from such Account Debtor
and its Affiliates to such Loan Party exceeds 10% of the aggregate amount of
Eligible Accounts;

 

(f)            with respect to which any covenant,
representation, or warranty contained in this Agreement or in the Security
Agreement has been breached or is not true in any material respect;

 

(g)           which (i) does not arise from
the sale of goods or performance of services in the ordinary course of
business, (ii) is not evidenced by an invoice or other documentation the
form of which is satisfactory to the Administrative Agent in its Permitted
Discretion and which has been sent to the Account Debtor, (iii) represents
a progress billing, (iv) is contingent upon such Loan Party’s completion
of any further performance, (v) represents a sale on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery
or any other repurchase or return basis (other than, for the avoidance of
doubt, normal wholesale customer return policies in respect of warranty claims)
or (vi) relates to payments of interest;

 

(h)           for which the goods giving rise to
such Account have not been shipped to the Account Debtor or for which the
services giving rise to such Account have not been performed by such Loan Party
or if such Account was invoiced more than once;

 

(i)            with respect to which any check or
other instrument of payment has been returned uncollected for any reason;

 

(j)            which is owed by an Account Debtor
which has (i) applied for, suffered, or consented to the appointment of
any receiver, custodian, trustee, or liquidator of its assets, (ii) has
had possession of all or a material part of its property taken by any receiver,
custodian, trustee or liquidator, (iii) filed, or had filed against it,
any request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or
involuntary case under any state or federal bankruptcy laws, (iv) has
admitted in writing its inability, or is generally unable to, pay its debts as
they become due, (v) become insolvent, or (vi) ceased operation of
its business;

 

(k)           which is owed by any Account Debtor
which has sold all or a substantially all of its assets unless the Account has
been assumed by a party of at least equal creditworthiness in the
Administrative Agent’s Permitted Discretion;

 

(l)            which is owed by an Account Debtor
which (i) does not maintain its chief executive office in the U.S. or
Canada or (ii) is not organized under applicable law of the U.S., any
state of the U.S., Canada, or any province of Canada unless, in either case,
such Account is backed by (A) a letter of credit acceptable to the
Administrative Agent which is in the possession of, has been assigned to and is
directly drawable by the Administrative Agent or (B) security equivalent
to such a letter of credit and reasonably acceptable to the Administrative
Agent;

 

(m)          which is owed in any currency other
than U.S. dollars;

 

8

 

(n)           which is owed by (i) the
government (or any department, agency, public corporation, or instrumentality
thereof) of any country other than the U.S. unless such Account is backed by a
Letter of Credit acceptable to the Administrative Agent in its Permitted
Discretion and which is in the possession of the Administrative Agent, or (ii) the
government of the U.S., or any department, agency, public corporation, or
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other
steps necessary to perfect the Lien of the Administrative Agent in such Account
have been complied with to the Administrative Agent’s satisfaction;

 

(o)           which is owed by any Affiliate,
employee, officer, director, agent or stockholder of any Loan Party (to the
extent such stockholder owns or controls 5% or more of the Equity Interests in
a Loan Party);

 

(p)           which, for any Account Debtor,
exceeds a credit limit determined by the Administrative Agent, to the extent of
such excess;

 

(q)           which is owed by an Account Debtor or
any Affiliate of such Account Debtor to which any Loan Party is indebted, but
only to the extent of such indebtedness or is subject to any security, deposit,
progress payment, retainage or other similar advance made by or for the benefit
of an Account Debtor, in each case to the extent thereof;

 

(r)            which is subject to any counterclaim
(to the extent asserted), deduction, defense, setoff or dispute, but only to
the extent of such counterclaim, deduction, defense, setoff or dispute;

 

(s)           which is evidenced by any promissory
note, chattel paper, or instrument;

 

(t)            which is owed by an Account Debtor
located in any jurisdiction which requires filing of a “Notice of Business Activities
Report” or other similar report in order to permit the applicable
Loan Party to seek judicial enforcement in such jurisdiction of payment of such
Account, unless such Loan Party has filed such report or qualified to do
business in such jurisdiction;

 

(u)           with respect to which such Loan Party
has made any agreement with the Account Debtor for any reduction thereof, other
than discounts and adjustments given in the ordinary course of business, or any
Account which was partially paid and such Loan Party created a new receivable
for the unpaid portion of such Account;

 

(v)           which does not comply in all material
respects with the requirements of all applicable laws and regulations, whether
Federal, state or local, including without limitation the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board;

 

(w)          which is for goods that have been sold
under a purchase order or pursuant to the terms of a contract or other
agreement or understanding (written or oral) that indicates or purports that
any Person other than such Loan Party has or has had an ownership interest in
such goods, or which indicates any party other than such Loan Party as payee or
remittance party;

 

(x)            which was created on cash on
delivery terms;

 

9

 

(y)           which is subject to any limitation on
assignments or other security interests (whether arising by operation of law,
by agreement or otherwise), unless the Administrative Agent has determined that
such limitation is not enforceable;

 

(z)            which is governed by the laws of any
jurisdiction other than the United States, any State thereof or the District of
Columbia;

 

(aa)         in respect of which the Account Debtor
is a consumer within applicable consumer protection litigation; or

 

(bb)         which the Administrative Agent
determines in its Permitted Discretion may not be paid by reason of the Account
Debtor’s inability to pay or which the Administrative Agent otherwise
determines in its Permitted Discretion is unacceptable.

 

In the event that an Account
which was previously an Eligible Account (in an amount of at least $5,000,000)
ceases to be an Eligible Account hereunder by virtue of the foregoing clauses
(j), (k) or (l), the Borrower shall notify the Administrative Agent
thereof on and at the time of submission to the Administrative Agent of the
next Borrowing Base Certificate.  In
determining the amount of an Eligible Account, the face amount of an Account
may, in the Administrative Agent’s Permitted Discretion, be reduced by, without
duplication, to the extent not reflected in such face amount, (i) the
amount of all accrued and actual discounts, claims, credits or credits pending,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that the applicable Loan Party may be
obligated to rebate to an Account Debtor pursuant to the terms of any agreement
or understanding (written or oral)) and (ii) the aggregate amount of all
cash received in respect of such Account but not yet applied by the applicable
Loan Party to reduce the amount of such Account.  For the avoidance of doubt, no Credit Card Account
Receivable shall constitute an Eligible Account under this Agreement.

 

“Eligible Credit Card Account Receivables” means any Credit Card
Account Receivable that (i) has been earned and represents the bona fide
amounts due to a Loan Party from a Credit Card Processor, and in each case
originated in the ordinary course of business of the applicable Loan Party and (ii) is
not excluded as an Eligible Credit Card Receivable pursuant to any of clauses (a) through
(l) below.  Without limiting the
foregoing, to qualify as an Eligible Credit Card Account Receivable, a Credit
Card Account Receivable shall indicate no person other than a Loan Party as
payee or remittance party. Eligible Credit Card Account Receivable shall not
include any Credit Card Account Receivable if:

 

(a)           such Credit Card Account Receivable is not owned by a Loan
Party and such Loan Party does not have good or marketable title to such Credit
Card Account Receivable;

 

(b)           such Credit Card Account Receivable does not constitute an
“Account” (as defined in the UCC) or such Credit Card Account Receivable has
been outstanding more than five (5) Business Days;

 

(c)           the Credit Card Processor of the applicable credit card
with respect to such Credit Card Account Receivable is the subject of any bankruptcy
or insolvency proceedings;

 

(d)           such Credit Card Account Receivable is not a valid,
legally enforceable obligation of the applicable credit card issuer with
respect thereto;

 

(e)           such Credit Card Account Receivable is not subject to a
properly perfected security interest in favor of the Administrative Agent, or
is subject to any Lien whatsoever other than Permitted Encumbrances
contemplated by the processor agreements and for which 

 

10

 

appropriate reserves (as determined by the Administrative
Agent in its Permitted Discretion) have been established or maintained by the
Loan Parties;

 

(f)            such Credit Card Account Receivable does not conform in
all material respects to all representations, warranties or other provisions in
the Loan Documents or in the credit card agreements relating to such Credit
Card Account Receivable;

 

(g)           such Credit Card Account Receivable is subject to risk of
set-off, non-collection or not being processed due to unpaid or overdue Credit
Card Processor fee balances;

 

(h)           such Credit Card Account Receivable is evidenced by “chattel
paper” or an “instrument” of any kind unless such “chattel paper” or “instrument”
is in the possession of the Administrative Agent, and to the extent necessary
or appropriate, endorsed to the Administrative Agent;

 

(i)            such Credit Card Account Receivable has been disputed, or
with respect to which a claim, counterclaim, offset or chargeback has been
asserted, by the related Credit Card Processor;

 

(j)            such Credit Card Account Receivable is due from a Credit
Card Processor which the Administrative Agent determines in its Permitted
Discretion to be unlikely to be collected;

 

(k)           other than for the ninety (90) days immediately following
the Effective Date, such Credit Card Account Receivable is due from a Credit
Card Processor with respect to which a Processor Control Agreement has not been
obtained; or

 

(l)            such Credit Card Account Receivable does not meet such
other usual and customary eligibility criteria for Credit Card Account
Receivables as the Administrative Agent may determine from time to time in its
Permitted Discretion.

 

In determining the amount to be so
included in the calculation of the value of an Eligible Credit Card Receivable,
the face amount thereof shall be reduced by, without duplication, to the extent
not reflected in such face amount, (i) the amount of all customary fees
and expenses in connection with any credit card arrangements and (ii) the
aggregate amount of all cash received in respect thereof but not yet applied by
the applicable Loan Party to reduce the amount of such Eligible Credit Card
Account Receivable.

 

“Eligible Inventory” means, at any time, the
Inventory of a Loan Party which the Administrative Agent determines in its
Permitted Discretion is eligible as the basis for the extension of Revolving
Loans, Swingline Loans and the issuance of Letters of Credit hereunder.  Without limiting the Administrative Agent’s
discretion permitted herein, Eligible Inventory shall not include any Inventory:

 

(a)           which is not subject to a first
priority perfected Lien in favor of the Administrative Agent;

 

(b)           which is subject to any Lien other
than (i) a Lien in favor of the Administrative Agent and (ii) a
Permitted Encumbrance which does not have priority over the Lien in favor of
the Administrative Agent;

 

(c)           which is, in the determination of the
Borrower in its ordinary course of business with the approval of the
Administrative Agent in its Permitted Discretion, unmerchantable, 

 

11

 

defective, used, unfit for sale, not salable at prices
approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category and/or quantity;

 

(d)           with respect to which any covenant,
representation, or warranty contained in this Agreement or the Security
Agreement has been breached or is not true in any material respect and which
does not conform in all material respects to all standards imposed by any
Governmental Authority;

 

(e)           in which any Person other than a Loan
Party shall (i) have any direct or indirect ownership, interest or title
to such Inventory or (ii) be indicated on any purchase order or invoice
with respect to such Inventory as having or purporting to have an interest
therein;

 

(f)            which constitutes work-in-process,
spare or replacement parts, subassemblies, packaging and shipping material,
manufacturing supplies, samples, prototypes, displays or display items (except
to the extent saleable as finished goods in the ordinary course of business),
bill-and-hold goods, goods that are returned or marked for return, repossessed
goods, defective or damaged goods, goods held on consignment, or goods which
are not of a type held for sale in the ordinary course of business;

 

(g)           which is not located in the U.S. or
is in transit with a common carrier from vendors and suppliers located outside
of the U.S.; provided that Inventory in transit from vendors and
suppliers having a value (based on invoiced amounts) not exceeding $7,000,000
in the aggregate at any time shall not be excluded from “Eligible Inventory”
pursuant to this clause (g) so long as (i) such Inventory has
been paid for in full by the applicable Loan Party, (ii) the
Administrative Agent shall have received evidence that such Inventory is
covered by casualty insurance and the Administrative Agent shall have been
named as loss payee with respect to such casualty insurance, and (iii) other
than for the sixty (60) days following the Effective Date, the
Administrative Agent shall have received, to the extent requested by the
Administrative Agent in its Permitted Discretion, a duly executed
Collateral Access Agreement from the applicable Loan Party’s customs broker
with respect to such Inventory;

 

(h)           other than for the sixty (60)
days immediately following the Effective Date, which is located
in a warehouse, distribution center, regional distribution center or depot
located in any location leased by the applicable Loan Party unless (i) the
lessor has delivered to the Administrative Agent a Collateral Access Agreement
or (ii) a Reserve for rent, charges, and other amounts due or to become
due with respect to such facility has been established by the Administrative
Agent in its Permitted Discretion;

 

(i)            which is located in a store or other
retail location located in any location leased by the applicable Loan Party in
any Landlord Lien State unless (i) the lessor has delivered to the
Administrative Agent a Collateral Access Agreement, (ii) a Rent Reserve
has been established by the Administrative Agent in its Permitted Discretion or
(iii) the landlord has waived any applicable lien pursuant to
documentation satisfactory to the Administrative Agent in its Permitted
Discretion;

 

(j)            other than for the sixty (60)
days immediately following the Effective Date, which is located
in any third party warehouse or is in the possession of a bailee (other than a
third party processor) and is not evidenced by a Document, unless (i) such
warehouseman or bailee has delivered to the Administrative Agent a Collateral
Access Agreement and such other 

 

12

 

documentation as the
Administrative Agent may require in its Permitted Discretion or (ii) a
Rent Reserve has been established by the Administrative Agent in its Permitted
Discretion;

 

(k)           which is being processed offsite at a
third party location or outside processor, or is in-transit to or from said
third party location or outside processor;

 

(l)            which is a discontinued product or
component thereof;

 

(m)          which is the subject of a consignment
by the applicable Loan Party as consignor;

 

(n)           which contains or bears any
intellectual property rights licensed to the applicable Loan Party unless the
Administrative Agent is satisfied in its Permitted Discretion that it may sell
or otherwise dispose of such Inventory without (i) the consent of each
applicable licensor, (ii) infringing the rights of such licensor, (iii) violating
any contract with such licensor, or (iv) incurring any liability with
respect to payment of royalties other than royalties incurred pursuant to sale
of such Inventory under the current licensing agreement;

 

(o)           which is not reflected in a current
perpetual inventory report of the applicable Loan Party;

 

(p)           for which reclamation rights have
been asserted by the seller; or

 

(q)           which the Administrative Agent
otherwise determines is unacceptable in its Permitted Discretion.

 

“Environmental Laws” means all laws, rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any liability,
contingent or otherwise (including any liability for damages, costs of
environmental investigation or remediation, injunctive or equitable relief,
fines, penalties or indemnities), of Holdings or any Subsidiary directly or
indirectly resulting from or based upon (a) a violation or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the Release, presence or threatened
Release of any Hazardous Materials into the environment or within any facility,
building or fixture or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Equity Interests” means shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests in
a Person, and any warrants, options or other rights entitling the holder
thereof to purchase or acquire any such equity interest.

 

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

 

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

 

13

 

solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”,
as defined in Section 4043 of ERISA or the regulations issued thereunder
with respect to a Plan (other than an event for which the 30 day notice period
is waived); (b) the existence with respect to any Plan of an “accumulated
funding deficiency” (as defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of
the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the incurrence
by the Borrower or any of its ERISA Affiliates of any liability under Title IV
of ERISA with respect to the termination of any Plan; (e) the receipt by
the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or
any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from the Borrower or any ERISA Affiliate of any notice, concerning the
imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Eurodollar”, when used in reference to any Loan or
Borrowing, means that such Loan, or the Loans comprising such Borrowing, bears
interest at a rate determined by reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to
such term in Article VII.

 

“Excluded Assets” means (i) any “Principal
Property” as defined in  the Indenture
dated as of September 27, 2005 by and among  Holdings and certain Subsidiaries and U.S.
Bank National Association as in effect on the Effective Date and without giving
effect to any amendments or modifications thereto after the Effective Date, (ii) any
Real Property owned by Holdings or any Subsidiary and (iii) only to the
extent that the IP Collateral Trigger Date has not occurred, intellectual
property owned by Holdings or any Subsidiary.

 

“Excluded
Subsidiary” means, at any time, any Subsidiary of the Borrower
identified on Schedule 3.15 as an “Excluded Subsidiary” and that has not ceased
to be an “Excluded Subsidiary” as provided below; provided
that such Subsidiary does not own assets or properties that, together with the
assets and properties owned by all other Subsidiaries that are treated as “Excluded
Subsidiaries”, have a book value, in the aggregate, in excess of $10,000,000, (b) did
not, during the period of four consecutive fiscal quarters of the Borrower
ended on the most recent date for which quarterly or annual financial
statements of Holdings are available, have revenues that, together with the
revenues of all other Subsidiaries that are treated as “Excluded Subsidiaries”,
accounted for more than 5% of the consolidated revenues of the Borrower and its
Subsidiaries during such period, and (c) does not have any Indebtedness or
any other material liabilities.  At any
time the Borrower may, and shall if one or more Excluded Subsidiaries fail to
satisfy one or more of the conditions described in clauses (a) through (c) above,
notify the Administrative Agent that one or more Excluded Subsidiaries shall
cease to constitute an “Excluded Subsidiary”, whereupon such Subsidiary or
Subsidiaries shall cease to constitute an “Excluded Subsidiary” for all
purposes hereof.  The Borrower may not
designate any Subsidiary that is not an Excluded Subsidiary as an Excluded
Subsidiary.

 

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, the Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of the 

 

14

 

Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.19(b)), any withholding tax that is imposed
on amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender’s failure to comply with Section 2.17(f),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment),
to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.17(a).

 

“Existing Credit Agreement” means the Credit Agreement,
dated as of July 21, 2005, by and among the Borrower, Holdings, the
lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as
administrative agent thereunder, as amended, restated, supplemented or
otherwise modified prior to the date hereof.

 

“Existing Letters of Credit” is defined in Section 2.06(a).

 

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

 

“Financial Officer” means the chief financial
officer, principal accounting officer, treasurer or controller of the Borrower
or the assistant treasurer or controller for purposes of giving notices.

 

“First Tier Foreign Subsidiary” means each
Foreign Subsidiary with respect to which any one or more of the Loan Parties
directly owns or Controls more than 50% of such Foreign Subsidiary’s issued and
outstanding Equity Interests.

 

“Fixed Charges” means, with reference to
any period, without duplication, cash Interest Expense, plus cash
Rentals, plus prepayments and scheduled principal payments on Indebtedness made
during such period, plus expense for taxes paid in cash, plus
dividends or distributions paid in cash, plus Capital Lease Obligation
payments, plus cash contributions to any Plan, all calculated for
Holdings and its Subsidiaries on a consolidated basis.

 

“Fixed Charge Coverage Ratio” means, for any
period, the ratio of (a) EBITDA minus the unfinanced portion of Capital
Expenditures to (b) Fixed Charges, all calculated for the Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP for such period.

 

“Foreign Lender” means any Lender that is
organized under the laws of a jurisdiction other than that in which the
Borrower is located.  For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

 

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

 

15

 

“Funding Account” has the meaning assigned to
such term in Section 4.01(h).

 

“GAAP” means generally accepted accounting
principles in the United States of America.

 

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

 

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

 

“Guaranteed Obligations” has the meaning assigned to
such term in Section 10.01.

 

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

 

“Holdings” means Ethan Allen Interiors Inc., a Delaware
corporation.

 

“Indebtedness” of any Person means,
without duplication, (a) all obligations of such Person for borrowed money
or with respect to deposits or advances of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
(other than accounts payable incurred in the ordinary course of business), (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all
Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty, (j) all obligations, contingent or otherwise, of such Person
in respect of bankers’ acceptances, (k) obligations under any liquidated
earn-out and (l) any other Off-Balance Sheet Liability.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

 

16

 

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

 

“Information Memorandum” means the Confidential
Information Memorandum dated April 2009 relating to the Borrower and the
Transactions.

 

“Interest Election Request” means a
request by the Borrower to convert or continue a Revolving Borrowing in
accordance with Section 2.08.

 

“Interest Expense” means, with reference to
any period, total interest expense (including, but without duplication, that
attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries
for such period with respect to all outstanding Indebtedness of the Borrower
and its Subsidiaries (including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Swap Agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with GAAP),
calculated on a consolidated basis for the Borrower and its Subsidiaries for
such period in accordance with GAAP.

 

“Interest Payment Date” means (a) with respect
to any ABR Loan (other than a Swingline Loan), the first day of each calendar
quarter and the Maturity Date, and (b) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months’ duration, each day prior to the last day of
such Interest Period that occurs at intervals of three months’ duration after
the first day of such Interest Period and the Maturity Date.

 

“Interest Period” means with respect to any
Eurodollar Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day in the calendar month that is one,
two, three or six (or, with the consent of each Lender, nine or twelve) months
thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the
case of a Eurodollar Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day and (ii) any Interest Period pertaining
to a Eurodollar Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of
a Revolving Borrowing, thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.

 

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

 

“IP Collateral Trigger Date” means the earliest date
after the Effective Date on which Availability is less than $17,500,000 and the
Administrative Agent has notified the Borrower in writing of such date.

 

“Issuing Bank” means Chase, in its
capacity as the issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.06(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any
such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“Joinder Agreement” has the meaning assigned to
such term in Section 5.11.

 

17

 

“Landlord Lien State” means any jurisdiction the laws of which provide
for the liens in favor of the landlords of such jurisdiction to have priority
over the liens of the Administrative Agent on Inventory; provided that if the laws of any such jurisdiction are changed
after the Effective Date so as to provide for the liens in favor of the
Administrative Agent on Inventory to have priority over the liens in favor of
the landlords of such jurisdiction, then such jurisdiction shall no longer be a
“Landlord Lien State” as such term is used herein.

 

“LC Collateral Account” has the meaning assigned to
such term in Section 2.06(j).

 

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

 

“LC Exposure” means, at any time, the sum of Commercial LC
Exposure and Standby LC Exposure.  The LC
Exposure of any Lender at any time shall be its Applicable Percentage of the
total LC Exposure at such time.

 

“Lenders” means the Persons listed on Schedule 2.01
and any other Person that shall have become a party hereto pursuant to an
Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the
term “Lenders” includes the Swingline Lender.

 

“Letter of Credit” means any letter of credit
issued pursuant to this Agreement.

 

“LIBO Rate” means, with respect to any Eurodollar
Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01
Page (or on any successor or substitute page of such service, or any
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two (2) Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period
are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.

 

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

 

“Loan Documents” means this Agreement, any
promissory notes issued pursuant to Section 2.10(f) of this
Agreement, any Letter of Credit applications, the Collateral Documents and all
other agreements, instruments, documents and certificates identified in Section 4.01
executed and delivered to, or in favor of, the Administrative Agent, any
Lenders or any Secured Parties and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit
agreements and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Loan Party, or any employee of any Loan Party,
and delivered to the Administrative Agent, any Lender or any 

 

18

 

Secured Party in connection with this
Agreement or the transactions contemplated thereby.  Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.

 

“Loan Guarantor” means each Loan Party
(other than the Borrower).

 

“Loan Guaranty” means Article X
of this Agreement.

 

“Loan Parties” means Holdings, the
Borrower, the Borrower’s Material Domestic Subsidiaries and any other Person
who becomes a party to this Agreement pursuant to a Joinder Agreement and their
successors and assigns.

 

“Loans” means the loans and advances made by the
Lenders pursuant to this Agreement, including Swingline Loans, Overadvances and
Protective Advances.

 

“Material Adverse Effect” means a material adverse
effect on (a) the business, assets, operations, condition (financial or
otherwise) or prospects of Holdings, or the Borrower, or the Borrower and the
Subsidiaries taken as a whole, (b) the ability of any Loan Party to
perform any of its obligations under the Loan Documents to which it is a party,
(c) the Collateral, or the Administrative Agent’s Liens (on behalf of
itself and the Secured Parties) on the Collateral or the priority of such
Liens, or (d) the rights of or benefits available to the Administrative
Agent, the Issuing Bank, the Lenders or the Secured Parties thereunder.

 

“Material Domestic Subsidiaries” means each
Domestic Subsidiary which, as of the most recent fiscal quarter of Holdings,
for the period of four consecutive fiscal quarters then ended, for which
financial statements have been delivered pursuant to Section 5.01,
contributed greater than ten percent (10%) of Total Assets as of such date; provided
that, if at any time the aggregate amount of the Total Assets of all
Subsidiaries that are not Material Domestic Subsidiaries exceeds ten percent
(10%) of Total Assets as of the end of any such fiscal quarter, Holdings (or,
in the event Holdings has failed to do so within ten (10) days, the
Administrative Agent) shall designate sufficient Subsidiaries as “Material
Domestic Subsidiaries” to eliminate such excess, and such designated
Subsidiaries shall for all purposes of this Agreement constitute Material
Domestic Subsidiaries.

 

“Material Foreign Subsidiaries” means each
Foreign Subsidiary which, as of the most recent fiscal quarter of Holdings, for
the period of four consecutive fiscal quarters then ended, for which financial
statements have been delivered pursuant to Section 5.01, contributed
greater than ten percent (10%) of Total Assets as of such date; provided
that, if at any time the aggregate amount of the Total Assets of all
Subsidiaries that are not Material Foreign Subsidiaries exceeds ten percent
(10%) of Total Assets as of the end of any such fiscal quarter, Holdings (or,
in the event Holdings has failed to do so within ten (10) days, the
Administrative Agent) shall designate sufficient Subsidiaries as “Material
Foreign Subsidiaries” to eliminate such excess, and such designated
Subsidiaries shall for all purposes of this Agreement constitute Material
Foreign Subsidiaries.

 

“Material Indebtedness” means Indebtedness (other
than the Loans and Letters of Credit), or obligations in respect of one or more
Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $10,000,000.  For purposes of determining Material
Indebtedness, the “obligations” of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) 

 

19

 

that the Borrower or such Subsidiary would be
required to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date” means May 29, 2012 or
any earlier date on which the Commitments are reduced to zero or otherwise
terminated pursuant to the terms hereof.

 

“Maximum Liability” has the meaning assigned to
such term in Section 10.10.

 

“Monthly Reporting Trigger” shall be in effect at any
time that (i) an Event of Default is continuing, (ii) any Loans are
outstanding, (iii) LC Exposure is equal to or in excess of $13,500,000 or (iv) average
Availability for the most recently ended calendar month is equal to or less
than $25,000,000.

 

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

 

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

 

“Negative Covenant Permission Trigger” means (a) no Default or
Event of Default has occurred and is continuing prior to making such
acquisition (in the case of a Permitted Acquisition), Restricted Payment (in
the case of Section 6.08(a)) or payment (in the case of Section 6.08(b))
or would arise after giving effect (including pro forma effect) thereto, (b) Availability
equals or exceeds an amount equal to the greater of (i) 25% of the
Aggregate Commitment at such time and (ii) $12,000,000, prior thereto as
well as after giving effect (including pro forma effect) thereto and (c) Holdings
and the Borrower are in compliance, on a pro forma basis after giving effect
thereto (excluding synergies or cost savings in the case of an acquisition),
with the covenant contained in Section 6.12 recomputed as of the last day
of the most recently ended fiscal quarter of Holdings for which financial
statements are available

 

“Net Income” means, for any period, the consolidated net
income (or loss) of Holdings and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with  Holdings 
or any of its Subsidiaries, (b) the income (or deficit) of any
Person (other than a Subsidiary) in which 
Holdings or any of its Subsidiaries has an ownership interest, except to
the extent that any such income is actually received by Holdings or such
Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any contractual obligation (other than under any
Loan Document) or Requirement of Law applicable to such Subsidiary. Any
Requirement of Law that a dividend be declared by the board of directors or
similar governing body of a Subsidiary shall not be deemed a restriction
described in clause (c) above.

 

“Net Orderly Liquidation Value” means, with
respect to Inventory of any Person, the orderly liquidation value thereof as
determined in a manner acceptable to the Administrative Agent in its Permitted
Discretion by an appraiser acceptable to the Administrative Agent, net of all
costs of liquidation thereof.

 

“Net Proceeds” means, with respect to any
event, (a) the cash proceeds received in respect of such event including (i) any
cash received in respect of any non-cash proceeds (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise,
but excluding any interest payments), but only as and when received, (ii) in
the case of a casualty, insurance proceeds and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments, net of
(b) the sum of (i) all 

 

20

 

reasonable fees and out-of-pocket expenses
paid to third parties (other than Affiliates) in connection with such event, (ii) in
the case of a sale, transfer or other disposition of an asset (including
pursuant to a sale and leaseback transaction or a casualty or a condemnation or
similar proceeding), the amount of all payments required to be made as a result
of such event to repay Indebtedness (other than Loans) secured by such asset or
otherwise subject to mandatory prepayment as a result of such event and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) and the amount
of any reserves established to fund contingent liabilities reasonably estimated
to be payable, in each case during the year that such event occurred or the
next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by a Financial Officer).

 

“Non-Consenting Lender” has the meaning assigned to
such term in Section 9.02(d).

 

“Non-Paying Guarantor” has the meaning assigned to
such term in Section 10.11.

 

“Obligated Party” has the meaning assigned to
such term in Section 10.02.

 

“Obligations” means all unpaid principal of and accrued
and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees
and all expenses, reimbursements, indemnities and other obligations and
indebtedness (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), obligations and liabilities
of the Loan Parties to the Lenders or to any of the Lenders, the Administrative
Agent, the Issuing Bank or any indemnified party, individually or collectively,
existing on the Effective Date or arising thereafter, direct or indirect, joint
or several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise, arising or incurred under this Agreement or any of the other Loan
Documents or in respect of any of the Loans made or reimbursement or other
obligations incurred or any of the Letters of Credit or other instruments at
any time evidencing any thereof.

 

“Off-Balance Sheet Liability” of a Person
means (a) any repurchase obligation or liability of such Person with
respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability or obligation under any so-called “synthetic lease”
transaction entered into by such Person, or (c) any indebtedness,
liability or obligation arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the balance sheets of such Person (other than
operating leases).

 

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

 

“Overadvance” has the meaning assigned to such term in Section 2.05(b).

 

“Participant” has the meaning set forth in Section 9.04.

 

“Paying Guarantor” has the meaning assigned to
such term in Section 10.11.

 

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

 

“Permitted Acquisition” means any acquisition
(whether by purchase, lease (other than a customary real estate lease), merger,
consolidation or otherwise) or series of related acquisitions by 

 

21

 

Holdings, the Borrower or any Subsidiary of (i) all
or substantially all the assets of or (ii) all or substantially all the
Equity Interests in, a Person or division or line of business of a Person, if,
at the time of and immediately after giving effect thereto, (a) no Default
has occurred and is continuing or would arise after giving effect (including
pro forma effect) thereto, (b) such Person or division or line of business
is engaged in the same or a similar line of business as Holdings and its
Subsidiaries or business reasonably related thereto, (c) all actions
required to be taken with respect to such acquired or newly formed Subsidiary
under Section 5.15 shall have been taken, (d) the Negative Covenant
Permission Trigger is satisfied and (e) in the case of an acquisition or
merger involving Holdings, the Borrower or a Subsidiary, Holdings, the Borrower
or such Subsidiary is the surviving entity of such merger and/or consolidation.

 

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

 

“Permitted Encumbrances” means:

 

(a)           Liens imposed by law for taxes that
are not yet due or are being contested in compliance with Section 5.04;

 

(b)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than thirty (30) days or are being contested in compliance with Section 5.04;

 

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

 

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

 

(e)           judgment liens in respect of
judgments that do not constitute an Event of Default under clause (k) of Article VII;

 

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

 

(g)           liens arising by virtue of any
statutory, common law or contractual provisions relating to bankers’ liens,
right of set-off or similar rights and remedies;

 

provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.

 

“Permitted Investments” means:

 

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

 

22

 

(b)           investments in commercial paper
maturing within 270 days from the date of acquisition thereof and having, at
such date of acquisition, the highest credit rating obtainable from S&P or
from Moody’s;

 

(c)           investments in certificates of
deposit, banker’s acceptances and time deposits maturing within 180 days from
the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000;

 

(d)           fully collateralized repurchase
agreements with a term of not more than 30 days for securities described in
clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above;

 

(e)           money market funds that (i) comply
with the criteria set forth in Securities and Exchange Commission Rule 2a-7
under the Investment Company Act of 1940, (ii) are rated AAA by S&P
and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000; and

 

(f)            other investments made in accordance
with Holdings’ investment policy as in effect on the Effective Date and without
giving effect to any amendments, modifications or supplements thereto unless
the same are approved by the Administrative Agent in its Permitted Discretion.

 

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

 

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

 

“Pledge Subsidiary” means (i) each Domestic Subsidiary and (ii) each
First Tier Foreign Subsidiary which is a Material Foreign Subsidiary.

 

“Prepayment Event” means:

 

(a)           any sale, transfer or other
disposition (excluding a sale, transfer or disposition of Real Property
pursuant to a transaction permitted by Sections 6.01(n) and 6.06) of any
Collateral, other than dispositions described in Section 6.05(a); or

 

(b)           any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of any Loan Party with a fair value
immediately prior to such event equal to or greater than $5,000,000; or

 

(c)           the issuance by Holdings or the
Borrower of any Equity Interests, or the receipt by Holdings or the Borrower of
any capital contribution, other than any issuance by the Borrower of common
Equity Interests to, or receipt of any such capital contribution from, Holdings
and other than in connection with employee and director compensation, incentive
and benefit plans and other than in connection with acquisitions or in payment
of or exchange for debt; or

 

23

 

(d)           the incurrence by any Loan Party of
any Indebtedness, other than Indebtedness permitted under Section 6.01 or
permitted by the Required Lenders pursuant to Section 9.02.

 

“Prime Rate” means the rate of interest per annum
publicly announced from time to time by Chase as its prime rate at its offices
at 270 Park Avenue in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as
being effective.

 

“Processor Control Agreement” means, with respect to any
Credit Card Processor providing credit card processing services for or on
behalf of any Loan Party, an agreement in form and substance reasonably
satisfactory to the Administrative Agent in its Permitted Discretion, executed
and delivered by the applicable Loan Party, such Credit Card Processor and the
Administrative Agent, pursuant to which such Credit Card Processor shall agree,
among other things, to follow instructions originated by the Administrative
Agent regarding amounts payable by such Credit Card Processor to such Loan
Party pursuant to the applicable credit card processing agreement without the
further consent of such Loan Party under circumstances specified therein, as
such agreement may be amended, supplemented or otherwise modified from time to
time.

 

“Projections” has the meaning assigned to such term in Section 5.01(f).

 

“Protective Advance” has the meaning assigned to
such term in Section 2.04.

 

“Real Property” means real property and all related fixtures,
cooling, heating and other building systems located thereon and all
improvements thereto (including any parking lot located thereon).

 

“Register” has the meaning set forth in Section 9.04.

 

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

 

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

 

“Rentals” means, with reference to any period, the
aggregate fixed amounts payable in cash by Holdings and its Subsidiaries under
any operating leases, calculated on a consolidated basis for Holdings and its
Subsidiaries for such period in accordance with GAAP.

 

“Rent Reserve” with respect to any store,
warehouse distribution center, regional distribution center or depot where any
Inventory subject to Liens arising by operation of law is located, a reserve
equal to two (2) months’ rent at such store, warehouse distribution center,
regional distribution center or depot.

 

“Report” means reports prepared by the Administrative
Agent or another Person showing the results of appraisals, field examinations
or audits pertaining to the Loan Parties’ assets from information furnished by
or on behalf of the Borrower, after the Administrative Agent has exercised its
rights of inspection pursuant to this Agreement, which Reports may be
distributed to the Lenders by the Administrative Agent.

 

24

 

“Required Lenders” means, at any time, Lenders
(but at least two (2) such Lenders during such time when there is more
than one (1) Lender but no more than three (3) Lenders) having
Revolving Exposures and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures and unused Commitments at such time,
except as provided in Section 2.20(b).

 

“Requirement of Law” means, as to any Person,
the Certificate of Incorporation and By Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Reserves” means any and all reserves which the
Administrative Agent deems necessary, in its Permitted Discretion, to maintain
(including, without limitation, reserves for accrued and unpaid interest on the
Secured Obligations, Banking Services Reserves, Rent Reserves, reserves for
rent at locations leased by any Loan Party and for consignee’s, warehousemen’s
and bailee’s charges, reserves for dilution of Accounts and/or Credit Card
Account Receivables, reserves for Inventory shrinkage, reserves for customs
charges and shipping charges related to any Inventory in transit, reserves for
Swap Obligations, reserves for contingent liabilities of any Loan Party,
reserves for uninsured losses of any Loan Party, reserves for uninsured,
underinsured, unindemnified or underindemnified liabilities or potential
liabilities with respect to any litigation and reserves for taxes, fees,
assessments, and other governmental charges) without duplication with respect
to the Collateral or any Loan Party.

 

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

 

“Revolving Exposure” means, with respect to any
Lender at any time, the sum of (a) the outstanding principal amount of
such Lender’s Revolving Loans and its LC Exposure, plus (b) an
amount equal to its Applicable Percentage of the aggregate principal amount of
Swingline Loans at such time, plus (c) an amount equal to its
Applicable Percentage of the aggregate principal amount of Overadvances
outstanding at such time.

 

“Revolving Loan” means a Loan made pursuant
to Section 2.01(a).

 

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

 

“Secured Obligations” means all Obligations,
together with all (i) Banking Services Obligations and (ii) Swap Obligations
owing to one or more Secured Parties or their respective Affiliates; provided
that at or prior to the time that any transaction relating to such Swap
Obligation is executed, the Secured Party party thereto (other than Chase)
shall have delivered written notice to the Administrative Agent that such a
transaction has been entered into and that it constitutes a Secured Obligation
entitled to the benefits of the Collateral Documents.

 

“Secured Parties” means the holders of the Secured Obligations from
time to time and shall include (i) each Lender and the Issuing Bank in
respect of its Loans and LC Exposure respectively, (ii) the Administrative
Agent, the Issuing Bank and the Lenders in respect of all other present and
future obligations and liabilities of Holdings, the Borrower and each
Subsidiary of every type and description 

 

25

 

arising under or in connection
with this Agreement or any other Loan Document, (iii) each Lender and
Affiliate of such Lender in respect of Swap Obligations and Banking Services
Obligations owed to such Person by Holdings, the Borrower or any Subsidiary, (iv) each
indemnified party under Section 9.03 in respect of the obligations and
liabilities of Holdings, the Borrower or any Subsidiary to such Person
hereunder and under the other Loan Documents, and (v) their respective
successors and (in the case of a Lender, permitted) transferees and assigns.

 

“Security Agreement” means the Pledge and
Security Agreement (including any and all supplements thereto), dated as of the
date hereof, between the Loan Parties and the Administrative Agent, for the
benefit of the Administrative Agent and the Secured Parties, and any other
pledge or security agreement entered into, after the date of this Agreement by
any other Loan Party (as required by this Agreement or any other Loan
Document), or any other Person, as the same may be amended, restated or
otherwise modified from time to time.

 

“Settlement” has the meaning assigned to such term in Section 2.05(d).

 

“Settlement Date” has the meaning assigned to
such term in Section 2.05(d).

 

“Standby LC Exposure” means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding standby Letters of Credit at such
time plus (b) the aggregate amount of all LC Disbursements relating to
standby Letters of Credit that have not yet been reimbursed by or on behalf of
the Borrower at such time.  The Standby
LC Exposure of any Lender at any time shall be its Applicable Percentage of the
total Standby LC Exposure at such time.

 

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

 

“Subordinated Indebtedness” of a Person
means any Indebtedness of such Person the payment of which is subordinated to
payment of the Secured Obligations to the written satisfaction of the Administrative
Agent in its Permitted Discretion.

 

“subsidiary” means, with respect to any Person (the “parent”)
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with those
of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, Controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

 

26

 

“Subsidiary” means any direct or indirect subsidiary of
Holdings, the Borrower or a Loan Party, as applicable.

 

“Swap Agreement” means any agreement with
respect to any swap, forward, future or derivative transaction or option or
similar agreement involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions; provided
that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of Holdings or the Subsidiaries shall be a Swap Agreement.

 

“Swap Obligations” of a Person means any and
all obligations of such Person, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (a) any
and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a
Lender, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any such Swap Agreement transaction.

 

“Swingline Exposure” means, at any time, the
aggregate principal amount of all outstanding Swingline Loans at such
time.  The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

 

“Swingline Lender” means JPMorgan Chase Bank,
N.A., in its capacity as lender of Swingline Loans hereunder.

 

“Swingline Loan” has the meaning assigned to
such term in Section 2.05(a).

 

“Syndication Agent” means JPMorgan Chase Bank,
N.A. in its capacity as syndication agent for the credit facility evidenced by
this Agreement.

 

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

 

“Total Assets” means, as of the date of
any determination thereof, total assets of Holdings and its Subsidiaries
calculated in accordance with GAAP on a consolidated basis as of such date.

 

“Total Indebtedness” means, at any date, the
aggregate principal amount of all Indebtedness of Holdings and its Subsidiaries
at such date, determined on a consolidated basis in accordance with GAAP.

 

“Transactions” means the execution,
delivery and performance by the Loan Parties of this Agreement and the other
Loan Documents, the borrowing of Loans and other credit extensions, the use of
the proceeds thereof and the issuance of Letters of Credit hereunder.

 

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

 

“UCC” means the Uniform Commercial Code as in
effect from time to time in the State of New York or any other state the laws
of which are required to be applied in connection with the issue of perfection
of security interests.

 

27

 

“Unliquidated Obligations” means, at any time, any
Secured Obligations (or portion thereof) that are contingent in nature or
unliquidated at such time, including any Secured Obligation that is: (i) an
obligation to reimburse a bank for drawings not yet made under a letter of
credit issued by it; (ii) any other obligation (including any guarantee)
that is contingent in nature at such time; or (iii) an obligation to
provide collateral to secure any of the foregoing types of obligations.

 

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

 

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

 

SECTION 1.03.    Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will”
shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, restated, supplemented or otherwise
modified (subject to any restrictions on such amendments, restatements,
supplements or modifications set forth herein), (b) any reference herein
to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until  such notice shall have been withdrawn or such
provision amended in accordance herewith. 
Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein shall be construed, and all
computations of amounts and ratios referred to herein shall be made, without
giving effect to any election under Statement of Financial Accounting Standards
159 (or any other Financial Accounting Standard having a similar result or
effect) to value any Indebtedness or other liabilities of Holdings, the
Borrower or any Subsidiary at “fair value”, as defined therein.

 

28

 

ARTICLE II

 

The Credits

 

SECTION 2.01.  Commitments.   Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower in
dollars from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) such Lender’s Revolving Exposure
exceeding such Lender’s Commitment or (b) the total Revolving Exposures
exceeding the lesser of (i) the Aggregate Commitment or (ii) the
Borrowing Base, subject to the Administrative Agent’s authority, in its sole
discretion, to make Protective Advances and Overadvances pursuant to the terms
of Section 2.04 and 2.05.  Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.02.  Loans and Borrowings.  (a)  Each Loan (other than a Swingline
Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and
Type made by the Lenders ratably in accordance with their respective
Commitments of the applicable Class.  Any
Protective Advance, any Overadvance and any Swingline Loan shall be made in
accordance with the procedures set forth in Section 2.04 and 2.05.  No failure to fund by a Defaulting Lender
shall relieve any other Lender of its funding obligations hereunder in
accordance with the terms and conditions hereof.

 

(b)  Subject to Section 2.14,
each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower may request in accordance herewith; provided that
all Borrowings made on the Effective Date must be made as ABR Borrowings but
may be converted into Eurodollar Borrowings in accordance with Section 2.08.
Each Swingline Loan shall be an ABR Loan. 
Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)  At the
commencement of each Interest Period for any Eurodollar Revolving Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $2,000,000. 
ABR Revolving Borrowings may be in any amount.  Borrowings of more than one Type and Class may
be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) Eurodollar Borrowings outstanding.

 

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

 

SECTION 2.03.  Requests for
Revolving Borrowings.  To
request a Revolving Borrowing, the Borrower shall notify the Administrative
Agent of such request either in writing (delivered by hand or facsimile) in a
form approved by the Administrative Agent and signed by the Borrower or by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three (3) Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
1:00 p.m., New York City time, on the date of the proposed Borrowing; provided
that any such notice of an ABR Revolving Borrowing to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.06(e) may be given
not later than 10:00 a.m., New York City time, on the date of the proposed
Borrowing.  Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Borrowing
Request in a form approved by the Administrative Agent and signed by the 

 

29

 

Borrower. 
Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.01:

 

(i)  the aggregate
amount of the requested Borrowing and a breakdown of the separate wires
comprising such Borrowing;

 

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

 

(iii)  whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

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

 

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

 

SECTION 2.04.  Protective Advances.  (a)  Subject to the limitations set forth
below, the Administrative Agent is authorized by the Borrower and the Lenders,
from time to time in the Administrative Agent’s sole discretion (but shall have
absolutely no obligation to), to make Loans to the Borrower, on behalf of all
Lenders, which the Administrative Agent, in its Permitted Discretion, deems
necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount
of, repayment of the Loans and other Obligations, or (iii) to pay any
other amount chargeable to or required to be paid by the Borrower pursuant to
the terms of this Agreement, including payments of reimbursable expenses
(including costs, fees, and expenses as described in Section 9.03) and
other sums payable under the Loan Documents (any of such Loans are herein
referred to as “Protective Advances”); provided that, the
aggregate amount of Protective Advances outstanding at any time shall not at
any time exceed $5,000,000; provided  further that, the aggregate
amount of outstanding Protective Advances plus the aggregate Revolving Exposure
shall not exceed the Aggregate Commitment. 
Protective Advances may be made even if the conditions precedent set
forth in Section 4.02 have not been satisfied.  The Protective Advances shall be secured by
the Liens in favor of the Administrative Agent in and to the Collateral and
shall constitute Obligations hereunder. 
All Protective Advances shall be ABR Borrowings.  The Administrative Agent’s authorization to
make Protective Advances may be revoked at any time by 100% of the Lenders
(other than the Lender  that is (or whose
Affiliate is) the Administrative Agent). 
Any such revocation must be in writing and shall become effective
prospectively upon the Administrative Agent’s receipt thereof.  At any time that there is sufficient
Availability and the conditions precedent set forth in Section 4.02 have
been satisfied, the Administrative Agent may request the Lenders to make a
Revolving Loan to repay a Protective Advance. 
At any other time the Administrative Agent may require the Lenders to
fund their risk participations described in Section 2.04(b).

 

(b)  Upon the making of
a Protective Advance by the Administrative Agent (whether before or after the
occurrence of a Default), each Lender shall be deemed, without further action
by any party hereto, to have unconditionally and irrevocably purchased from the
Administrative Agent without recourse or warranty, an undivided interest and
participation in such Protective Advance in proportion to its Applicable
Percentage.  From and after the date, if
any, on which any Lender is required to fund its participation in any
Protective Advance purchased hereunder, the Administrative Agent shall promptly
distribute to such Lender, such Lender’s Applicable Percentage of all payments 

 

30

 

of principal and interest and all proceeds of
Collateral received by the Administrative Agent in respect of such Protective
Advance.

 

SECTION 2.05.  Swingline Loans and
Overadvances.  (a)  The
Administrative Agent, the Swingline Lender and the Lenders agree that in order
to facilitate the administration of this Agreement and the other Loan
Documents, promptly after the Borrower requests an ABR Borrowing, the Swingline
Lender may elect to have the terms of this Section 2.05(a) apply to
such Borrowing Request by advancing, on behalf of the Lenders and in the amount
requested, same day funds to the Borrower on the applicable Borrowing date to
the Funding Account (each such Loan made solely by the Swingline Lender
pursuant to this Section 2.05(a) is referred to in this Agreement as
a “Swingline Loan”), with settlement among them as to the Swingline
Loans to take place on a periodic basis as set forth in Section 2.05(d).  Each Swingline Loan shall be subject to all
the terms and conditions applicable to other ABR Loans funded by the Lenders,
except that all payments thereon shall be payable to the Swingline Lender
solely for its own account.  In addition,
the Borrower hereby authorizes the Swingline Lender to, and the Swingline
Lender shall, subject to the terms and conditions set forth herein (but without
any further written notice required), not later than 2:00 p.m., New York
City time, on each Business Day, make available to the Borrower by means of a
credit to the Funding Account, the proceeds of a Swingline Loan to the extent
necessary to pay items to be drawn on any Controlled Disbursement Account that
day (as determined based on notice from the Administrative Agent).  The aggregate amount of Swingline Loans
outstanding at any time shall not exceed $6,000,000.  The Swingline Lender shall not make any
Swingline Loan if the requested Swingline Loan exceeds Availability (before
giving effect to such Swingline Loan). 
All Swingline Loans shall be ABR Borrowings.

 

(b)  Any provision of
this Agreement to the contrary notwithstanding, at the request of the Borrower,
the Administrative Agent may in its sole discretion (but with absolutely no
obligation), make Revolving Loans to the Borrower, on behalf of the Lenders, in
amounts that exceed Availability (any such excess Revolving Loans are herein
referred to collectively as “Overadvances”); provided
that, no Overadvance shall result in a Default due to Borrower’s failure to
comply with Section 2.01 for so long as such Overadvance remains
outstanding in accordance with the terms of this paragraph, but solely with
respect to the amount of such Overadvance. 
In addition, Overadvances may be made even if the condition precedent
set forth in Section 4.02(c) has not been satisfied.  All Overadvances shall constitute ABR
Borrowings.  The authority of the
Administrative Agent to make Overadvances is limited to an aggregate amount not
to exceed $5,000,000 at any time, no Overadvance may remain outstanding for
more than forty-five (45) days and no Overadvance shall cause any Lender’s
Revolving Exposure to exceed its Commitment; provided
that, the Required Lenders may at any time revoke the Administrative Agent’s
authorization to make Overadvances.  Any
such revocation must be in writing and shall become effective prospectively
upon the Administrative Agent’s receipt thereof.

 

(c)  Upon the making of
a Swingline Loan or an Overadvance (whether before or after the occurrence of a
Default and regardless of whether a Settlement has been requested with respect
to such Swingline Loan or Overadvance), each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably
purchased from the Swingline Lender or the Administrative Agent, as the case
may be, without recourse or warranty, an undivided interest and participation
in such Swingline Loan or Overadvance in proportion to its Applicable
Percentage of the Commitment.    The
Swingline Lender or the Administrative Agent may, at any time, require the
Lenders to fund their participations. 
From and after the date, if any, on which any Lender is required to fund
its participation in any Swingline Loan or Overadvance purchased hereunder, the
Administrative Agent shall promptly distribute to such Lender, such Lender’s
Applicable Percentage of all payments of principal and interest and all
proceeds of Collateral received by the Administrative Agent in respect of such
Loan.

 

31

 

(d)  The Administrative
Agent, on behalf of the Swingline Lender, shall request settlement (a “Settlement”)
with the Lenders on at least a weekly basis or on any date that the
Administrative Agent elects, by notifying the Lenders of such requested
Settlement by facsimile, telephone, or e-mail no later than 1:00 p.m., New
York City time, on the date of such requested Settlement (the “Settlement
Date”).  Each Lender (other than the
Swingline Lender, in the case of the Swingline Loans) shall transfer the amount
of such Lender’s Applicable Percentage of the outstanding principal amount of
the applicable Loan with respect to which Settlement is requested to the
Administrative Agent, to such account of the Administrative Agent as the
Administrative Agent may designate, not later than 3:00 p.m., New York
City time, on such Settlement Date. 
Settlements may occur during the existence of a Default and whether or
not the applicable conditions precedent set forth in Section 4.02 have
then been satisfied.  Such amounts
transferred to the Administrative Agent shall be applied against the amounts of
the Swingline Lender’s Swingline Loans and, together with Swingline Lender’s
Applicable Percentage of such Swingline Loan, shall constitute Revolving Loans
of such Lenders, respectively.  If any
such amount is not transferred to the Administrative Agent by any Lender on
such Settlement Date, the Swingline Lender shall be entitled to recover such
amount on demand from such Lender together with interest thereon as specified
in Section 2.07.

 

SECTION 2.06.  Letters of Credit.  (a) General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit for its own
account, in a form reasonably acceptable to the Administrative Agent and the
Issuing Bank, at any time and from time to time during the Availability
Period.  In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.  The letters of
credit identified on Schedule 2.06 (the “Existing Letters of Credit”)
shall be deemed to be “Letters of Credit” issued on the Effective Date for all
purposes of the Loan Documents.

 

(b)  Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions.  To request the
issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or facsimile (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and specifying
the date of issuance, amendment, renewal or extension (which shall be a
Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit.  If requested by the
Issuing Bank, the Borrower also shall submit a letter of credit application and
(in the case of a commercial Letter of Credit) a master agreement for the
issuance of commercial Letters of Credit, in each case on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i) the
LC Exposure shall not exceed $30,000,000, (ii) the Standby LC Exposure
shall not exceed $25,000,000 and (iii) the total Revolving Exposures shall
not exceed the lesser of the Aggregate Commitment and the Borrowing Base.

 

(c)  Expiration Date. 
Each Letter of Credit shall expire at or prior to the close of business
on the earlier of (i) the date one year after the date of the issuance of
such Letter of Credit (or, in the case of any renewal or extension thereof, one
year after such renewal or extension) and (ii) the date that is five (5) Business
Days prior to the Maturity Date.

 

32

 

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

 

(e)  Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such
date, or, if such notice has not been received by the Borrower prior to such
time on such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of
receipt; provided that, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or 2.05 that such payment
be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent
amount and, to the extent so financed, the Borrower’s obligation to make such
payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan.  If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Lender of the applicable LC Disbursement, the payment then due from
the Borrower in respect thereof and such Lender’s Applicable Percentage
thereof.  Promptly following receipt of
such notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07
shall apply, mutatis mutandis, to the payment obligations of the Lenders), and
the Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Lenders. 
Promptly following receipt by the Administrative Agent of any payment
from the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Lenders have
made payments pursuant to this paragraph to reimburse the Issuing Bank, then to
such Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this
paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the
funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

(f)  Obligations
Absolute.  The Borrower’s
obligation to reimburse LC Disbursements as provided in paragraph (e) of
this Section shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement under any
and all circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit or this Agreement, or any
term or provision therein, (ii) any draft or other document presented
under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being 

 

33

 

untrue or inaccurate in any respect, (iii) payment by the Issuing
Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, or (iv) any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder. 
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that the foregoing shall not
be construed to excuse the Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such
determination.  In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

(g)  Disbursement
Procedures.  The Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by facsimile) of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay
in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.

 

(h)  Interim
Interest.  If the Issuing Bank
shall make any LC Disbursement, then, unless the Borrower shall reimburse such
LC Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR
Revolving Loans; provided that, if the Borrower fails to reimburse such
LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(d) shall
apply.  Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph (e) of
this Section to reimburse the Issuing Bank shall be for the account of
such Lender to the extent of such payment.

 

(i)  Replacement
of the Issuing Bank.  The
Issuing Bank may be replaced at any time by written agreement among the
Borrower, the Administrative Agent, the replaced Issuing Bank and the successor
Issuing Bank.  The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to 

 

34

 

Section 2.12(b).  From and
after the effective date of any such replacement, (i) the successor
Issuing Bank shall have all the rights and obligations of the Issuing Bank
under this Agreement with respect to Letters of Credit to be issued thereafter
and (ii) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

 

(j)  Cash
Collateralization.  If any
Event of Default shall occur and be continuing, on the Business Day that the
Borrower receives notice from the Administrative Agent or the Required  Lenders (or, if the maturity of the Loans has
been accelerated, Lenders with LC Exposure representing greater than 50% of the
total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Secured Parties (the “LC Collateral Account”), an amount in cash equal
to 103% of the LC Exposure as of such date plus accrued and unpaid interest
thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the
occurrence of any Event of Default with respect to the Borrower described in
clause (h) or (i) of Article VII.  Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Secured Obligations.  The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account and the Borrower hereby grants the
Administrative Agent a security interest in the LC Collateral Account.  Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
Permitted Discretion of the Administrative Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. 
Interest or profits, if any, on such investments shall accumulate in
such account.  Moneys in such account
shall be applied by the Administrative Agent to reimburse the Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other Secured Obligations.  If the
Borrower is required to provide an amount of cash collateral hereunder as a result
of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three (3) Business
Days after all such Defaults have been cured or waived.

 

SECTION 2.07.  Funding of
Borrowings.  (a)  Each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 2:00 p.m., New
York City time, to the account of the Administrative Agent most recently
designated by it for such purpose by notice to the Lenders in an amount equal
to such Lender’s Applicable Percentage; provided that, Swingline Loans
shall be made as provided in Section 2.05. 
The Administrative Agent will make such Loans available to the Borrower
by promptly crediting the amounts so received, in like funds, to the Funding
Account; provided that ABR Revolving Loans made to finance the
reimbursement of (i) an LC Disbursement as provided in Section 2.06(e) shall
be remitted by the Administrative Agent to the Issuing Bank and (ii) a
Protective Advance or an Overadvance shall be retained by the Administrative
Agent.

 

(b)  Unless the Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that
such Lender has made such share available on such date in accordance with
paragraph (a) of this Section and may, 

 

35

 

in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans.  If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.08.  Interest Elections.  (a)  Each Revolving Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Revolving Borrowing, shall have an initial Interest Period
as specified in such Borrowing Request. 
Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Revolving Borrowing, may elect Interest Periods therefor, all as provided in
this Section.  The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.  This Section shall not apply to
Swingline Borrowings, Overadvances or Protective Advances, which may not be
converted or continued.

 

(b)  To make an election pursuant to
this Section, the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.03 if the Borrower were requesting a Revolving Borrowing
of the Type resulting from such election to be made on the effective date of
such election.  Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or facsimile to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the Borrower.

 

(c)  Each telephonic and written
Interest Election Request shall specify the following information in compliance
with Section 2.02:

 

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

 

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

 

(iii)  whether the resulting Borrowing
is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)  if the resulting Borrowing is a
Eurodollar Borrowing, the Interest Period to be applicable thereto after giving
effect to such election, which shall be a period contemplated by the definition
of the term “Interest Period”.

 

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

 

36

 

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

 

(e)  If the Borrower fails to deliver a
timely Interest Election Request with respect to a Eurodollar Revolving
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Revolving Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Revolving
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

 

SECTION 2.09.  Termination and
Reduction of Commitments; Increase in Commitments.  (a)  Unless previously terminated, the
Commitments shall terminate on the Maturity Date.

 

(b)  The Borrower may at any time
terminate the Commitments upon (i) the payment in full of all outstanding
Loans, together with accrued and unpaid interest thereon and on any Letters of
Credit, (ii) the cancellation and return of all outstanding Letters of
Credit (or alternatively, with respect to each such Letter of Credit, the
furnishing to the Administrative Agent of a cash deposit (or at the discretion
of the Administrative Agent a back up standby letter of credit satisfactory to
the Administrative Agent) equal to 103% of the LC Exposure as of such date), (iii) the
payment in full of the accrued and unpaid fees and (iv) the payment in
full of all reimbursable expenses and other Obligations together with accrued
and unpaid interest thereon.

 

(c)  The Borrower may from time to time
reduce the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $1,000,000
and not less than $5,000,000 and (ii) the Borrower shall not reduce the
Commitments if, after giving effect to any concurrent prepayment of the
Revolving Loans in accordance with Section 2.10, the sum of the Revolving
Exposures would exceed the lesser of the total Commitments and the Borrowing
Base.

 

(d)  The Borrower shall notify the
Administrative Agent of any election to terminate or reduce the Commitments
under paragraph (b) or (c) of this Section at least three (3) Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. 
Promptly following receipt of any notice, the Administrative Agent shall
advise the Lenders of the contents thereof. 
Each notice delivered by the Borrower pursuant to this Section shall
be irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.  Any termination or reduction of the
Commitments shall be permanent.  Each
reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.

 

(e)  The Borrower shall have the right
to increase the Aggregate Commitment by obtaining additional Commitments,
either from one or more of the Lenders or another lending institution provided
that (i) any such request for an increase shall be in a minimum amount of
$5,000,000, (ii) the Borrower may make a maximum of two (2) such
requests, (iii) after giving effect thereto, the Aggregate Commitment does
not exceed $60,000,000, (iv) the Administrative Agent has approved the
identity of any such new Lender, such approval not to be unreasonably withheld,
(v) any 

 

37

 

such new Lender assumes all of the rights and obligations of a “Lender”
hereunder, (vi) the procedure described in Section 2.09(f) have
been satisfied and (vii) solely during the period commencing on the
Effective Date and ending 90 days thereafter, the percentage rate on any
upfront or similar fee paid to such new Lender in respect of its Commitment
(the “New Upfront Fee Rate”) shall not exceed the percentage rate on
upfront fees paid to the other Lenders in respect of their Commitments (the “Original
Upfront Fee Rate”) unless the Borrower pays the incremental difference (if
positive) in percentage between the New Upfront Fee Rate and the Original
Upfront Fee Rate to such other Lenders in respect of their Commitments.

 

(f)  Any amendment hereto for such an
increase or addition shall be in form and substance satisfactory to the
Administrative Agent and shall only require the written signatures of the
Administrative Agent, the Borrower and the Lender(s) being added or
increasing their Commitment.  As a
condition precedent to such an increase, Borrower shall deliver to the
Administrative Agent (i) a certificate of each Loan Party signed by an
authorized officer of such Loan Party (A) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such
increase, and (B) in the case of the Borrower, certifying that, before and
after giving effect to such increase, (1) the representations and
warranties contained in Article III and the other Loan Documents
are true and correct, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and (2) no Default exists and (ii) legal
opinions and documents consistent with those delivered on the Effective Date as
to the corporate power and authority of the Loan Parties.

 

(g)  Within a reasonable time after the
effective date of any increase, the Administrative Agent shall, and is hereby
authorized and directed to, revise Schedule 2.01 to reflect such
increase and shall distribute such revised Schedule 2.01 to each of the
Lenders and the Borrower, whereupon such revised Schedule 2.01 shall
replace the old Schedule 2.01 and become part of this Agreement.  On the Business Day following any such
increase, all outstanding ABR Loans shall be reallocated among the Lenders
(including any newly added Lenders) in accordance with the Lenders’ respective
revised Applicable Percentages. 
Eurodollar Loans shall not be reallocated among the Lenders prior to the
expiration of the applicable Interest Period in effect at the time of any such
increase.

 

SECTION 2.10.  Repayment and
Amortization of Loans; Evidence of Debt.  (a)  The Borrower hereby unconditionally
promises to pay (i) to the Administrative Agent for the account of each
Lender the then unpaid principal amount of each Revolving Loan on the Maturity
Date, (ii) to the Administrative Agent the then unpaid amount of each
Protective Advance on the earlier of the Maturity Date and demand by the
Administrative Agent and (iii) to the Administrative Agent the then unpaid
principal amount of each Overadvance on the earlier of the Maturity Date and
demand by the Administrative Agent.

 

(b)  At all times that full cash
dominion is in effect pursuant to Section 7.3 of the Security Agreement,
on each Business Day, the Administrative Agent shall apply all funds credited
to the Collection Account the previous Business Day (whether or not immediately
available) first to prepay any Protective Advances and Overadvances that
may be outstanding, pro rata, and second to prepay the Revolving Loans
(including Swing Line Loans) and to cash collateralize outstanding LC
Exposure.  If no Default is continuing,
the amount of such cash collateral securing outstanding LC Exposure shall be
returned to the Borrower within three (3) Business Days.

 

(c)  Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made 

 

38

 

by such Lender, including the amounts of principal and interest payable
and paid to such Lender from time to time hereunder.

 

(d)  The Administrative Agent shall
maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

 

(e)  The entries made in the accounts
maintained pursuant to paragraph (c) or (d) of this Section shall
be prima facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.

 

(f)  Any Lender may request that Loans
made by it be evidenced by a promissory note. 
In such event, the Borrower shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent. 
Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the
order of the payee named therein (or, if such promissory note is a registered
note, to such payee and its registered assigns).

 

SECTION 2.11.  Prepayment of Loans.  (a)  The Borrower shall have the right
at any time and from time to time to prepay any Borrowing in whole or in part,
subject to prior notice in accordance with paragraph (f) of this Section.

 

(b)  Except for Overadvances permitted
under Section 2.05, in the event and on such occasion that the total
Revolving Exposure exceeds (the amount of such excess, the “Excess”) the
lesser of (A) the Aggregate Commitment or (B) the Borrowing Base, the
Borrower shall prepay the Revolving Loans, LC Exposure and/or Swingline Loans
in an aggregate amount equal to such Excess. 
If such Excess is subsequently reduced and no Default is continuing, any
such cash collateral so provided by the Borrower shall be returned to the
Borrower (in an amount equal to the lesser of (i) any such reduction in
the Excess and (ii) the amount of such cash collateral) within three (3) Business
Days after such reduction.

 

(c)  In the event and on each occasion
that any Net Proceeds are received by or on behalf of any Loan Party in respect
of any Prepayment Event, the Borrower shall, within three (3) Business
Days after such Net Proceeds are received by any Loan Party, prepay the
Obligations as set forth in Section 2.11(e) below in an aggregate
amount equal to 100% of such Net Proceeds.

 

(d)  [Intentionally Omitted].

 

(e)  All such amounts pursuant to Section 2.11(c) shall
be applied, first to prepay any Protective Advances and Overadvances
that may be outstanding, pro rata, and second to prepay the Revolving
Loans (including Swing Line Loans) without a corresponding reduction in the
Commitment and, so long as a Default is continuing, to cash collateralize
outstanding LC Exposure.

 

(f)  The Borrower shall notify the
Administrative  Agent (and, in the case
of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed
by facsimile) of any 

 

39

 

prepayment hereunder (i) in the case of prepayment of a Eurodollar
Revolving Borrowing, not later than 11:00 a.m., New York City time, three (3) Business
Days before the date of prepayment, or (ii) in the case of prepayment of
an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time,
one (1) Business Day before the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment
is given in connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.09, then such notice of
prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. 
Promptly following receipt of any such notice relating to a Revolving
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof.   Each partial prepayment of any
Revolving Borrowing shall be in an amount that would be permitted in the case
of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Revolving Borrowing
shall be applied ratably to the Revolving Loans included in the prepaid
Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.

 

SECTION 2.12.  Fees.  (a)  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the average daily amount of the
Available Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which the Lenders’ Commitments
terminate.  Accrued commitment fees shall
be payable in arrears on the first day of each calendar quarter and on the date
on which the Commitments terminate, commencing on the first such date to occur
after the date hereof.  All commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed.

 

(b)  The Borrower agrees to pay (i) to
the Administrative Agent for the account of each Lender a participation fee
with respect to its participations in Letters of Credit, which shall accrue, in
the case of standby Letters of Credit at the same Applicable Rate and, in the
case of Commercial Letters of Credit at 50% of such Applicable Rate, in each
case used to determine the interest rate applicable to Eurodollar Revolving
Loans on the average daily amount of such Lender’s LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date on which such Lender’s Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure, as well
as the Issuing Bank’s standard fees and commissions (including without
limitation standard commissions with respect to Commercial Letters of Credit,
payable at the time of invoice of such amounts) with respect to the issuance,
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder.  Participation fees
and fronting fees accrued through and including the last day of each calendar
quarter shall be payable on the first day of each calendar quarter following
such last day, commencing on the first such date to occur after the Effective
Date; provided that all such fees shall be payable on the date on which
the Commitments terminate and any such fees accruing after the date on which
the Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within ten (10) days after
demand.  All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed.

 

(c)  The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

 

40

 

(d)  All fees payable hereunder shall be
paid on the dates due, in immediately available funds, to the Administrative
Agent (or to the Issuing Bank, in the case of fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the
Lenders.  Fees paid shall not be
refundable under any circumstances.

 

SECTION 2.13.  Interest.  (a)  The Loans comprising each ABR
Borrowing (including each Swingline Loan) shall bear interest at the Alternate
Base Rate plus the Applicable Rate.

 

(b)  The Loans comprising each
Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.

 

(c)  Each Protective Advance and each
Overadvance shall bear interest at the Alternate Base Rate plus the Applicable
Rate for Revolving Loans plus 2%.

 

(d)  Notwithstanding the foregoing,
during the occurrence and continuance of an Event of Default, the
Administrative Agent or the Required Lenders may, at their option, by notice to
the Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 9.02 requiring the consent of “each
Lender directly affected thereby” for reductions in interest
rates), declare that (i) all Loans shall bear interest at 2% plus the rate
otherwise applicable to such Loans as provided in the preceding paragraphs of
this Section or (ii) in the case of any other amount outstanding
hereunder, such amount shall accrue at 2% plus the rate applicable to such fee
or other obligation as provided hereunder.

 

(e)  Accrued interest on each Loan (for
ABR Loans, accrued through the last day of the prior calendar month) shall be
payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (i) interest accrued
pursuant to paragraph (d) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event
of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

 

(f)  All interest hereunder shall be
computed on the basis of a year of 360 days, except that interest computed by
reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days
(or 366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed.  The applicable
Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
manifest error.

 

SECTION 2.14.  Alternate Rate of
Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

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

 

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

 

41

 

then the Administrative
Agent shall give notice thereof to the Borrower and the Lenders by telephone or
facsimile as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that
requests the conversion of any Revolving Borrowing to, or continuation of any
Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if
any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing
shall be made as an ABR Borrowing.

 

SECTION 2.15.  Increased Costs.  (a)  If any Change in Law shall:

 

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

 

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

 

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

 

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

 

(c)  A certificate of a Lender or the
Issuing Bank setting forth the amount or amounts necessary to compensate such
Lender or the Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such certificate
within ten (10) days after receipt thereof.

 

(d)  Failure or delay on the part of any
Lender or the Issuing Bank to demand compensation pursuant to this Section shall
not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand
such compensation; provided that the Borrower shall not be required to
compensate a Lender or the Issuing Bank pursuant to this Section for any
increased costs or reductions incurred more than 270 days prior to the date
that such Lender or the Issuing Bank, as the case may be, notifies the Borrower
of the Change in Law giving rise to such increased costs or reductions and of
such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided
further that, if 

 

42

 

the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

SECTION 2.16.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.09(d) and
is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such Loan had such event
not occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.  A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender the amount shown as due on any such certificate
within ten (10) days after receipt thereof.

 

SECTION 2.17.  Taxes.  (a) Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b)  In addition, the Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

 

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

 

43

 

(d)  Each Lender and the Issuing Bank
shall indemnify the Borrower and the Administrative Agent, within ten (10) days
after written demand therefor, against any and all Taxes and any and all
related losses, claims, liabilities, penalties, interest and reasonable
expenses (including the fees, charges and disbursements of any counsel for the
Borrower or the Administrative Agent) incurred by or asserted against the
Borrower or the Administrative Agent by any Governmental Authority as a result
of the failure by such Lender or the Issuing Bank, as the case may be, to
deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any
documentation required to be delivered to the Borrower or the Administrative
Agent pursuant to Section 2.17(f). 
Each Lender and the Issuing Bank hereby authorizes the Administrative
Agent to set off and apply any and all amounts at any time owing to such Lender
or the Issuing Bank, as the case may be, under this Agreement or any other Loan
Document against any amount due to the Administrative Agent under this Section 2.17(d).

 

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

 

(f)  Any Foreign Lender that is entitled
to an exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.

 

(g)  If the Administrative Agent or a
Lender determines, in its sole good faith discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.17, it shall pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.17 with respect to the
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund to such Governmental Authority. This Section shall not be construed
to require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

 

SECTION 2.18.  Payments Generally;
Allocation of Proceeds; Sharing of Set-offs.  (a)  The Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest,
fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 3:00 p.m., New York City time, on the
date when due, in immediately available funds, without set off or
counterclaim.  Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon.  All
such payments shall be made to the Administrative Agent at its offices at 10
South Dearborn Street, 22nd Floor, Chicago, Illinois, except
payments to be made directly to the Issuing Bank or Swingline Lender as
expressly provided herein and 

 

44

 

except that payments pursuant to Sections
2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled
thereto.  The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder shall
be made in dollars.

 

(b)  Any proceeds of Collateral
received by the Administrative Agent (i) not constituting either (A) a
specific payment of principal, interest, fees or other sum payable under the
Loan Documents (which shall be applied as specified by the Borrower), (B) a
mandatory prepayment (which shall be applied in accordance with Section 2.11)
or (C) amounts to be applied from the Collection Account when full cash
dominion is in effect pursuant to Section 7.3 of the Security Agreement
(which shall be applied in accordance with Section 2.10(b)) or (ii) after
an Event of Default has occurred and is continuing and the Administrative Agent
so elects or the Required Lenders so direct, such proceeds shall be applied
ratably first, to pay any fees, indemnities, or expense reimbursements
including amounts then due to the Administrative Agent and the Issuing Bank
from the Borrower (other than in connection with Banking Services or Swap
Obligations), second, to pay any fees or expense reimbursements then due
to the Lenders from the Borrower (other than in connection with Banking
Services or Swap Obligations), third, to pay interest due in respect of
the Overadvances and Protective Advances, fourth, to pay the principal
of the Overadvances and Protective Advances, fifth, to pay interest then
due and payable on the Loans (other than the Overadvances and Protective
Advances) ratably, sixth, to prepay principal on the Loans (other than
the Overadvances and Protective Advances) and unreimbursed LC Disbursements
ratably, seventh, to pay an amount to the Administrative Agent equal to
one hundred three percent (103%) of the aggregate undrawn face amount of all
outstanding Letters of Credit and the aggregate amount of any unpaid LC
Disbursements, to be held as cash collateral for such Obligations, eighth,
to payment of any amounts owing with respect to Banking Services and Swap Obligations,
and ninth, to the payment of any other
Secured Obligation due to the Administrative Agent or any Lender by the
Borrower. Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrower, or unless a Default is in existence,
neither the Administrative Agent nor any Lender shall apply any payment which
it receives to any Eurodollar Loan of a Class, except (a) on the
expiration date of the Interest Period applicable to any such Eurodollar Loan
or (b) in the event, and only to the extent, that there are no outstanding
ABR Loans of the same Class and, in any such event, the Borrower shall pay
the break funding payment required in accordance with Section 2.16. The
Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments
to any portion of the Secured Obligations.

 

(c)  At the election of the
Administrative Agent, all payments of principal, interest, LC Disbursements,
fees, premiums, reimbursable expenses (including, without limitation, all
reimbursement for fees and expenses pursuant to Section 9.03), and other
sums payable under the Loan Documents, may be paid from the proceeds of
Borrowings made hereunder whether made following a request by the Borrower
pursuant to Section 2.03 or a deemed request as provided in this Section or
may be deducted from any deposit account of the Borrower maintained with the
Administrative Agent.  The Borrower
hereby irrevocably authorizes (i) the Administrative Agent to make a
Borrowing for the purpose of paying each payment of principal, interest and
fees as it becomes due hereunder or any other amount due under the Loan
Documents and agrees that all such amounts charged shall constitute Loans
(including Swingline Loans and Overadvances, but such a Borrowing may only
constitute a Protective Advance if it is to reimburse costs, fees and expenses
as described in Section 9.03) and that all such Borrowings shall be deemed
to have been requested pursuant to Sections 2.03, 2.04 or 2.05, as applicable
and (ii) the Administrative Agent to charge any deposit 

 

45

 

account of the Borrower maintained with the Administrative Agent for
each payment of principal, interest and fees as it becomes due hereunder or any
other amount due under the Loan Documents.

 

(d)  If any Lender shall, by exercising
any right of set off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered,  such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply
to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). 
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

 

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

 

(f)  If any Lender shall fail to make
any payment required to be made by it pursuant to Section 2.05, 2.06(d) or
(e), 2.07(b), 2.18(e) or 9.03(c), then the Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), (i) apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender and for the benefit of the Administrative Agent, the Swingline
Lender or the Issuing Bank to satisfy such Lender’s obligations under such
Sections until all such unsatisfied obligations are fully paid, and/or (ii) hold
any such amounts in a segregated account as cash collateral for, and
application to, any future funding obligations of such Lender under such
Sections; in the case of each of (i) and (ii) above, in any order as
determined by the Administrative Agent in its discretion.

 

46

 

SECTION 2.19.  Mitigation
Obligations; Replacement of Lenders.

 

(a)  If any Lender requests compensation
under Section 2.15, or if the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.17, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15
or 2.17, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

 

(b)  If any Lender requests compensation
under Section 2.15, or if the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.17, or if any Lender becomes a Defaulting
Lender, then the Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations
under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) the Borrower shall have received the prior written consent of the
Administrative Agent (and if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii) in
the case of any such assignment resulting from a claim for compensation under Section 2.15
or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

 

SECTION 2.20.  Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions shall apply for so long as such Lender is a Defaulting
Lender:

 

(a)  fees shall cease to accrue on the
unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.12(a);

 

(b)  the Commitment and Revolving
Exposure of such Defaulting Lender shall not be included in determining whether
all Lenders or the Required Lenders have taken or may take any action hereunder
(including any consent to any amendment or waiver pursuant to Section 9.02);
provided that any waiver, amendment or modification requiring the
consent of all Lenders or each affected Lender which affects such Defaulting
Lender differently than other affected Lenders shall require the consent of
such Defaulting Lender;

 

(c)  if any Swingline Exposure or LC
Exposure exists at the time a Lender becomes a Defaulting Lender then:

 

(i)  all or any part of such Swingline
Exposure and LC Exposure shall be reallocated among the non-Defaulting Lenders
in accordance with their respective Applicable Percentages but only to the
extent (x) the sum of all non-Defaulting Lenders’ Revolving Exposures plus
such

 

47

 

Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed
the total of all non-Defaulting Lenders’ Commitments and (y) the
conditions set forth in Section 4.02 are satisfied at such time; and

 

(ii)  if the reallocation described in
clause (i) above cannot, or can only partially, be effected, the Borrower
shall within one (1) Business Day following notice by the Administrative
Agent (x) first, prepay such Swingline Exposure and (y) second,
cash collateralize such Defaulting Lender’s LC Exposure (after giving effect to
any partial reallocation pursuant to clause (i) above) in accordance with
the procedures set forth in Section 2.06(j) for so long as such LC
Exposure is outstanding;

 

(iii)  if the Borrower cash
collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to Section 2.20(c),
the Borrower shall not be required to pay any fees to such Defaulting Lender
pursuant to Section 2.12(b) with respect to such Defaulting Lender’s
LC Exposure during the period such Defaulting Lender’s LC Exposure is cash
collateralized;

 

(iv)  if the LC Exposure of the
non-Defaulting Lenders is reallocated pursuant to Section 2.20(c), then
the fees payable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall
be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Percentages; or

 

(v)  if any Defaulting Lender’s LC
Exposure is neither cash collateralized nor reallocated pursuant to Section 2.20(c),
then, without prejudice to any rights or remedies of the Issuing Bank or any
Lender hereunder, all letter of credit fees payable under Section 2.12(b) with
respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing
Bank until such LC Exposure is cash collateralized and/or reallocated; and

 

(d)  so long as any Lender is a
Defaulting Lender, the Issuing Bank shall not be required to issue, amend or
increase any Letter of Credit, unless it is satisfied that the related exposure
will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash
collateral will be provided by the Borrower in accordance with Section 2.20(c),
and participating interests in any such newly issued or increased Letter of
Credit or newly made Swingline Loan shall be allocated among non-Defaulting
Lenders in a manner consistent with Section 2.20(c)(i) (and
Defaulting Lenders shall not participate therein).

 

In the event that the
Administrative Agent, the Borrower, the Issuing Bank and the Swingline Lender
each agrees that a Defaulting Lender has adequately remedied all matters that
caused such Lender to be a Defaulting Lender, then the Swingline Exposure and
LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such
Lender’s Commitment and on such date such Lender shall purchase at par such of
the Loans of the other Lenders (other than Swingline Loans) as the
Administrative Agent shall determine may be necessary in order for such Lender
to hold such Loans in accordance with its Applicable Percentage.

 

SECTION 2.21.  Returned Payments.  If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the
Administrative Agent or any Lender is for any reason compelled to surrender
such payment or proceeds to any Person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended
to be satisfied shall be revived and continued and this Agreement shall
continue in full force as if such payment or proceeds had not been received by
the Administrative Agent or such Lender. 
The provisions of this Section 2.21 shall be and remain effective
notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance 

 

48

 

upon such payment or application of
proceeds.  The provisions of this Section 2.21
shall survive the termination of this Agreement.

 

SECTION 2.22.  Senior Debt.  The Borrower hereby designates all Secured
Obligations now or hereinafter incurred or otherwise outstanding, and agrees
that the Secured Obligations shall at all times constitute, senior indebtedness
and designated senior indebtedness, or terms of similar import, which are
entitled to the benefits of the subordination provisions of all Subordinated
Indebtedness.

 

ARTICLE
III

 

Representations and Warranties

 

Each Loan Party represents
and warrants to the Lenders that:

 

SECTION 3.01.  Organization; Powers.  Each of the Loan Parties and each of its
Subsidiaries (other than Excluded Subsidiaries) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where the failure to
so qualify could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.

 

SECTION 3.02.  Authorization;
Enforceability.  The
Transactions are within each Loan Party’s organizational powers and have been
duly authorized by all necessary organizational actions and, if required,
actions by equity holders.  The Loan
Documents to which each Loan Party is a party have been duly executed and
delivered by such Loan Party and constitute a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in
equity or at law.

 

SECTION 3.03.  Governmental
Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except such
as have been obtained or made and are in full force and effect and except for
filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will
not violate in any material respect any Requirement of Law applicable to any
Loan Party or any of its Subsidiaries, (c) will not violate or result in a
default under any indenture, material agreement or other material instrument
binding upon any Loan Party or any of its Subsidiaries or its assets, or give
rise to a right thereunder to require any payment to be made by any Loan Party
or any of its Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of any Loan Party or any of its
Subsidiaries, except Liens created pursuant to the Loan Documents.

 

SECTION 3.04.  Financial Condition;
No Material Adverse Change.  (a) 
Holdings has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended June 30, 2008, reported on by KPMG LLP,
independent public accountants, and (ii) as of and for the fiscal quarter
ended March 31, 2009, certified by its chief financial officer.  Such financial statements present fairly, in
all material respects, the financial position and results of operations and
cash flows of Holdings and its consolidated Subsidiaries as of such dates and
for such periods in accordance with GAAP, subject to year end audit adjustments
and the absence of footnotes in the case of the statements referred to in
clause (ii) above.

 

49

 

(b)  No event, change or condition has
occurred that has had, or could reasonably be expected to have, a Material
Adverse Effect, since March 31, 2009.

 

SECTION 3.05.  Properties.  (a)  Each of the Loan Parties and its
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its material real and personal property, free of all Liens other than those
permitted by Section 6.02.

 

(b)  Each Loan Party and its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property necessary to its business
as currently conducted, and the use thereof by the Loan Parties and its
Subsidiaries does not infringe in any material respect upon the rights of any
other Person, and the Loan Parties’ rights thereto are not subject to any
licensing agreement or similar arrangement (other than customary licensing
agreements and arrangements in respect of software, technology and
advertising).

 

SECTION 3.06.  Litigation and
Environmental Matters.  (a) 
Except for the Disclosed Matters, there are not any actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of Holdings or the Borrower, threatened against or
affecting Holdings or the Borrower or any Subsidiary or any business, property
or rights of any such Person (i) which involve any Loan Document or the
Transactions or (ii) as to which there is a reasonable possibility of an
adverse determination and which (A) if adversely determined, would
individually result in a loss of greater than $300,000 or (B) if adversely
determined (excluding any actions, suits or proceedings at law or in equity or
by or before any Governmental Authority that would individually result in a
loss of $300,000 or less), in the aggregate could reasonably be expected to
result in a Material Adverse Effect.

 

(b)  None of Holdings, the Borrower or
any of the Subsidiaries or any of their respective material properties or
assets is in violation of, nor will the continued operation of their material
properties and assets as currently conducted violate, any law, rule or
regulation (including any zoning, building, Environmental Law, ordinance, code
or approval or any building permits), or is in default with respect to any
judgment, writ, injunction or decree of any Governmental Authority, except any
such violations or defaults that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

(c)  Except for the Disclosed Matters,
the soils and groundwater beneath the properties and facilities owned or
operated by Holdings, the Borrower and the Subsidiaries (the “Properties”) do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute a violation
of, or (ii) give rise to liability under, Environmental Laws, which violations
and liabilities, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

 

(d) Except for the Disclosed Matters,
the Properties and all operations of Holdings, the Borrower and the
Subsidiaries are in compliance, and in the last three years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that such
non-compliance or failure to obtain any necessary permits, in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

(e) Except for the Disclosed Matters,
there have been no Releases or threatened Releases at, from, under or proximate
to the Properties or otherwise in connection with the operations of Holdings,
the Borrower or the Subsidiaries, which Releases or threatened Releases, in the
aggregate, could reasonably be anticipated to result in a Material Adverse
Effect.

 

50

 

(f) Except for the Disclosed Matters,
none of Holdings, the Borrower or any of the Subsidiaries has received any
written notice of an Environmental Claim in connection with the Properties or
the operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters Holdings, the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could reasonably be
anticipated to result in a Material Adverse Effect, nor do Holdings, the
Borrower or the Subsidiaries have reason to believe that any such notice will
be received or is being threatened.

 

(g)  Since the date of this Agreement,
there has been no change in the status of the Disclosed Matters that,
individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.

 

SECTION 3.07.  Compliance with Laws
and Agreements.  Each Loan
Party and its Subsidiaries is in compliance with all Requirements of Law
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  No Default
has occurred and is continuing.

 

SECTION 3.08.  Investment Company
Status.  No Loan Party nor any
of its Subsidiaries is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.

 

SECTION 3.09.  Taxes.  Each Loan Party and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed by it and has paid or caused to be paid all Taxes required to have
been paid by it as shown thereon, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which such Loan
Party or such Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not be expected
to result in a Material Adverse Effect. 
No material tax liens have been filed and no material claims are being
asserted with respect to any such taxes.

 

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.

 

SECTION 3.11.  Disclosure.  As of the date hereof, Holdings and the
Borrower have disclosed to the Lenders or in their filings with the Securities
and Exchange Commission and available on their website, all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary
is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of the any Loan Party to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or any other Loan Document (as modified or supplemented by other
information so furnished and considered as a whole) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower and Holdings represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time delivered and, if such projected financial information was delivered prior
to the Effective Date, as of the Effective Date.

 

51

 

SECTION 3.12.  Material Agreements.  No Loan Party is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement to which it is a party which could
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.13.  Solvency.  (a)  Immediately after the consummation
of the Transactions to occur on the Effective Date, (i) the fair value of
the assets of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (ii) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will
be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (iv) each
Loan Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted after the Effective Date.

 

(b)   No Loan Party intends to, or will permit any
of its Subsidiaries to, and no Loan Party believes that it or any of its
Subsidiaries will, incur debts beyond its ability to pay such debts as they
mature, taking into account the timing of and amounts of cash to be received by
it or any such Subsidiary and the timing of the amounts of cash to be payable
on or in respect of its Indebtedness or the Indebtedness of any such
Subsidiary.

 

SECTION 3.14.  Insurance.  Schedule 3.14 sets forth a description
of all insurance maintained by or on behalf of the Loan Parties and the
Subsidiaries as of the Effective Date. 
As of the Effective Date, all premiums in respect of such insurance have
been paid.  The Borrower and Holdings
believe that the insurance maintained by or on behalf of the Borrower and the
Subsidiaries is adequate.

 

SECTION 3.15.  Capitalization and
Subsidiaries.  Schedule
3.15 sets forth (a) a correct and complete list of the name and
relationship to the Borrower of each and all of the Borrower’s Subsidiaries, (b) a
true and complete listing of each class of each of the Borrower’s authorized
Equity Interests, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and owned beneficially and of
record by the Persons identified on Schedule 3.15, and (c) the type
of entity of the Borrower  and each of
its Subsidiaries.  All of the issued and
outstanding Equity Interests owned by any Loan Party has been (to the extent
such concepts are relevant with respect to such ownership interests) duly
authorized and issued and is fully paid and non assessable.

 

SECTION 3.16.  No Burdensome
Restrictions.  No Loan Party  is a party to any agreement or instrument or
subject to any corporate restriction that has resulted or could reasonably be
expected to result in a Material Adverse Effect.

 

SECTION 3.17.  Federal Reserve
Regulations.  None of Holdings,
the Borrower or any of the Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock. 
No part of the proceeds of any Loan have been used or will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations T, U and X.

 

SECTION 3.18.  Security Interest in
Collateral.  The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, and upon the filing of required financing
statements by the Administrative Agent, such Liens constitute perfected and
continuing Liens on the Collateral, securing the Secured Obligations,
enforceable against the applicable Loan Party and all third parties, and having
priority over all other Liens on the Collateral except in the case of (a) Permitted

 

52

 

Encumbrances, to the extent any such
Permitted Encumbrances would have priority over the Liens in favor of the
Administrative Agent pursuant to any applicable law and (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Administrative Agent has not obtained or does not maintain
possession of such Collateral.

 

SECTION 3.19.  Employment Matters.  As of the Effective Date, there are no
strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending
or, to the knowledge of the Borrower, threatened.  The hours worked by and payments made to
employees of the Loan Parties and the Subsidiaries have not been in violation
of the Fair Labor Standards Act or any other applicable Federal, state, local
or foreign law dealing with such matters except where such violation could not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.  All material
payments due from any Loan Party or any Subsidiary, or for which any claim may
be made against any Loan Party or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Loan Party or such Subsidiary.

 

SECTION 3.20.  Common Enterprise.  The successful operation and condition of
each of the Loan Parties is dependent on the continued successful performance
of the functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties is dependent on the successful
performance and operation of each other Loan Party.  Each Loan Party expects to derive benefit
(and its board of directors or other governing body has determined that it may
reasonably be expected to derive benefit), directly and indirectly, from (i) successful
operations of each of the other Loan Parties and (ii) the credit extended
by the Lenders to the Borrower hereunder, both in their separate capacities and
as members of the group of companies. 
Each Loan Party has determined that execution, delivery, and performance
of this Agreement and any other Loan Documents to be executed by such Loan
Party is within its purpose, will be of direct and indirect benefit to such
Loan Party, and is in its best interest.

 

SECTION 3.21.  Credit Card Processors.  As of the Effective Date, Schedule 3.21
lists all Credit Card Processors that provide any Loan Party with credit card
processing services, and such Schedule correctly identifies the name and
address of each Credit Card Processor, and the name in which such services are
provided. True and complete copies of each agreement listed on Schedule 3.21
have been delivered to the Administrative Agent, together with all amendments,
waivers and other modifications thereto. All such agreements are valid,
subsisting, in full force and effect, are currently binding upon each Loan
Party that is a party thereto and binding upon the other parties thereto in
accordance with their terms. The Loan Parties are in compliance in all material
respects under such agreements.

 

ARTICLE
IV

 

Conditions

 

SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(a)  Credit
Agreement and Loan Documents. 
The Administrative Agent (or its counsel) shall have received (i) from
each party hereto either (A) a counterpart of this Agreement signed on
behalf of such party or (B) written evidence satisfactory to the
Administrative Agent (which may include facsimile or electronic transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and (ii) duly executed copies of the Loan
Documents and such other certificates, documents, instruments and agreements as
the Administrative

 

53

 

Agent shall reasonably request in connection with
the transactions contemplated by this Agreement and the other Loan Documents,
including any promissory notes requested by a Lender pursuant to Section 2.10
payable to the order of each such requesting Lender and written opinions of the
Loan Parties’ counsels, addressed to the Administrative Agent, the Issuing Bank
and the Lenders in substantially the form of Exhibit B, all in form
and substance satisfactory to the Administrative Agent and its counsel and as
further described in the list of closing documents attached as Exhibit F.

 

(b)  Financial
Statements and Projections. 
The Lenders shall have received (i) satisfactory audited
consolidated financial statements of Holdings and the Borrower for the 2007 and
2008 fiscal years, (ii) satisfactory unaudited interim consolidated
financial statements of Holdings and the Borrower for each fiscal quarterly
period ended after the date of the latest applicable financial statements
delivered pursuant to clause (i) of this paragraph and (iii) the
Borrower’s most recent projected income statement, balance sheet and cash
flows, prepared on a quarterly basis for the 2009 and 2010 fiscal years and on
an annual basis for the 2011 and 2012 fiscal years (including, without limitation,
a reasonably detailed description of the assumptions used in preparing such
projections), all in form and detail reasonably satisfactory to the
Administrative Agent.

 

(c)  Closing
Certificates; Certified Certificate of Incorporation; Good Standing Certificates.  The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Effective Date and executed by its
Secretary or Assistant Secretary, which shall (A) certify the resolutions
of its Board of Directors, members or other body authorizing the execution,
delivery and performance of the Loan Documents to which it is a party, (B) identify
by name and title and bear the signatures of the Financial Officers and any
other officers of such Loan Party authorized to sign the Loan Documents to
which it is a party, and (C) contain appropriate attachments, including
the certificate or articles of incorporation or organization of each Loan Party
certified by the relevant authority of the jurisdiction of organization of such
Loan Party and a true and correct copy of its by laws or operating, management
or partnership agreement, and (ii) a good standing certificate for each
Loan Party from its jurisdiction of organization.

 

(d)  No Default
Certificate.  The
Administrative Agent shall have received a certificate, signed by the chief
financial officer of Holdings, on the initial Borrowing date (i) stating
that no Default has occurred and is continuing, (ii) stating that the
representations and warranties contained in Article III are true and
correct as of such date, and (iii) certifying any other factual matters as
may be reasonably requested by the Administrative Agent.

 

(e)  Fees.  The Lenders and the Administrative Agent
shall have received all fees required to be paid, and all reasonable expenses
for which reasonably detailed invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Effective
Date.

 

(f)  Lien
Searches.  The Administrative
Agent shall have received the results of a recent lien search in each of the
jurisdictions where the Loan Parties are located, and such search shall reveal
no liens on any of the assets of the Loan Parties except for liens permitted by
Section 6.02 or discharged on or prior to the Effective Date pursuant to a
pay-off letter or other documentation satisfactory to the Administrative Agent.

 

(g)  Pay-Off
Letter.  Unless the same has
previously been terminated, the Administrative Agent shall have received
satisfactory pay-off letter for the Existing Credit Agreement, confirming that
all Liens upon any of the property of the Loan Parties constituting Collateral
will be terminated concurrently with such payment and all letters of credit
(other than the Existing Letters of Credit) issued or guaranteed as part of
such Existing Credit Agreement shall have been cash 

 

54

 

collateralized or supported by a Letter of Credit or otherwise
satisfied in a manner satisfactory to the Administrative Agent.

 

(h)  Funding
Account.  The Administrative
Agent shall have received a notice setting forth the deposit account of the
Borrower (the “Funding Account”) to which the Administrative Agent is
authorized by the Borrower to transfer the proceeds of any Borrowings requested
or authorized pursuant to this Agreement.

 

(i)  Solvency.  The Administrative Agent shall have received
a solvency certificate from the chief financial officer of the Borrower in form
and substance satisfactory to the Administrative Agent.

 

(j)  Borrowing
Base Certificate.  The
Administrative Agent shall have received a Borrowing Base Certificate which
calculates the Borrowing Base as of the end of the calendar quarter immediately
preceding the Effective Date.

 

(k)  Closing
Availability.  After giving
effect to all Borrowings to be made on the Effective Date and the issuance of
any Letters of Credit on the Effective Date and payment of all fees and
expenses due hereunder, and with all of the Loan Parties’ indebtedness,
liabilities, and obligations current, Availability shall not be less than
$25,000,000.

 

(l)  Pledged Stock; Stock Powers;
Pledged Notes.  The Administrative
Agent shall have received (i) the certificates representing the shares of
Equity Interests pledged pursuant to the Security Agreement, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each promissory note
(if any) pledged to the Administrative Agent pursuant to the Security Agreement
endorsed (without recourse) in blank (or accompanied by an executed transfer
form in blank) by the pledgor thereof.

 

(m)  Filings, Registrations and
Recordings.  Each document (including
any UCC financing statement) required by the Collateral Documents or under law
or reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a perfected Lien on the Collateral described
therein and being provided on the Effective Date, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by Section 6.02),
shall be in proper form for filing, registration or recordation.

 

(n)  Insurance.  The Administrative Agent shall have received
evidence of insurance coverage in form, scope, and substance reasonably
satisfactory to the Administrative Agent and otherwise in compliance with the
terms of Section 5.09 and Section 4.12 of the Security Agreement.

 

(o)   Letter of Credit
Application.  The Administrative
Agent shall have received a properly completed letter of credit application if
the issuance of a Letter of Credit will be required on the Effective Date.

 

(p)   Other Documents.  The Administrative Agent shall have received
such other documents and information as the Administrative Agent, the Issuing
Bank, any Lender or their respective counsel may have reasonably requested.

 

The Administrative Agent
shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. 
Notwithstanding the foregoing, the obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective unless 

 

55

 

each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.02) at or prior
to 3:00 p.m., New York City time, on May 29, 2009 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).

 

SECTION 4.02.  Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

 

(a)  The representations and warranties
of the Borrower set forth in this Agreement shall be true and correct on and as
of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

 

(b)  At the time of and immediately
after giving effect to such Borrowing or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, no Default shall have
occurred and be continuing.

 

(c)  After giving effect to any
Borrowing or the issuance of any Letter of Credit, Availability is not less
than zero.

 

Each Borrowing and each
issuance, amendment, renewal or extension of a Letter of Credit shall be deemed
to constitute a representation and warranty by the Borrower on the date thereof
as to the matters specified in paragraphs (a), (b) and (c) of this
Section.

 

Notwithstanding the failure
to satisfy the conditions precedent set forth in paragraphs (a) or (b) of
this Section, unless otherwise directed by the Required Lenders, the Administrative
Agent may, but shall have no obligation to, continue to make Loans and an
Issuing Bank may, but shall have no obligation to, issue or cause to be issued
any Letter of Credit for the ratable account and risk of Lenders from time to
time if the Administrative Agent believes that making such Loans or issuing or
causing to be issued any such Letter of Credit is in the best interests of the
Lenders.

 

ARTICLE
V

 

Affirmative Covenants

 

Until the Commitments have
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, each Loan Party executing this Agreement covenants and agrees,
jointly and severally with all of the Loan Parties, with the Lenders that:

 

SECTION 5.01.  Financial
Statements; Borrowing Base and Other Information.  The Borrower will furnish to the
Administrative Agent and each Lender:

 

(a)  within ninety (90) days after the
end of each fiscal year of Holdings, its audited consolidated and consolidating
balance sheets and related consolidated and consolidating statements of
operations and consolidated statements of shareholders’ equity and cash flows
as of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by KPMG LLP or
other independent public accountants of recognized national standing (without a
“going
concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of Holdings and its 

 

56

 

consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, accompanied by any management letter prepared by
said accountants;

 

(b)  within forty-five (45) days after
the end of each of the first three fiscal quarters of each fiscal year of
Holdings, its consolidated and consolidating balance sheets and related
consolidated and consolidating statements of operations and consolidated
statements of shareholders’ equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of Holdings and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;

 

(c)  if and so long as the Availability
Trigger is in effect, within twenty (20) days after the end of each calendar
month, Holdings’ consolidated and consolidating balance sheets and related
consolidated and consolidating statements of operations and consolidated
statements of shareholders’ equity and cash flows as of the end of and for such
calendar month and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of Holdings and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;

 

(d)  concurrently with any delivery of
financial statements under clause (a) or (b) above, a certificate of
a Financial Officer of the Borrower in substantially the form of Exhibit D  (i) certifying, in the case of the
financial statements delivered under clause (b), as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes, (ii) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto, (iii) setting
forth reasonably detailed calculations demonstrating compliance with Section 6.12
and (iv) to the extent not discussed in the footnotes to financial
statements delivered pursuant to clauses (a) and (b) above, stating
whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 3.04 and,
if any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;

 

(e)  concurrently with any delivery of
financial statements under clause (a) above, a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines);

 

(f)  as soon as available, but in any
event not more than thirty (30) days prior to the end of each fiscal year of
the Holdings, a copy of the plan and forecast (including a projected
consolidated balance sheet, income statement and funds flow statement) of
Holdings for each quarter of the upcoming fiscal year (the “Projections”)
in form reasonably satisfactory to the Administrative Agent;

 

57

 

(g)  as soon as available but in any
event within twenty (20) days after the end of each fiscal quarter of each
fiscal year of Holdings ((or within twenty (20) days of the end of each
calendar month if and so long as the Monthly Reporting Trigger is in effect)
(or within four (4) days of the end of each calendar week if and so long
as the Availability Trigger is in effect)), and at such other times as may be
requested by the Administrative Agent upon at least four (4) days’ prior
notice to the Borrower, as of the period then ended, a Borrowing Base
Certificate and supporting information in connection therewith (including, in
respect of any Borrowing Base Certificate delivered for a month which is also
the end of any fiscal quarter of Holdings, a calculation of Average Quarterly
Availability for such quarter then ended and an indication of what the
Applicable Rate is as a result of such Average Quarterly Availability),
together with any additional reports with respect to the Borrowing Base as the
Administrative Agent may reasonably request; provided that if, at the
time the Lenders make any Loan to the Borrower hereunder and the Borrower shall
not have delivered a Borrowing Base Certificate within the preceding twenty
(20) days, the Borrower shall deliver a Borrowing Base Certificate to the
Administrative Agent as soon as available but in any event within ten (10) days
of the funding of such Loan, which Borrowing Base Certificate shall set forth
the Borrowing Base as of the last day of the calendar month most recently
ended;

 

(h)  as soon as available but in any
event within twenty (20) days after the end of each fiscal quarter of each
fiscal year of Holdings ((or within twenty (20) days of the end of each
calendar month if and so long as the Monthly Reporting Trigger is in effect)
(or within four (4) days of the end of each calendar week if and so long
as the Availability Trigger is in effect)), and at such other times as may be
requested by the Administrative Agent upon at least four (4) days’ prior
notice to the Borrower, as of the period then ended, all delivered
electronically in a text formatted file acceptable to the Administrative Agent:

 

(i)  a detailed aging of the each Loan
Party’s Accounts (but only a detailed schedule in the case of Credit Card
Account Receivables) (1) including all invoices aged by invoice date and
due date (with an explanation of the terms offered if not then standard) and (2) reconciled
to the Borrowing Base Certificate delivered as of such date prepared in a
manner reasonably acceptable to the Administrative Agent, together with a
summary specifying the name, address, and balance due for each Account Debtor;

 

(ii)  a schedule detailing each Loan
Party’s Inventory, in form satisfactory to the Administrative Agent, (1) by
location (showing Inventory in transit, any Inventory located with a third
party under any consignment, bailee arrangement, or warehouse agreement), by
class (raw material, work-in-process and finished goods), by product type, and
by volume on hand, which Inventory shall be valued at the lower of cost
(determined on a first-in, first-out basis) or market and adjusted for Reserves
as the Administrative Agent has previously indicated to the Borrower are deemed
by the Administrative Agent to be appropriate, (2) including a report of
any variances or other results of Inventory counts performed by such Loan Party
since the last Inventory schedule (including information regarding sales or
other reductions, additions, returns, credits issued by such Loan Party and
complaints and claims made against such Loan Party which in the aggregate
exceed $100,000 in such month), and (3) reconciled to the Borrowing Base
Certificate delivered as of such date;

 

(iii)  a worksheet of calculations
prepared by each Loan Party to determine Eligible Accounts, Eligible Credit
Card Account Receivables and Eligible Inventory, such worksheets detailing the
Accounts, Credit Card Account Receivables and Inventory excluded from Eligible
Accounts, Eligible Credit Card Account Receivables and Eligible Inventory and
the reason for such exclusion;

 

58

 

(iv)  a reconciliation of each Loan
Party’s Accounts, Credit Card Account Receivables and Inventory between the
amounts shown in such Loan Party’s general ledger and financial statements and
the reports delivered pursuant to clauses (i) and (ii) above; and

 

(v)  a reconciliation of the loan
balance per each Loan Party’s general ledger to the loan balance under this
Agreement;

 

(i)  as soon as available but in any
event within twenty (20) days after the end of each fiscal quarter of each
fiscal year of Holdings ((or within twenty (20) days of the end of each
calendar month if and so long as the Monthly Reporting Trigger is in effect)
(or within four (4) days of the end of each calendar week if and so long
as the Availability Trigger is in effect)), and at such other times as may be
requested by the Administrative Agent upon at least four (4) days’ prior
notice to the Borrower, as of the fiscal quarter (or month or week, if
applicable) then ended, a detailed schedule of each Loan Party’s accounts
payable, delivered electronically in a text formatted file acceptable to the
Administrative Agent;

 

(j)  promptly upon the Administrative
Agent’s request:

 

(i)  copies of invoices in connection
with the invoices issued by each Loan Party in connection with any Accounts
(including, without limitation, Credit Card Account Receivables), credit memos,
shipping and delivery documents, and other information related thereto;

 

(ii)  copies of purchase orders,
invoices, and shipping and delivery documents in connection with any Inventory
or Equipment purchased by any Loan Party; and

 

(iii)  a schedule detailing the balance
of all intercompany accounts of the Loan Parties;

 

(k)  to the extent requested by the
Administrative Agent, copies of all tax returns filed by any Loan Party with
the U.S. Internal Revenue Service;

 

(l)  promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements
and other materials filed by Holdings, the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national securities
exchange, or distributed by Holdings or the Borrower to its shareholders
generally, as the case may be; and

 

(m)  promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of Holdings, the Borrower or any Subsidiary, or compliance
with the terms of this Agreement, as the Administrative Agent or any Lender may
reasonably request.

 

Documents
required to be delivered pursuant to clauses (a) and (b) of this Section 5.01
may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date on which such documents (i) shall have been
posted by the Administrative Agent on IntraLinks or similar site to which the
Lenders have been granted access or (ii) shall be available on the website
of the Securities and Exchange Commission at www.sec.gov, provided that
Holdings shall have delivered a notice to the Administrative Agent that such
information is so available.  Information
required to be delivered pursuant to this Section may be delivered by
electronic communications pursuant to procedures approved by the Administrative
Agent.  Notwithstanding anything
contained herein, in every instance the Borrower shall 

 

59

 

be
required to provide copies of the compliance certificates required by clause (d) of
this Section 5.01 to the Administrative Agent.

 

SECTION 5.02.  Notices of Material
Events.  The Borrower and
Holdings will furnish to the Administrative Agent and each Lender prompt
written notice of the following:

 

(a)  the occurrence of any Default;

 

(b)  receipt of any notice of any
governmental investigation or any litigation or proceeding commenced or
threatened against any Loan Party that (i) seeks damages in excess of
$10,000,000, (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Plan, its fiduciaries or its assets, (iv) alleges
criminal misconduct by any Loan Party, (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental Laws,
that could reasonably be expected to result in liabilities in excess of
$10,000,000 (vi) contests any tax, fee, assessment, or other governmental
charge in excess of $10,000,000, or (vii) involves any product recall;

 

(c)  any Lien (other than Permitted
Encumbrances) or claim made or asserted against any of the Collateral;

 

(d)  
any and all default notices received under or with respect to any leased
location or public warehouse where Collateral (with a book value in excess of
$10,000,000) is located (which shall be delivered within five (5) Business
Days after receipt thereof);

 

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

 

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

 

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

 

SECTION 5.03.  Existence; Conduct
of Business.  Each Loan Party
will, and will cause each Subsidiary (other than Excluded Subsidiaries) to, (a) do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, qualifications, licenses,
permits, privileges, franchises, governmental authorizations and intellectual
property rights material to the conduct of its business, and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted except where failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect; provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 and (b) carry on and conduct
its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted.

 

SECTION 5.04.  Payment of
Obligations.  Each Loan Party
will, and will cause each  Subsidiary to,
pay or discharge all Material Indebtedness and all other material liabilities
and obligations, including Taxes, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) such Loan Party or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

 

60

 

SECTION 5.05.  Maintenance of
Properties.  Each Loan Party
will, and will cause each Subsidiary to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted.

 

SECTION 5.06.  Books and Records;
Inspection Rights.  Without
limiting Sections 5.11 or 5.12 hereof, each Loan Party will, and will cause
each Subsidiary to, maintain all financial records in accordance with GAAP and
permit any representatives designated by any Lender, upon reasonable prior
notice (except that no prior notice shall be required if an Event of Default
has occurred and is continuing) to visit and inspect the financial records and
the properties of Holdings, the Borrower or any Subsidiary at reasonable times
(during normal business hours) and as often as requested and to make extracts
from and copies of such financial records, and permit any representatives
designated by any Lender to discuss the affairs, finances and condition of
Holdings, the Borrower or any Subsidiary with the officers thereof and
independent accountants therefor; provided
that any such visitation and inspection rights shall be exercised in a
reasonable manner that does not disrupt the business activities of Holdings,
the Borrower and its Subsidiaries.  The
Loan Parties acknowledge that the Administrative Agent, after exercising its
rights of inspection, may prepare and distribute to the Lenders certain Reports
pertaining to the Loan Parties’ assets for internal use by the Administrative
Agent and the Lenders.

 

SECTION 5.07.  Compliance with Laws.  Each Loan Party will, and will cause each
Subsidiary to, comply with all Requirements of Law applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.08.  Use of Proceeds.  The proceeds of the Loans will be used only
for general corporate purposes of the Borrower and its Subsidiaries in the
ordinary course of business.  No part of
the proceeds of any Loan and no Letter of Credit will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X.

 

SECTION 5.09.  Insurance.  Each Loan Party will, and will cause each
Subsidiary to, maintain with financially sound and reputable carriers having a
financial strength rating of at least A- by A.M. Best Company (a) insurance
in such amounts (with no greater risk retention) and against such risks
(including loss or damage by fire and loss in transit; theft, burglary,
pilferage, larceny, embezzlement, and other criminal activities; business
interruption; and general liability) and such other hazards, as is customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations and (b) all
insurance required pursuant to the Collateral Documents.  The Borrower will furnish to the Lenders,
upon request of the Administrative Agent, information in reasonable detail as
to the insurance so maintained.

 

SECTION 5.10.  Casualty and
Condemnation.  The Borrower (a) will
furnish to the Administrative Agent and the Lenders prompt written notice of
any casualty or other insured damage to any material portion of the Collateral
or the commencement of any action or proceeding for the taking of any material
portion of the Collateral or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net
Proceeds of any such event (whether in the form of insurance proceeds,
condemnation awards or otherwise) are collected and applied in accordance with
the applicable provisions of this Agreement and the Collateral Documents.

 

SECTION 5.11.  Appraisals.  At any time that the Administrative Agent
requests, the Loan Parties will provide the Administrative Agent with
appraisals or updates thereof of their Inventory from an appraiser selected and
engaged by the Administrative Agent, and prepared on a basis satisfactory to
the Administrative Agent, such appraisals and updates to include, without
limitation, information 

 

61

 

required by applicable law and
regulations.  It is anticipated that up
to three (3) appraisals per year will be conducted; provided that (i) no
more than one (1) appraisal per year will be conducted unless the
Administrative Agent elects to conduct a second appraisal in its sole
discretion, (ii) no more than three (3) appraisals per year will be
conducted if any Loans are outstanding, and average monthly Availability is
less than an amount equal to the greater of (x) 20% of the Aggregate
Commitment and (y) $10,000,000 at such time, and (iii) there shall be
no limitation on the number or frequency of appraisals if an Event of Default
shall have occurred and be continuing. 
For purposes of this Section 5.11, it is understood and agreed that
a single Inventory appraisal may consist of examinations conducted at multiple
relevant sites and involve one or more relevant Loan Parties and their
assets.  All such appraisals shall be at
the sole expense of the Loan Parties.

 

SECTION 5.12.  Field Examinations.  At any time that the Administrative Agent
requests, the Loan Parties will permit, upon reasonable notice, the
Administrative Agent to conduct a field examination to ensure adequacy of
Collateral included in the Borrowing Base and related reporting and control
systems.  It is anticipated that up to
three (3) field examinations per year will be conducted; provided
that (i) no more than one (1) field examination per year will be
conducted unless the Administrative Agent elects to conduct a second field
examination in its sole discretion, (ii) no more than three (3) field
examinations per year will be conducted if any Loans are outstanding, and
average monthly Availability is less than an amount equal to the greater of (x) 20%
of the Aggregate Commitment and (y) $10,000,000, at such time, and (iii) there
shall be no limitation on the number or frequency of field examinations if an
Event of Default shall have occurred and be continuing.  For purposes of this Section 5.12, it is
understood and agreed that a single field examination may consist of
examinations conducted at multiple relevant sites and involve one or more
relevant Loan Parties and their assets. 
All such field examinations shall be at the sole expense of the Loan
Parties.

 

SECTION 5.13.  [Intentionally
Omitted].

 

SECTION 5.14.  Credit Card
Processors.  Each Loan Party
will (a) comply in all material respects with all obligations of such Loan
Party under each credit card processing agreement to which such Loan Party is a
party, (b) maintain each credit card processing agreement set forth on Schedule 3.21 and each credit card processing agreement entered
into after the Effective Date in full force and effect (except to the extent
such Loan Party elects to terminate the same and so notifies the Administrative
Agent) and take or cause to be taken all actions necessary to maintain,
preserve and protect the rights and interests of the Administrative Agent in
all material respects with respect to all such agreements, (c) use
commercially reasonable efforts to obtain a Processor Control Agreement with
respect to each Credit Card Processor providing any credit card processing
services for or on behalf of such Loan Party and listed on Schedule 3.21 within sixty (60) days after the Effective Date and (d) promptly
notify the Administrative Agent of the entry by such Loan Party into any credit
card processing agreement with any Credit Card Processor after the Effective
Date and (subject to Section 5.15(e) with respect to any credit card
processing agreement acquired by such Loan Party in connection with the
consummation of a Permitted Acquisition) obtain a Processor Control Agreement
with respect to each such Credit Card Processor contemporaneously with the
entry by such Loan Party into such credit processing agreement.

 

SECTION 5.15.  Additional Collateral;
Further Assurances.  (a) 
Holdings shall cause each of its Material Domestic Subsidiaries formed or
acquired after the Effective Date, and each Domestic Subsidiary which is not a
Material Domestic Subsidiary on the Effective Date but which qualifies as a
Material Domestic Subsidiary after the Effective Date, in accordance with the
terms of this Agreement to become a Loan Party by executing the Joinder
Agreement set forth as Exhibit E hereto (the “Joinder Agreement”)
within thirty (30) days (or such later date as may be agreed upon by the
Administrative Agent) of such formation, acquisition or qualification, such
Joinder Agreement to be accompanied by appropriate corporate resolutions, other
corporate organizational and authorization 

 

62

 

documentation and legal opinions in form and
substance reasonably satisfactory to the Administrative Agent. Upon execution
and delivery thereof, each such Person (i) shall automatically become a
Loan Guarantor hereunder and thereupon shall have all of the rights, benefits,
duties, and obligations in such capacity under the Loan Documents and (ii) will
grant Liens to the Administrative Agent, for the benefit of the Secured
Parties, in any property of such Loan Party which constitutes Collateral.

 

(b)  Without limiting the generality of
the foregoing, Holdings will cause the Applicable Pledge Percentage of the
issued and outstanding Equity Interests of each Pledge Subsidiary directly
owned by Holdings or any other Loan Party to be subject at all times to a first
priority, perfected Lien in favor of the Administrative Agent, for the benefit
of the Administrative Agent and the Lenders, to secure the Secured Obligations
in accordance with the terms and conditions of the Collateral Documents or such
other security documents as the Administrative Agent shall reasonably
request.  Notwithstanding the foregoing,
no such pledge agreement in respect of the Equity Interests of a Foreign
Subsidiary shall be required hereunder (i) (A) until the date that is
sixty (60) days immediately following the Effective Date (or such later date as
may be agreed upon by the Administrative Agent) in the case of Material Foreign
Subsidiaries in existence on the Effective Date and (B) within sixty (60)
days (or such later date as may be agreed upon by the Administrative Agent) in
the case of a Material Foreign Subsidiary formed or acquired, or a Foreign
Subsidiary otherwise qualifying as a Material Foreign Subsidiary, after the
Effective Date and (ii) to the extent the Administrative Agent or its
counsel determines that, in light of the cost and expense associated therewith,
such pledge would not provide material credit support for the benefit of the
Secured Parties pursuant to legally valid, binding and enforceable pledge
agreements.

 

(c)  Without limiting the foregoing,
each Loan Party will, and will cause each Subsidiary to, execute and deliver,
or cause to be executed and delivered, to the Administrative Agent such
documents, agreements and instruments (including, without limitation, the
making of commercially reasonably efforts in respect of deposit account control
agreements and securities account control agreements), and will take or cause
to be taken such further actions (including the filing and recording of
financing statements and other documents and such other actions or deliveries
of the type required by Section 4.01, as applicable), which may be
required by law or which the Administrative Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents and to ensure perfection and priority of the Liens
created or intended to be created by the Collateral Documents, all in form and
substance reasonably satisfactory to the Administrative Agent and all at the
expense of the Loan Parties.

 

(d)  If any material assets (other than
Excluded Assets) are acquired by any Loan Party after the Effective Date (other
than assets constituting Collateral under the Security Agreement that become
subject to the Lien in favor of the Administrative Agent upon acquisition
thereof), the Borrower will notify the Administrative Agent and the Lenders
thereof, and, if requested by the Administrative Agent or the Required Lenders,
the Borrower will cause such assets to be subjected to a Lien securing the
Secured Obligations and will take, and cause the Loan Parties to take, such
actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in paragraph
(c) of this Section, all at the expense of the Loan Parties.

 

(e)  Each Loan Party will use
commercially reasonable efforts to obtain a Processor Control Agreement with
respect to each Credit Card Processor party to a credit card processing
agreement acquired by any Loan Party in connection with the consummation of any
Permitted Acquisition, within sixty (60) days after the consummation of such
Permitted Acquisition.

 

63

 

(f)  On or prior to the Effective Date,
each Loan Party shall deliver to the Administrative Agent executed signature pages and
exhibits to Confirmatory Grants of Security Interest with respect to its
patents, trademarks and copyrights to be held in escrow by the Administrative
Agent until the occurrence of the IP Collateral Trigger Date.  Upon the occurrence of the IP Collateral
Trigger Date, each Loan Party acknowledges and agrees that (i) all
signature pages, exhibits, documents, instruments and other deliveries provided
to the Administrative Agent by such Loan Party to evidence a first priority
security interest of the Administrative Agent in such Loan Party’s patents,
trademarks, and copyrights, shall be automatically and irrevocably released, (ii) the
Administrative Agent shall be authorized to (A) date any such items the
date of the IP Collateral Trigger Date, (B) attach the executed signature pages of
such Loan Party thereto, and (C) make all filings and take any other
actions contemplated thereby in connection with creating and perfecting the
Administrative Agent’s Lien on the patents, trademarks and copyrights of such
Loan Party, and (iii) it shall promptly execute and deliver to the
Administrative Agent a reaffirmation agreement, in form and substance
satisfactory to the Administrative Agent, that reaffirms its obligations under
the Loan Documents (including, without limitation, such Loan Party’s grant to
the Administrative Agent of a first priority security interest in all of such
Loan Party’s patents, trademarks and copyrights).

 

(g) If an agreement with respect to a
joint venture (that is not a Subsidiary) entered into by a Loan Party otherwise
permitted hereunder contains customary restrictions on the granting of Liens on
its assets or Equity Interests of such joint venture, no Lien need be provided
to the Administrative Agent to the extent that such Lien would not be permitted
by the terms of the joint venture agreements.

 

ARTICLE
VI

 

Negative Covenants

 

Until the Commitments have
expired or terminated and the principal of and interest on each Loan and all
fees, expenses and other amounts payable under any Loan Document have been paid
in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Loan Parties covenant and agree,
jointly and severally, with the Lenders that:

 

SECTION 6.01.  Indebtedness.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

 

(a)  the Secured Obligations;

 

(b)  Indebtedness existing on the date
hereof and set forth in Schedule 6.01 and extensions, renewals and
replacements of any such Indebtedness in accordance with clause (f) hereof;

 

(c)  Indebtedness of Holdings or the
Borrower to any Subsidiary and of any Subsidiary to Holdings, the Borrower or
any other Subsidiary; provided that (i) Indebtedness of any
Subsidiary that is not a Loan Party to Holdings, the Borrower or any Subsidiary
that is a Loan Party shall be subject to Section 6.04 and (ii) Indebtedness
of Holdings or the Borrower to any Subsidiary and Indebtedness of any
Subsidiary that is a Loan Party to any Subsidiary that is not a Loan Party
shall be subordinated to the Secured Obligations on terms reasonably
satisfactory to the Administrative Agent;

 

(d)  Guarantees by Holdings or the
Borrower of Indebtedness or other obligations of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided
that (i) the Indebtedness so Guaranteed is permitted by this Section 6.01,
(ii) Guarantees by Holdings, the Borrower or any Subsidiary that is a Loan
Party of Indebtedness of any Subsidiary that 

 

64

 

is not a Loan Party shall be subject to Section 6.04 and (iii) Guarantees
permitted under this clause (d) shall be subordinated to the Secured
Obligations of the applicable Subsidiary on the same terms as the Indebtedness
so Guaranteed is subordinated to the Secured Obligations;

 

(e)  Indebtedness of the Borrower or any
Subsidiary incurred to finance the acquisition, construction or improvement of
any fixed or capital assets (whether or not constituting purchase money
Indebtedness), including Capital Lease Obligations and any Indebtedness assumed
in connection with the acquisition of any such assets or secured by a Lien on
any such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness in accordance with clause (f) hereof;
provided that (i) such Indebtedness is incurred prior to or one
hundred eighty (180) days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (e) shall not exceed $35,000,000 at
any time outstanding;

 

(f)  Indebtedness which represents an
extension, refinancing, or renewal of any of the Indebtedness described in
clauses (b), (e) and (i) hereof; provided that, (i) the
principal amount of such Indebtedness is not increased, (ii) any Liens
securing such Indebtedness are not extended to any additional property of any
Loan Party, (iii) no Loan Party that is not originally obligated with
respect to repayment of such Indebtedness is required to become obligated with
respect thereto, (iv) such extension, refinancing or renewal does not
result in a shortening of the average weighted maturity of the Indebtedness so
extended, refinanced or renewed, (v) the material terms (taken as a whole)
of any such extension, refinancing, or renewal are not less favorable to the
obligor thereunder than the original terms of such Indebtedness and (iv) if
the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Secured Obligations, then the terms and conditions of
the refinancing, renewal, or extension Indebtedness must include subordination
terms and conditions that are at least as favorable to the Administrative Agent
and the Lenders as those that were applicable to the refinanced, renewed, or
extended Indebtedness;

 

(g)  Indebtedness owed to any person
providing workers’ compensation, health, disability or other employee benefits
or property, casualty or liability insurance, pursuant to reimbursement or
indemnification obligations to such person, in each case incurred in the ordinary
course of business;

 

(h)  Indebtedness of the Borrower or any
Subsidiary in respect of performance bonds, bid bonds, appeal bonds, surety
bonds and similar obligations, in each case provided in the ordinary course of
business;

 

(i)  Indebtedness of any Person that
becomes a Subsidiary after the date hereof; provided that (i) such
Indebtedness exists at the time such Person becomes a Subsidiary and is not
created in contemplation of or in connection with such Person becoming a
Subsidiary and (ii) the aggregate principal amount of Indebtedness
permitted by this clause (i) shall not exceed $25,000,000 at any time
outstanding;

 

(j) Indebtedness owed in respect of any
overdrafts and related liabilities arising in the ordinary course of business
from treasury, depository and cash management services or from any automated
clearing-house transfers of funds;

 

(k) obligations under Swap Agreements
permitted under this Agreement;

 

65

 

(l) Indebtedness of Foreign Subsidiaries
incurred for working capital purposes provided that the aggregate principal
amount of Indebtedness permitted by this clause (l) shall not exceed
$10,000,000 at any time outstanding;

 

(m) Guarantees of obligations of
independent licensed Ethan Allen dealers in an aggregate principal amount not
exceeding $5,000,000 at any time outstanding;

 

(n) Indebtedness under sale-leaseback
transactions, and other financing arrangements, in respect of Real Property and
in an aggregate principal amount not exceeding $50,000,000 at any time
outstanding; and

 

(o)  other unsecured Indebtedness in an
aggregate principal amount not exceeding $100,000,000 at any time outstanding.

 

SECTION 6.02.  Liens.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a)  Liens created pursuant to any Loan
Document;

 

(b)  Permitted Encumbrances;

 

(c)  any Lien on any property or asset
of Holdings or any Subsidiary existing on the date hereof and set forth in Schedule
6.02; provided that (i) such Lien shall not apply to any other
property or asset of Holdings or Subsidiary (other than additions thereto that
become part thereof) and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;

 

(d)  Liens on fixed or capital assets
acquired, constructed or improved by Holdings or any Subsidiary; provided
that (i) such security interests secure Indebtedness permitted by clause (e) of
Section 6.01, (ii) such security interests and the Indebtedness
secured thereby are incurred prior to or within one hundred eighty (180) days
after such acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 90% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of the
Borrower or Subsidiary;

 

(e)  any Lien existing on any property
or asset (other than Accounts (including, without limitation, Credit Card
Account Receivables) and Inventory) prior to the acquisition thereof by any
Loan Party or any Subsidiary or existing on any property or asset (other than
Accounts (including, without limitation, Credit Card Account Receivables) and
Inventory) of any Person prior to the acquisition of such Person by any Loan
Party or any Subsidiary; provided that (i) such Lien is not created
in contemplation of or in connection with such acquisition, (ii) such Lien
shall not apply to any other property or assets of a Loan Party and (iii) such
Lien shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Loan Party, as the case may be
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

 

(f)  Liens of a collecting bank arising
in the ordinary course of business under Section 4-208 of the Uniform
Commercial Code in effect in the relevant jurisdiction covering only the items
being collected upon;

 

66

 

(g)  Liens on Real Property arising out
of sale and leaseback transactions, and other financing arrangements, permitted
by Sections 6.01(n) and 6.06;

 

(h) customary rights and restrictions
contained in agreements relating to a sale, transfer or other disposition
applicable pending completion thereof and customary post-closing escrow and
similar arrangements;

 

(i) in the case of any Subsidiary that
is not a wholly-owned Subsidiary, any put, call, right of first refusal and
similar arrangements, and customary transfer restrictions, set forth in its
organizational documents or any related joint venture or similar agreement;

 

(j) leases, subleases, licenses and
sublicenses of assets, in each case entered into by Holdings or any other
Subsidiary in the ordinary course of business, that do not materially interfere
with the conduct of the business of the Holdings and its Subsidiaries taken as
a whole;

 

(k) Liens arising by virtue of UCC
financing statement filings (or similar filings under applicable law) regarding
operating leases entered into by Holdings or any Subsidiary in the ordinary
course of business;

 

(l)Liens consisting of interests of lessors
under capital leases permitted under Section 6.01;

 

(m) Liens on assets of Foreign
Subsidiaries securing Indebtedness permitted by Section 6.01(l);

 

(n)  Liens granted by a Subsidiary that
is not a Loan Party in favor of the Borrower or another Loan Party in respect
of Indebtedness owed by such Subsidiary; and

 

(o)  other Liens on Excluded Assets
securing Indebtedness or other obligations in an aggregate principal amount not
exceeding $1,000,000 at any time outstanding.

 

Notwithstanding the
foregoing, none of the Liens permitted pursuant to this Section 6.02 may
at any time attach to any Loan Party’s (1) Accounts (including, without
limitation, Credit Card Account Receivables), other than those permitted under
clause (a) of the definition of Permitted Encumbrance and clause (a) above
and (2) Inventory, other than those permitted under clauses (a) and (b) of
the definition of Permitted Encumbrance and clause (a) above.

 

SECTION 6.03.  Fundamental Changes.  (a)  No Loan Party will, nor will it
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Event of Default shall have occurred and be continuing (i) any
Subsidiary of Holdings may merge into the Borrower in a transaction in which
the Borrower is the surviving corporation, (ii) any Subsidiary of Holdings
(other than the Borrower) may merge into any Loan Party in a transaction in
which the surviving entity is a Loan Party and (iii) any Subsidiary that
is not a Loan Party may liquidate or dissolve if the Borrower determines in
good faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Lenders; provided
that any such merger involving a Person that is not a wholly owned Subsidiary
immediately prior to such merger shall not be permitted unless also permitted
by Section 6.04.

 

67

 

(b)  No Loan Party will, nor will it
permit any of its Subsidiaries to, engage in any business other than businesses
of the type conducted by the Borrower and its Subsidiaries on the date of
execution of this Agreement and businesses reasonably related thereto.

 

(c)  Holdings will not engage in any
business or activity other than business conducted as of the Effective Date
(and activities incidental thereto) as the parent company of the Borrower and
the other Subsidiaries, as a public company under securities laws.

 

SECTION 6.04.  Investments, Loans,
Advances, Guarantees and Acquisitions.   No Loan Party will, nor will it permit any
Subsidiary to, purchase, hold or acquire (including pursuant to any merger with
any Person that was not a Loan Party and a wholly owned Subsidiary prior to
such merger) any capital stock, evidences of indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any
Indebtedness of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (whether through purchase of assets, merger or
otherwise), except:

 

(a)  Permitted Investments, subject, to
the extent requested by the Administrative Agent, to control agreements in
favor of the Administrative Agent for the benefit of the Secured Parties or
otherwise subject to a perfected security interest in favor of the
Administrative Agent for the benefit of the Secured Parties;

 

(b)  investments, loans and advances in
existence on the date of this Agreement and described in Schedule
6.04;

 

(c)  
investments by Holdings in the Borrower and by the Borrower and the
Subsidiaries in Equity Interests in their respective Subsidiaries; provided
that (A) any such Equity Interests held by a Loan Party shall be pledged
pursuant to, and to the extent required by, the Security Agreement and the
other Collateral Documents (subject to the limitations applicable to common
stock of an Affected Foreign Subsidiary referred to in Section 5.12) and (B) the
aggregate amount of investments by Loan Parties in Subsidiaries that are not
Loan Parties (together with outstanding intercompany loans permitted under the
proviso to Section 6.04(d) and outstanding Guarantees permitted under
the proviso to Section 6.04(e)) shall not exceed $15,000,000 at any time
outstanding (in each case determined without regard to any write-downs or
write-offs);

 

(d)  loans or advances made by a Loan
Party to any Subsidiary and made by any Subsidiary to any Loan Party or any
other Subsidiary; provided that the amount of such loans and advances
made by Loan Parties to Subsidiaries that are not Loan Parties (together with
outstanding investments permitted under clause (B) to the proviso to Section 6.04(c) and
outstanding Guarantees permitted under the proviso to Section 6.04(e))
shall not exceed $15,000,000 at any time outstanding (in each case determined
without regard to any write-downs or write-offs);

 

(e)  Guarantees constituting
Indebtedness permitted by Section 6.01; provided that the aggregate
principal amount of Indebtedness of Subsidiaries that are not Loan Parties that
is Guaranteed by any Loan Party shall (together with outstanding investments
permitted under clause (B) to the proviso to Section 6.04(c) and
outstanding intercompany loans permitted under the proviso to Section 6.04(d))
shall not exceed $15,000,000 at any time outstanding (in each case determined
without regard to any write-downs or write-offs);

 

(f)  loans or advances made by a Loan
Party to its employees on an arms-length basis in the ordinary course of
business consistent with past practices for travel and entertainment expenses, 

 

68

 

relocation costs and similar purposes up to a maximum of $1,000,000 in
the aggregate at any one time outstanding;

 

(g)  subject to Sections 4.2(a) and
4.4 of the Security Agreement, notes payable, or stock or other securities
issued by account debtors or other obligors to a Loan Party pursuant to
negotiated agreements with respect to settlement of such Account Debtor’s
Accounts in the ordinary course of business, consistent with past practices or
received in connection with the bankruptcy or reorganization of an account
debtor or other obligor;

 

(h)  investments in the form of Swap
Agreements permitted by Section 6.07;

 

(i)  investments of any Person existing
at the time such Person becomes a Subsidiary or consolidates or merges with
Holdings or any of its Subsidiaries (including in connection with a Permitted
Acquisition) so long as such investments were not made in contemplation of such
Person becoming a Subsidiary or of such merger;

 

(j)  investments received in connection
with the dispositions of assets permitted by Section 6.05;

 

(k) accounts receivable arising and
trade credit granted in the ordinary course of business and prepayments and
other credits granted to suppliers in the ordinary course of business;

 

(l) loans or advances to, or for
the benefit of, independent licensed dealers in products and services of
Holdings and its Subsidiaries in an aggregate outstanding amount not exceeding
$5,000,000;

 

(m)  investments constituting
deposits described in clauses (c) and (d) of the definition of the
term “Permitted Encumbrances”; and

 

(n)  Permitted Acquisitions.

 

SECTION 6.05.  Asset Sales.  No Loan Party will, nor will it permit any
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any
Subsidiary to issue any additional Equity Interest in such Subsidiary (other
than to the Borrower or another Subsidiary in compliance with Section 6.04),
except:

 

(a)  sales, transfers and dispositions
of (i) inventory in the ordinary course of business and (ii) used,
obsolete, worn out or surplus equipment or property in the ordinary course of
business;

 

(b)  sales, transfers and dispositions
to any Loan Party or any Subsidiary; provided that any such sales,
transfers or dispositions involving a Subsidiary that is not a Loan Party shall
be made in compliance with Sections 6.04 and 6.09;

 

(c)  sales, transfers and dispositions
of accounts receivable in connection with the compromise, settlement or
collection thereof;

 

(d)  sales, transfers and dispositions
of Permitted Investments and other investments permitted by clauses (i) and
(k) of Section 6.04;

 

69

 

(e)  sale and leaseback transactions,
and other financing arrangements, permitted by Sections 6.01(n) and 6.06,
and any other sale of Real Property not involving the incurrence of
Indebtedness;

 

(f)  dispositions resulting from any
casualty or other insured damage to, or any taking under power of eminent
domain or by condemnation or similar proceeding of, any property or asset of
any Loan Party or any Subsidiary;

 

(g) leases, subleases, licenses and
sublicenses entered into in the ordinary course of business; and

 

(h)  sales, transfers and other
dispositions of assets (other than Equity Interests in a Subsidiary unless all
Equity Interests in such Subsidiary are sold) that are not permitted by any
other paragraph of this Section; provided that the aggregate fair market
value of all assets sold, transferred or otherwise disposed of in reliance upon
this paragraph (h) shall not exceed $30,000,000;

 

provided that all
sales, transfers, leases and other dispositions permitted hereby (other than
those permitted by paragraphs (b) and (f) above) shall be made for
fair value and for at least 75% cash consideration.

 

SECTION 6.06.  Sale and Leaseback
Transactions.  Except for Real
Property financing transactions existing on the Effective Date and set forth on
Schedule 6.01 or otherwise permitted pursuant to Section 6.01(n),
no Loan Party will, nor will it permit any Subsidiary to, enter into any
arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property sold or transferred, except for any such sale of any fixed or
capital assets by any Loan Party or any Subsidiary that is made for cash
consideration in an amount not less than the fair value of such fixed or
capital asset and, in the case of an acquisition or construction of any fixed
or capital asset as provided for in Section 6.01(e), is consummated within
one hundred eighty (180) days after such Loan Party or such Subsidiary acquires
or completes the construction of such fixed or capital asset.

 

SECTION 6.07.  Swap Agreements.  No Loan Party will, nor will it permit any  Subsidiary to, enter into any Swap Agreement,
except (a) Swap Agreements entered into to hedge or mitigate risks to
which any Loan Party or any Subsidiary has actual exposure (other than those in
respect of Equity Interests of the Borrower or any of its Subsidiaries), and (b) Swap
Agreements entered into in order to effectively cap, collar or exchange
interest rates (from fixed to floating rates, from one floating rate to another
floating rate or otherwise) with respect to any interest-bearing liability or
investment of any Loan Party or any Subsidiary.

 

SECTION 6.08.  Restricted Payments;
Certain Payments of Indebtedness. 
(a) No Loan Party will, nor will it permit any Subsidiary to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except (i) Holdings
may declare and pay dividends with respect to its common stock payable solely
in additional shares of its common stock, and, with respect to its preferred stock,
payable solely in additional shares of such preferred stock or in shares of its
common stock, (ii) Holdings may make any dividend or distribution to all
holders of its common stock to redeem rights issued pursuant to any stockholder
rights plan, “poison pill” or a similar arrangement, provided that the
aggregate amount of such dividends and distributions shall not exceed $750,000,
(iii) the Borrower and the Subsidiaries may declare and pay dividends
ratably with respect to their Equity Interests, (iv) Holdings may make
Restricted Payments pursuant to and in accordance with (A) equity
incentive plans or other benefit plans for management or 

 

70

 

employees of Holdings and its Subsidiaries so
long as the Negative Covenant Permission Trigger is satisfied and (B) the
employment agreement, and related restricted stock agreements, with M. Farooq
Kathwari, as specified in Holdings’ publicly filed proxy statement dated October 17,
2008 and (v) Holdings, the Borrower and its Subsidiaries may make any
Restricted Payment so long as the Negative Covenant Permission Trigger is
satisfied.

 

(b)  No Loan Party will, nor will it
permit any Subsidiary to, make or agree to pay or make, directly or indirectly,
any payment or other distribution (whether in cash, securities or other
property) of or in respect of principal of or interest on any Indebtedness, or
any payment or other distribution (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Indebtedness, except:

 

(i)  payment of Indebtedness created
under the Loan Documents;

 

(ii)  payment of regularly scheduled
interest and principal payments as and when due in respect of any Indebtedness,
other than payments in respect of the Subordinated Indebtedness prohibited by
the subordination provisions thereof;

 

(iii)  refinancings of Indebtedness to
the extent permitted by Section 6.01; and

 

(iv)  payment of secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;

 

provided that, Holdings, the Borrower and its Subsidiaries
may make any payment described in clause (b) above so long as the Negative
Covenant Permission Trigger is satisfied.

 

SECTION 6.09.  Transactions with
Affiliates.  No Loan Party
will, nor will it permit any Subsidiary to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions that (i) are in the ordinary
course of business and (ii) are at prices and on terms and conditions not less
favorable to the Loan Party or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties, (b) transactions between or among the
Loan Party and any Subsidiary that is a Loan Party not involving any other
Affiliate, (c) any investment permitted by Sections 6.04(c) or
6.04(d), (d) any Indebtedness permitted under Section 6.01(c), (e) any
Restricted Payment permitted by Section 6.08, (f) loans or advances
to employees permitted under Section 6.04, (g) the payment of reasonable
fees to directors of Holdings or any Subsidiary who are not employees of
Holdings or any Subsidiary, and compensation and benefit arrangements
(including reasonable and customary expense advancements) paid to, and
indemnities provided for the benefit of, directors, officers or employees of
Holdings or its Subsidiaries in the ordinary course of business and (h) any
issuances of securities or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment agreements, equity
incentive and employee benefit plans approved by Holdings’ board of directors.

 

SECTION 6.10.  Restrictive
Agreements.  No Loan Party
will, nor will it permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of such Loan Party
or any of its Subsidiaries to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (i) the foregoing shall not 

 

71

 

apply to restrictions and conditions imposed
by law or by any Loan Document, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on Schedule
6.10 (but shall apply to any extension or renewal of, or any amendment or
modification, in each case expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a Subsidiary or
an asset pending such sale; provided such restrictions and conditions
apply only to the Subsidiary or asset that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply
to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, (v) clause
(a) of the foregoing shall not apply to customary provisions in licenses
or leases restricting the assignment thereof and (vi) the foregoing shall
not apply to (1) any restriction in any agreement of any Person in effect
at the time such Person becomes a Subsidiary so long as such restriction is not
entered into in contemplation of such Person becoming a Subsidiary, (2) customary
restrictions and conditions in joint ventures or similar arrangements and (3) customary
restrictions on then-market terms (for the applicable Indebtedness) under any
Indebtedness permitted under Section 6.01 (so long as, in the case of
Indebtedness under clauses (b) or (f) of Section 6.01, the
restrictions imposed by any such Indebtedness which constitutes extended,
renewed, replaced or refinanced Indebtedness are not more restrictive than the
restrictions in the applicable original Indebtedness).

 

SECTION 6.11.  Amendment of
Material Documents.  No Loan
Party will, nor will it permit any Subsidiary to, amend, modify or waive any of
its rights under (a) agreement relating to any Subordinated Indebtedness
or any Material Indebtedness or (b) its certificate of incorporation,
by-laws, operating, management or partnership agreement or other organizational
documents, to the extent any such amendment, modification or waiver would be
materially adverse to the Lenders.

 

SECTION 6.12.  Financial Covenants.

 

(a)   Fixed
Charge Coverage Ratio.  The
Borrower will not, at any time when average monthly Availability is less than
an amount equal to the greater of (i) 15% of the Aggregate Commitment at
such time and (ii) $9,000,000, permit the Fixed Charge Coverage Ratio,
determined for any period of four consecutive fiscal quarters ending on the
last day of each fiscal quarter, to be less than 1.00 to 1.00.

 

ARTICLE
VII

 

Events of Default

 

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

 

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

 

(b)  the Borrower shall fail to pay any
interest on any Loan or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable under this Agreement,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three (3) Business Days;

 

(c)  any representation or warranty made
or deemed made by or on behalf of any Loan Party or any Subsidiary in or in
connection with this Agreement or any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial 

 

72

 

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

 

(d)  any Loan Party shall fail to
observe or perform any covenant, condition or agreement contained in Section 5.02(a),
5.03 (with respect to a Loan Party’s existence), 5.08, 5.15 or in Article VI;

 

(e)  any Loan Party shall fail to
observe or perform any covenant, condition or agreement contained in this
Agreement (other than those which constitute a default under another Section of
this Article), and such failure shall continue unremedied for a period of (i) five
(5) days after the earlier of any Loan Party’s knowledge of such breach or
notice thereof from the Administrative Agent (which notice will be given at the
request of any Lender) if such breach relates to terms or provisions of Section 5.01,
5.02 (other than Section 5.02(a)), 5.03 through 5.07, 5.09, 5.10 or 5.13
of this Agreement or (ii) fifteen (15) days after the earlier of any Loan
Party’s knowledge of such breach or notice thereof from the Administrative
Agent (which notice will be given at the request of any Lender) if such breach
relates to terms or provisions of any other Section of this Agreement;

 

(f)  any Loan Party or any Subsidiary
shall fail to make any payment (whether of principal or interest and regardless
of amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable;

 

(g)  any event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or
any trustee or agent on its or their behalf to cause any Material Indebtedness
to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing
such Indebtedness;

 

(h)  an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of a Loan Party or any Subsidiary of
any Loan Party or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Loan Party or
any Subsidiary of any Loan Party or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for
sixty (60) days or an order or decree approving or ordering any of the
foregoing shall be entered;

 

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

 

73

 

(j)  any Loan Party or any Subsidiary of
any Loan Party shall become unable, admit in writing its inability or fail
generally to pay its debts as they become due;

 

(k)  one or more judgments for the
payment of money in an aggregate amount in excess of $10,000,000 shall be
rendered against any Loan Party, any Subsidiary of any Loan Party or any
combination thereof and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of any Loan Party or any Subsidiary of any Loan Party
to enforce any such judgment or any Loan Party or any Subsidiary of any Loan
Party shall fail within thirty (30) days to discharge one or more non-monetary
judgments or orders which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, which judgments or orders, in
any such case, are not stayed on appeal or otherwise being appropriately
contested in good faith by proper proceedings diligently pursued;

 

(l)  an ERISA Event shall have occurred
that, in the opinion of the Required Lenders, when taken together with all
other ERISA Events that have occurred, could reasonably be expected to result
in a Material Adverse Effect;

 

(m)  a Change in Control shall occur;

 

(n)  the occurrence of any default
or “Event of Default” as defined in any Loan Document (other than
this Agreement) or the breach of any of the terms or provisions of any Loan
Document (other than this Agreement), which default or breach continues beyond
any period of grace therein provided;

 

(o)  the Loan Guaranty shall fail to
remain in full force or effect or any action shall be taken to discontinue or
to assert the invalidity or unenforceability of the Loan Guaranty, or any Loan
Guarantor shall fail to comply with any of the terms or provisions of the Loan
Guaranty to which it is a party, or any Loan Guarantor shall deny that it has
any further liability under the Loan Guaranty to which it is a party, or shall
give notice to such effect;

 

(p)  any Collateral Document shall for
any reason fail to create a valid and perfected first priority security
interest in any material portion of Collateral purported to be covered thereby,
except as permitted by the terms of any Collateral Document, or any Collateral
Document shall fail to remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or unenforceability of any
Collateral Document, or any Loan Party shall fail to comply in any material
respect with any of the terms or provisions of any Collateral Document; or

 

(q)  any material provision of any Loan
Document for any reason ceases to be valid, binding and enforceable in accordance
with its terms (or any Loan Party shall challenge the enforceability of any
Loan Document or shall assert in writing, or engage in any action or inaction
based on any such assertion, that any provision of any of the Loan Documents
has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms);

 

then, and in every such
event (other than an event with respect to the Borrower described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of
such event, the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, take either or both of the following
actions, at the same or different times: 
(i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to 

 

74

 

be due and payable, together
with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower. 
Upon the occurrence and during the continuance of an Event of Default,
the Administrative Agent may, and at the request of the Required Lenders shall,
exercise any rights and remedies provided to the Administrative Agent under the
Loan Documents or at law or equity, including all remedies provided under the
UCC.

 

ARTICLE
VIII

 

The Administrative Agent

 

Each of the Lenders and the
Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent
and authorizes the Administrative Agent to take such actions on its behalf,
including execution of the other Loan Documents, and to exercise such powers as
are delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.

 

The bank serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Loan Parties or any Subsidiary of a Loan Party or other Affiliate thereof
as if it were not the Administrative Agent hereunder.

 

The Administrative Agent
shall not have any duties or obligations except those expressly set forth in
the Loan Documents.  Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall
not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the Administrative Agent is required to
exercise in writing as directed by the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth in
the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any of its Subsidiaries that is communicated to
or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Administrative
Agent by the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, (v) the creation, perfection or
priority of Liens on the Collateral or the existence of the Collateral, or (vi) the

 

75

 

satisfaction
of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

 

The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. 
The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

Subject to the appointment
and acceptance of a successor Administrative Agent as provided in this
paragraph, the Administrative Agent may resign at any time by notifying the
Lenders, the Issuing Bank and the Borrower. 
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor.  If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within thirty
(30) days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a commercial bank or an Affiliate of any such commercial bank.  Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall 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 hereunder. 
The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. 
After the Administrative Agent’s resignation hereunder, the provisions
of this Article, Section 2.17(d) and Section 9.03 shall continue
in effect for the benefit of such retiring Administrative Agent, its sub agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while it was acting as Administrative Agent.

 

Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or related agreement or any document
furnished hereunder or thereunder.

 

Each Lender hereby agrees
that (a) it has requested a copy of each Report prepared by or on behalf
of the Administrative Agent; (b) the Administrative Agent (i) makes
no representation or warranty, express or implied, as to the completeness or
accuracy of any Report or any of the information contained therein or any
inaccuracy or omission contained in or relating to a Report and (ii) shall
not be liable for any information contained in any Report; (c) the Reports
are not comprehensive audits or 

 

76

 

examinations,
and that any Person performing any field examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the
Loan Parties’ books and records, as well as on representations of the Loan
Parties’ personnel and that the Administrative Agent undertakes no obligation
to update, correct or supplement the Reports; (d) it will keep all Reports
confidential and strictly for its internal use, not share the Report with any
Loan Party or any other Person except as otherwise permitted pursuant to this
Agreement; and (e) without limiting the generality of any other
indemnification provision contained in this Agreement, it will pay and protect,
and indemnify, defend, and hold the Administrative Agent and any such other
Person preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including reasonable
attorney fees) incurred by as the direct or indirect result of any third
parties who might obtain all or part of any Report through the indemnifying
Lender.

 

None of the Lenders, if any,
identified in this Agreement as a Syndication Agent or Documentation Agent
shall 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.  Each Lender hereby makes the
same acknowledgments with respect to the relevant Lenders in their respective
capacities as Syndication Agent or Documentation Agent, as applicable, as it makes
with respect to the Administrative Agent in the preceding paragraph.

 

Except with respect to the
exercise of setoff rights of any Lender, in accordance with Section 9.08,
the proceeds of which are applied in accordance with this Agreement, each
Lender agrees that it will not take any action, nor institute any actions or
proceedings, against the Borrower or with respect to any Loan Document, without
the prior written consent of the Required Lenders or, as may be provided in
this Agreement or the other Loan Documents, with the consent of the Administrative
Agent.

 

The Lenders are not partners
or co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender. 
The Administrative Agent shall have the exclusive right on behalf of the
Lenders to enforce the payment of the principal of and interest on any Loan
after the date such principal or interest has become due and payable pursuant
to the terms of this Agreement.

 

In its capacity, the
Administrative Agent is a “representative” of the Secured Parties within
the meaning of the term “secured party” as defined in the New York
Uniform Commercial Code.  Each Lender
authorizes the Administrative Agent to enter into each of the Collateral
Documents to which it is a party and to take all action contemplated by such
documents.  Each Lender agrees that no
Secured Party (other than the Administrative Agent) shall have the right
individually to seek to realize upon the security granted by any Collateral
Document, it being understood and agreed that such rights and remedies may be
exercised solely by the Administrative Agent for the benefit of the Secured
Parties upon the terms of the Collateral Documents.  In the event that any Collateral is hereafter
pledged by any Person as collateral security for the Secured Obligations, the
Administrative Agent is hereby authorized, and hereby granted a power of
attorney, to execute and deliver on behalf of the Secured Parties any Loan
Documents necessary or appropriate to grant and perfect a Lien on such
Collateral in favor of the Administrative Agent on behalf of the Secured
Parties.  The Lenders hereby authorize
the Administrative Agent, at its option and in its discretion, to release any
Lien granted to or held by the Administrative Agent upon any Collateral (i) as
described in Section 9.02(c); (ii) as permitted by, but only in
accordance with, the terms of the applicable Loan Document; or (iii) if
approved, authorized or ratified in writing by the Required Lenders, unless
such release is required to be approved by all of the Lenders hereunder.  Upon request by the Administrative Agent at
any time, the Lenders will confirm in writing the Administrative Agent’s
authority to release particular types or items of Collateral pursuant
hereto.  Upon any sale or transfer of
assets constituting Collateral which is permitted pursuant to the terms of any
Loan 

 

77

 

Document,
or consented to in writing by the Required Lenders or all of the Lenders, as
applicable, and upon at least five (5) Business Days’ prior written
request by the Borrower to the Administrative Agent, the Administrative Agent
shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Administrative Agent for the benefit of the Secured Parties herein or
pursuant hereto upon the Collateral that was sold or transferred; provided,
however, that (i) the Administrative Agent shall not be required to
execute any such document on terms which, in the Administrative Agent’s
opinion, would expose the Administrative Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any
manner discharge, affect or impair the Secured Obligations or any Liens upon
(or obligations of the Borrower or any Subsidiary in respect of) all interests
retained by the Borrower or any Subsidiary, including (without limitation) the
proceeds of the sale, all of which shall continue to constitute part of the
Collateral.

 

The Borrower, on its behalf
and on behalf of its Subsidiaries, and each Lender, on its behalf and on the
behalf of its affiliated Secured Parties, hereby irrevocably constitute the
Administrative Agent as the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of
the Civil Code of Québec) in order to hold hypothecs and security granted by
the Borrower or any Subsidiary on property pursuant to the laws of the Province
of Quebec to secure obligations of the Borrower or any Subsidiary under any
bond, debenture or similar title of indebtedness issued by the Borrower or any
Subsidiary in connection with this Agreement, and agree that the Administrative
Agent may act as the bondholder and mandatary with respect to any bond,
debenture or similar title of indebtedness that may be issued by the Borrower
or any Subsidiary and pledged in favor of the Secured Parties in connection
with this Agreement.  Notwithstanding the
provisions of Section 32 of the An Act respecting the special powers of
legal persons (Quebec), JPMorgan Chase Bank, N.A. as Administrative Agent may
acquire and be the holder of any bond issued by the Borrower or any Subsidiary
in connection with this Agreement (i.e., the fondé de pouvoir may acquire and
hold the first bond issued under any deed of hypothec by the Borrower or any
Subsidiary).

 

The Administrative Agent is
hereby authorized to execute and deliver any documents necessary or appropriate
to create and perfect the rights of pledge for the benefit of the Secured
Parties including a right of pledge with respect to the entitlements to
profits, the balance left after winding up and the voting rights of the
Borrower as ultimate parent of any subsidiary of the Borrower which is
organized under the laws of the Netherlands and the Equity Interests of which
are pledged in connection herewith (a “Dutch Pledge”).  Without prejudice to the provisions of this
Agreement and the other Loan Documents, the parties hereto acknowledge and
agree with the creation of parallel debt obligations of the Borrower or any
relevant Subsidiary as will be described in any Dutch Pledge (the “Parallel
Debt”), including that any payment received by the Administrative Agent in
respect of the Parallel Debt will conditionally upon such payment not
subsequently being avoided or reduced by virtue of any provisions or enactments
relating to bankruptcy, insolvency, preference, liquidation or similar laws of
general application be deemed a satisfaction of a pro rata portion of the
corresponding amounts of the 
Obligations, and any payment to the Secured Parties in satisfaction of
the Obligations shall conditionally upon such payment not subsequently being
avoided or reduced by virtue of any provisions or enactments relating to
bankruptcy, insolvency, preference, liquidation or similar laws of general
application be deemed as satisfaction of the corresponding amount of the
Parallel Debt.  The parties hereto
acknowledge and agree that, for purposes of a Dutch Pledge, any resignation by
the Administrative Agent is not effective until its rights under the Parallel
Debt are assigned to the successor Administrative Agent.

 

The parties hereto
acknowledge and agree for the purposes of taking and ensuring the continuing
validity of German law governed pledges (Pfandrechte)
with the creation of parallel debt obligations of the Borrower as will be
further described in a separate German law governed parallel debt
undertaking.  The Administrative Agent
shall (i) hold such parallel debt undertaking as fiduciary agent 

 

78

 

(Treuhaender) and (ii) administer and hold as fiduciary
agent (Treuhaender) any pledge created under a German law governed Collateral
Document which is created in favor of any Holder of the Secured Obligations or
transferred to any Holder of the Secured Obligations due to its accessory
nature (Akzessorietaet), in each case in its own
name and for the account of the Holders of the Secured Obligations.  Each Lender, on its own behalf and on behalf
of its affiliated Secured Parties, hereby authorizes the Administrative Agent
to enter as its agent in its name and on its behalf into any German law
governed Collateral Document, to accept as its agent in its name and on its
behalf any pledge under such Collateral Document and to agree to and execute as
agent its in its name and on its behalf any amendments, supplements and other
alterations to any such Collateral Document and to release any such Collateral
Document and any pledge created under any such Collateral Document in
accordance with the provisions herein and/or the provisions in any such
Collateral Document

 

ARTICLE
IX

 

Miscellaneous

 

SECTION 9.01.  Notices.  (a) Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile, as
follows:

 

(i)  if to any Loan Party, to it at
Ethan Allen Drive, Danbury, Connecticut 06811, Attention of Chief Financial
Officer or Treasurer (Telecopy No. (203) 743-8469; Telephone No. (203)
743-8305), with copies to, in the case of any notice or communication other
than routine notices and communications under Article II, the attention of
General Counsel at the aforesaid address (Telecopy No. (203) 743-8254);

 

(ii)  if to the Administrative Agent, to
JPMorgan Chase Bank, N.A., 270 Park Avenue, 44th Floor, New York, NY 10017,
Attention of Joseph A. Lisack (Telecopy No. (646) 534-2288);

 

(iii)  if to the Issuing Bank, to
JPMorgan Chase Bank, N.A., 270 Park Avenue, 44th Floor, New York, NY 10017,
Attention of Joseph A. Lisack (Telecopy No. (646) 534-2288);

 

(iv)  if to the Swingline Lender, to
JPMorgan Chase Bank, N.A., 270 Park Avenue, 44th Floor, New York, NY 10017, Attention
of Joseph A. Lisack (Telecopy No. (646) 534-2288); and

 

(v)  if to any other Lender, to it at
its address (or telecopy number) set forth in its Administrative Questionnaire.

 

All such notices and other
communications (i) sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received
or (ii) sent by facsimile, shall be deemed to have been given when sent,
provided that if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient.

 

(b)  Notices and other communications to
the Lenders hereunder may be delivered or furnished by electronic
communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the
foregoing shall not apply to notices pursuant to Article II or to
compliance and no Event of Default certificates delivered pursuant to Section 5.01(d) unless
otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower (on
behalf of the Loan Parties) may, in its discretion, agree 

 

79

 

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. All such notices and other communications (i) sent to an
e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement); provided that if not given during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (b)(i) of notification that
such notice or communication is available and identifying the website address
therefor.

 

(c)  Any party hereto may change its
address or facsimile number for notices and other communications hereunder by
notice to the other parties hereto.

 

SECTION 9.02.  Waivers; Amendments.  (a)  No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Administrative Agent, the Issuing Bank and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.

 

(b)  Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the
Required Lenders; provided that no such agreement shall (i) increase
the Commitment of any Lender without the written consent of such Lender (provided
that the Administrative Agent may make Protective Advances as set forth in Section 2.04),
(ii) reduce or forgive the principal amount of any Loan or LC Disbursement
or reduce the rate of interest thereon, or reduce or forgive any interest or
fees payable hereunder, without the written consent of each Lender directly
affected thereby, (iii) postpone any scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any date for the payment of
any interest, fees or other Obligations payable hereunder, or reduce the amount
of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
directly affected thereby, (iv) change Section 2.18(b) or (d) in
a manner that would alter the manner in which payments are shared, without the
written consent of each Lender, (v) increase the advance rates set forth
in the definition of Borrowing Base or add new categories of eligible assets,
without the written consent of each Lender, (vi) change any of the
provisions of this Section or the definition of “Required Lenders”
or any other provision of any Loan Document specifying the number or percentage
of Lenders required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (vii) change Section 2.20, without the consent of each
Lender (other than any Defaulting Lender), (viii) release any Loan
Guarantor from its obligation under its Loan Guaranty (except as otherwise
permitted herein or in the other Loan Documents), without the written consent
of each Lender, or (ix) except as provided in clauses (d) and (e) of
this Section or in any 

 

80

 

Collateral Document, release all or substantially all of the
Collateral, without the written consent of each Lender; provided  further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, the Issuing Bank or the Swingline Lender
hereunder without the prior written consent of the Administrative Agent, the
Issuing Bank or the Swingline Lender, as the case may be (it being understood
that any change to Section 2.20 shall require the consent of the
Administrative Agent, the Swingline Lender and the Issuing Bank).  The Administrative Agent may also amend Schedule
2.01 to reflect assignments entered into pursuant to Section 9.04

 

(c)  (1) The Lenders hereby
irrevocably authorize the Administrative Agent, at its option and in its sole
discretion, to release any Liens granted to the Administrative Agent by the
Loan Parties on any Collateral (i) upon the termination of the all
Commitments, payment and satisfaction in full in cash of all Secured Obligations
(other than Unliquidated  Obligations),
and the cash collateralization of all Unliquidated Obligations in a manner
satisfactory to the Administrative Agent, (ii) constituting property being
sold or disposed of if the Loan Party disposing of such property certifies to
the Administrative Agent that the sale or disposition is made in compliance
with the terms of this Agreement (and the Administrative Agent may rely
conclusively on any such certificate, without further inquiry), and to the
extent that the property being sold or disposed of constitutes 100% of the
Equity Interest of a Subsidiary, the Administrative Agent is authorized to
release any Loan Guaranty provided by such Subsidiary, (iii) constituting
property leased to a Loan Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement, (iv) as
required to effect any sale or other disposition of such Collateral in
connection with any exercise of remedies of the Administrative Agent and the
Lenders pursuant to Article VII and (v) as otherwise contemplated
hereunder in connection with cash collateral securing LC Exposure.  Except as provided in the preceding sentence
and the following clause (2), the Administrative Agent will not release any Liens
on Collateral without the prior written authorization of the Required Lenders; provided
that, the Administrative Agent may in its discretion, release its Liens on
Collateral valued in the aggregate not in excess of $5,000,000 during any
calendar year without the prior written authorization of the Required
Lenders.  Any such release shall not in
any manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Loan Parties
in respect of) all interests retained by the Loan Parties, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.

 

(2)  Notwithstanding the foregoing
clause (1), any Loan Party that is a Subsidiary (other than the Borrower) shall
be automatically released from its obligations under the Loan Documents and all
security interests in the Collateral of such Loan Party created by the Loan
Documents shall be automatically released upon the consummation of any
transaction permitted by this Agreement as a result of which such Loan Party
ceases to be a Subsidiary.  Upon any
sale, lease, transfer or other disposition by any Loan Party of any Collateral
that is permitted under this Agreement to any Person other than Holdings or a
Subsidiary, or upon the effectiveness of any written consent to the release of
the security interest created under any Loan Document in any Collateral
pursuant to Section 9.02, the security interest in such Collateral shall
be automatically released. In connection with any termination or release
pursuant to this Section, the Administrative Agent, upon receipt of any
certificates or other documents reasonably requested by it to confirm
compliance with this Agreement, shall promptly execute and deliver to any Loan
Party, at such Loan Party’s expense, all documents that such Loan Party shall
reasonably request to evidence such termination or release. The Lenders hereby
irrevocably authorize the Administrative Agent to take all actions specified in
this Section 9.02(c)(2).  Any execution
and delivery of documents pursuant to this Section shall be without
recourse to or warranty by the Administrative Agent.

 

(d)  If, in connection with any proposed
amendment, waiver or consent  requiring
the consent of “each Lender” or “each Lender directly affected
thereby,” the consent of the Required 

 

81

 

Lenders is obtained, but the consent of other necessary Lenders is not
obtained (any such Lender whose consent is necessary but not obtained being
referred to herein as a “Non-Consenting Lender”), then the Borrower may
elect to replace a Non-Consenting Lender as a Lender party to this Agreement; provided
that, concurrently with such replacement, (i) another bank or other entity
which is reasonably satisfactory to the Borrower and the Administrative Agent
shall agree, as of such date, to purchase for cash the Loans and other
Obligations due to the Non-Consenting Lender pursuant to an Assignment and
Assumption and to become a Lender for all purposes under this Agreement and to
assume all obligations of the Non-Consenting Lender to be terminated as of such
date and to comply with the requirements of clause (b) of Section 9.04,
and (ii) the Borrower shall pay to such Non-Consenting Lender in same day
funds on the day of such replacement (1) all interest, fees and other
amounts then accrued but unpaid to such Non-Consenting Lender by the Borrower
hereunder to and including the date of termination, including without
limitation payments due to such Non-Consenting Lender under Sections 2.15 and
2.17, and (2) an amount, if any, equal to the payment which would have
been due to such Lender on the day of such replacement under Section 2.16
had the Loans of such Non-Consenting Lender been prepaid on such date rather
than sold to the replacement Lender.

 

SECTION 9.03.  Expenses; Indemnity;
Damage Waiver.  (a)  The
Borrower shall pay (i) all reasonable out of pocket expenses incurred by
the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in
connection with the syndication and distribution (including, without
limitation, via the internet or through a service such as Intralinks) of the
credit facilities provided for herein, the preparation and administration of
the Loan Documents or any amendments, modifications or waivers of the
provisions of the Loan Documents (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement, collection or
protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the Loans made or Letters of
Credit issued hereunder, including all such out-of pocket expenses incurred
during  any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit. Expenses being
reimbursed by the Borrower under this Section include, without limiting
the generality of the foregoing, reasonable fees, costs and expenses incurred
in connection with:

 

(i)  appraisals and insurance reviews
and environmental reviews;

 

(ii)  field examinations and the
preparation of Reports based on the fees charged by a third party retained by
the Administrative Agent or the internally allocated fees for each Person
employed by the Administrative Agent with respect to each field examination;

 

(iii)  taxes, fees and other charges for
(A) lien searches and (B) filing financing statements and
continuations, and other actions to perfect, protect, and continue the
Administrative Agent’s Liens;

 

(iv)  sums paid or incurred to take any
action required of any Loan Party under the Loan Documents that such Loan Party
fails to pay or take; and

 

(v)  forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
the accounts and lock boxes, and costs and expenses of preserving and
protecting the Collateral.

 

82

 

All of the foregoing fees,
costs and expenses may be charged to the Borrower as Revolving Loans or to
another deposit account, all as described in Section 2.18(c).

 

(b)  The Borrower shall indemnify the
Administrative Agent, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, incremental taxes, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of the Loan
Documents or any agreement or instrument contemplated thereby, the performance
by the parties hereto of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, (iv) the failure of the Borrower to deliver to the
Administrative Agent the required receipts or other required documentary
evidence with respect to a payment made by the Borrower for Taxes pursuant to Section 2.17,
or (v) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, penalties, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.

 

(c)  To the extent that the Borrower
fails to pay any amount required to be paid by it to the Administrative Agent,
the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Administrative Agent,
the Issuing Bank or the Swingline Lender, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount (it being
understood that the Borrower’s failure to pay any such amount shall not relieve
the Borrower of any default in the payment thereof); provided that the
unreimbursed expense or indemnified loss, claim, damage, penalty, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity
as such.

 

(d)  To the extent permitted by applicable
law, no Loan Party shall assert, and each 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 or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.

 

(e)  All amounts due under this Section shall
be payable not later than fifteen (15) days after written demand therefor.

 

SECTION 9.04.  Successors and
Assigns.  (a)  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights 

 

83

 

or obligations hereunder except in accordance
with this Section.  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

(b)(i)  Subject to the conditions set
forth in paragraph (b)(ii) below, any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it) with the prior written consent (such consent not to be unreasonably
withheld) of:

 

(A)  the Borrower; provided
that no consent of the Borrower shall be required for an assignment to a Lender,
an Affiliate of a Lender, an Approved Fund or, if an Event of Default has
occurred and is continuing, any other assignee;

 

(B)  the Administrative
Agent; and

 

(C)  the Issuing Bank.

 

(ii)  Assignments shall be subject to
the following additional conditions:

 

(A)  except in the case
of an assignment to a Lender or an Affiliate of a Lender or an assignment of
the entire remaining amount of the assigning Lender’s Commitment or Loans of
any Class, the amount of the Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent; provided that no such consent of
the Borrower shall be required if an Event of Default has occurred and is
continuing;

 

(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;

 

(C)  the parties to
each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500, such fee to be paid by either the assigning Lender or the assignee
Lender or shared between such Lenders; and

 

(D)  the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire in which the assignee designates one or more
Credit Contacts to whom all syndicate-level information (which may contain
material non-public information about the Borrower, the Loan Parties and their
Related Parties or their respective securities) will be made available and who
may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.

 

For the purposes of this Section 9.04(b),
the term “Approved Fund” has the following meaning:

 

“Approved Fund” means any Person (other
than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

84

 

(iii)  Subject to acceptance and
recording thereof pursuant to paragraph (b)(iv) of this Section, from and
after the effective date specified in each Assignment and Assumption the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17
and 9.03).  Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply
with this Section 9.04 shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (c) of this Section.

 

(iv)  The Administrative Agent, acting
for this purpose as an agent of the Borrower, shall maintain at one of its
offices a copy of each Assignment and Assumption delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”).
 The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

 

(v)  Upon its receipt of a duly
completed Assignment and Assumption executed by an assigning Lender and an
assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either
the assigning Lender or the assignee shall have failed to make any payment
required to be made by it pursuant to Section 2.05, 2.06(d) or (e),
2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

(c)(i)  Any Lender may, without the
consent of the Borrower, the Administrative Agent, the Issuing Bank or the
Swingline Lender, sell participations to one or more banks or other entities (a
“Participant”) in all or a
portion of such Lender’s rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it); provided
that (A) such Lender’s obligations under this Agreement shall remain
unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent, the Issuing Bank and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation 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 described
in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant 

 

85

 

shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.

 

(ii)  A Participant shall not be
entitled to receive any greater payment under Section 2.15 or 2.17 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(f) as
though it were a Lender.

 

(d)  Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

 

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated.  The provisions of Sections 2.15, 2.16, 2.17
and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Letters of
Credit and the Commitments or the termination of this Agreement or any other
Loan Document or any provision hereof or thereof.

 

SECTION 9.06.  Counterparts;
Integration; Effectiveness. 
This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.  This Agreement, the other Loan Documents and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

86

 

SECTION 9.07.  Severability.  Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or any Loan Guarantor against any of and all the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be
unmatured.  The applicable Lender shall
notify the Borrower and the Administrative Agent of such set-off or
application; provided that any failure to give or any delay in giving
such notice shall not affect the validity of any such set-off or application
under this Section.  The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.

 

SECTION 9.09.  Governing Law;
Jurisdiction; Consent to Service of Process.  (a)  The Loan Documents shall be
construed in accordance with and governed by the law of the State of New York,
but giving effect to federal laws applicable to national banks.

 

(b)  Each Loan Party hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any U.S. Federal or New York State court sitting in New York
County, New York in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against any Loan Party or its properties in the courts of any
jurisdiction.

 

(c)  Each Loan Party hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in paragraph
(b) of this Section.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

(d)  Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 9.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR 

 

87

 

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

 

SECTION 9.11.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.  Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (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 regulatory authority, (c) to
the extent required by Requirement of Law 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 any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Loan Parties and their obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a
non-confidential basis from a source other than the Borrower.  For the purposes of this Section, “Information” means all information
received from the Borrower relating to the Borrower or its business, other than
any such information that is available to the Administrative Agent, the Issuing
Bank or any Lender on a non-confidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential.  Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED
IN SECTION 9.12 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE
MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS AFFILIATES
AND  THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND
AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO,
OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE 

 

88

 

SYNDICATE-LEVEL INFORMATION,
WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE
LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE
BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS
ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION
THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS
COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL
AND STATE SECURITIES LAWS.

 

SECTION 9.13.  Several Obligations;
Nonreliance; Violation of Law. 
The respective obligations of the Lenders hereunder are several and not
joint and the failure of any Lender to make any Loan or perform any of its
obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. Each Lender hereby represents that it is not relying on
or looking to any margin stock for the repayment of the Borrowings provided for
herein.  Anything contained in this
Agreement to the contrary notwithstanding, neither the Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrower in violation of any
Requirement of Law.

 

SECTION 9.14.  USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”) hereby notifies the Borrower
that pursuant to the requirements of the Act, it is required to obtain, verify
and record information that identifies the Borrower, which information includes
the name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the Act.

 

SECTION 9.15.  Disclosure.  Each Loan Party and each Lender hereby
acknowledges and agrees that the Administrative Agent and/or its Affiliates
from time to time may hold investments in, make other loans to or have other
relationships with any of the Loan Parties and their respective Affiliates.

 

SECTION 9.16.  Appointment for
Perfection.  Each Lender
hereby appoints each other Lender as its agent for the purpose of perfecting
Liens, for the benefit of the Administrative Agent and the Lenders, in assets
which, in accordance with Article 9 of the UCC or any other applicable law
can be perfected only by possession. 
Should any Lender (other than the Administrative Agent) obtain
possession of any such Collateral, such Lender shall notify the Administrative
Agent thereof, and, promptly upon the Administrative Agent’s request therefor
shall deliver such Collateral to the Administrative Agent or otherwise deal
with such Collateral in accordance with the Administrative Agent’s
instructions.

 

SECTION 9.17.  Interest Rate
Limitation.  Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans
or periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.

 

89

 

SECTION 9.18.  Conflicts.  In the event of any conflict between the
terms of this Agreement and the terms of any other Loan Document, the terms of
this Agreement shall, to the extent of such conflict, prevail.

 

ARTICLE
X

 

Loan Guaranty

 

SECTION 10.01.  Guaranty.  Each Loan Guarantor (other than those that
have delivered a separate Guaranty) hereby agrees that it is jointly and
severally liable for, and, as primary obligor and not merely as surety,
absolutely and unconditionally guarantees to the Lenders the prompt payment
when due, whether at stated maturity, upon acceleration or otherwise, and at
all times thereafter, of the Secured Obligations and all costs and expenses
including, without limitation, all court costs and attorneys’ and paralegals’
fees (including allocated costs of in-house counsel and paralegals) and
expenses paid or incurred by the Administrative Agent, the Issuing Bank and the
Lenders in endeavoring to collect all or any part of the Secured Obligations
from, or in prosecuting any action against, the Borrower, any Loan Guarantor or
any other guarantor of all or any part of the Secured Obligations (such costs
and expenses, together with the Secured Obligations, collectively the “Guaranteed
Obligations”). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal. All terms of this Loan Guaranty
apply to and may be enforced by or on behalf of any domestic or foreign branch
or Affiliate of any Lender that extended any portion of the Guaranteed
Obligations.

 

SECTION 10.02.  Guaranty of Payment.  This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the
Administrative Agent, the Issuing Bank or any Lender to sue the Borrower, any
Loan Guarantor, any other guarantor, or any other person obligated for all or
any part of the Guaranteed Obligations (each, an “Obligated Party”), or
otherwise to enforce its payment against any collateral securing all or any
part of the Guaranteed Obligations.

 

SECTION 10.03.  No Discharge or
Diminishment of Loan Guaranty. 
(a) Except as otherwise provided for herein, the obligations of
each Loan Guarantor hereunder are unconditional and absolute and not subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Guaranteed Obligations),
including:  (i) any claim of waiver,
release, extension, renewal, settlement, surrender, alteration, or compromise
of any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iii) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Obligated Party, or their assets or any
resulting release or discharge of any obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Loan Guarantor may
have at any time against any Obligated Party, the Administrative Agent, the
Issuing Bank, any Lender, or any other person, whether in connection herewith
or in any unrelated transactions.

 

(b)  The obligations of each Loan
Guarantor hereunder are not subject to any defense or setoff, counterclaim,
recoupment, or termination whatsoever by reason of the invalidity, illegality,
or unenforceability of any of the Guaranteed Obligations or otherwise, or any
provision of applicable law or regulation purporting to prohibit payment by any
Obligated Party, of the Guaranteed Obligations or any part thereof.

 

90

 

(c)  Further, the obligations of any
Loan Guarantor hereunder are not discharged or impaired or otherwise affected
by: (i) the failure of the Administrative Agent, the Issuing Bank or any
Lender to assert any claim or demand or to enforce any remedy with respect to
all or any part of the Guaranteed Obligations; (ii) any waiver or
modification of or supplement to any provision of any agreement relating to the
Guaranteed Obligations; (iii) any release, non-perfection, or invalidity
of any indirect or direct security for the obligations of the Borrower for all
or any part of the Guaranteed Obligations or any obligations of any other
guarantor of or other person liable for any of the Guaranteed Obligations; (iv) any
action or failure to act by the Administrative Agent, the Issuing Bank or any
Lender with respect to any collateral securing any part of the Guaranteed
Obligations; or (v) any default, failure or delay, willful or otherwise,
in the payment or performance of any of the Guaranteed Obligations, or any
other circumstance, act, omission or delay that might in any manner or to any
extent vary the risk of such Loan Guarantor or that would otherwise operate as
a discharge of any Loan Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).

 

SECTION 10.04.  Defenses Waived.  To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of the Borrower or any Loan Guarantor or the unenforceability of
all or any part of the Guaranteed Obligations from any cause, or the cessation
from any cause of the liability of the Borrower or any Loan Guarantor, other
than the indefeasible payment in full in cash of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Loan Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any person against any
Obligated Party, or any other person. 
The Administrative Agent may, at its election, foreclose on any Collateral
held by it by one or more judicial or nonjudicial sales, accept an assignment
of any such Collateral in lieu of foreclosure or otherwise act or fail to act
with respect to any collateral securing all or a part of the Guaranteed
Obligations, compromise or adjust any part of the Guaranteed Obligations, make
any other accommodation with any Obligated Party or exercise any other right or
remedy available to it against any Obligated Party, without affecting or
impairing in any way the liability of such Loan Guarantor under this Loan
Guaranty except to the extent the Guaranteed Obligations have been fully and
indefeasibly paid in cash.  To the
fullest extent permitted by applicable law, each Loan Guarantor waives any
defense arising out of any such election even though that election may operate,
pursuant to applicable law, to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of any Loan Guarantor against any
Obligated Party or any security.

 

SECTION 10.05.  Rights of
Subrogation.  No Loan
Guarantor will assert any right, claim or cause of action, including, without
limitation, a claim of subrogation, contribution or indemnification that it has
against any Obligated Party, or any collateral, until the Loan Parties and the
Loan Guarantors have fully performed all their obligations to the
Administrative Agent, the Issuing Bank and the Lenders.

 

SECTION 10.06.  Reinstatement; Stay
of Acceleration.  If at any
time any payment of any portion of the Guaranteed Obligations is rescinded or
must otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or otherwise, each Loan Guarantor’s obligations
under this Loan Guaranty with respect to that payment shall be reinstated at
such time as though the payment had not been made and whether or not the
Administrative Agent, the Issuing Bank and the Lenders are in possession of
this Loan Guaranty. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Lender.

 

91

 

SECTION 10.07.  Information.  Each Loan Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that each Loan Guarantor assumes and incurs under this Loan
Guaranty, and agrees that neither the Administrative Agent, the Issuing Bank
nor any Lender shall have any duty to advise any Loan Guarantor of information
known to it regarding those circumstances or risks.

 

SECTION 10.08.  Termination.  The Lenders may continue to make loans or
extend credit to the Borrower based on this Loan Guaranty until five (5) days
after it receives written notice of termination from any Loan Guarantor.  Notwithstanding receipt of any such notice,
each Loan Guarantor will continue to be liable to the Lenders for any
Guaranteed Obligations created, assumed or committed to prior to the fifth day
after receipt of the notice, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any
part of that Guaranteed Obligations.

 

SECTION 10.09.  Taxes.  All payments of the Guaranteed Obligations
will be made by each Loan Guarantor free and clear of and without deduction for
any Indemnified Taxes or Other Taxes; provided that if any Loan
Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Guarantor
shall make such deductions and (iii) such Loan Guarantor shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

SECTION 10.10.  Maximum Liability.  The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law,
or any state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of
any Loan Guarantor under this Loan Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount
of such Loan Guarantor’s liability under this Loan Guaranty, then,
notwithstanding any other provision of this Loan Guaranty to the contrary, the
amount of such liability shall, without any further action by the Loan
Guarantors or the Lenders, be automatically limited and reduced to the highest
amount that is valid and enforceable as determined in such action or proceeding
(such highest amount determined hereunder being the relevant Loan Guarantor’s “Maximum
Liability”.  This Section with
respect to the Maximum Liability of each Loan Guarantor is intended solely to
preserve the rights of the Lenders to the maximum extent not subject to
avoidance under applicable law, and no Loan Guarantor nor any other person or
entity shall have any right or claim under this Section with respect to
such Maximum Liability, except to the extent necessary so that the obligations
of any Loan Guarantor hereunder shall not be rendered voidable under applicable
law. Each Loan Guarantor agrees that the Guaranteed Obligations may at any time
and from time to time exceed the Maximum Liability of each Loan Guarantor
without impairing this Loan Guaranty or affecting the rights and remedies of
the Lenders hereunder; provided that, nothing in this sentence shall be
construed to increase any Loan Guarantor’s obligations hereunder beyond its
Maximum Liability.

 

SECTION 10.11.  Contribution.  In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or
shall suffer any loss as a result of any realization upon any collateral
granted by it to secure its obligations under this Loan Guaranty, each other
Loan Guarantor (each a “Non-Paying Guarantor”) shall contribute to such
Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable
Percentage” of such payment or payments made, or losses suffered, by such
Paying Guarantor.  For purposes of this Article X,
each Non-Paying Guarantor’s “Applicable Percentage” with respect to any
such payment or loss by a Paying Guarantor shall be determined as of the date
on which such payment or loss was made by reference to the ratio of (i) such

 

92

 

Non-Paying Guarantor’s Maximum Liability as
of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum
Liability has not been determined, the aggregate amount of all monies received
by such Non-Paying Guarantor from the Borrower after the date hereof (whether
by loan, capital infusion or by other means) to (ii) the aggregate Maximum
Liability of all Loan Guarantors hereunder (including such Paying Guarantor) as
of such date (without giving effect to any right to receive, or obligation to
make, any contribution hereunder), or to the extent that a Maximum Liability has
not been determined for any Loan Guarantor, the aggregate amount of all monies
received by such Loan Guarantors from the Borrower after the date hereof
(whether by loan, capital infusion or by other means).  Nothing in this provision shall affect any
Loan Guarantor’s several liability for the entire amount of the Guaranteed
Obligations (up to such Loan Guarantor’s Maximum Liability).  Each of the Loan Guarantors covenants and
agrees that its right to receive any contribution under this Loan Guaranty from
a Non-Paying Guarantor shall be subordinate and junior in right of payment to
the payment in full in cash of the Guaranteed Obligations.  This provision is for the benefit of both the
Administrative Agent, the Issuing Bank, the Lenders and the Loan Guarantors and
may be enforced by any one, or more, or all of them in accordance with the
terms hereof.

 

SECTION 10.12.  Liability Cumulative.  The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative
with all liabilities of each Loan Party to the Administrative Agent, the
Issuing Bank and the Lenders under this Agreement and the other Loan Documents
to which such Loan Party is a party or in respect of any obligations or
liabilities of the other Loan Parties, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

 

[Signature Pages Follow]

 

93

 

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

 

	
   

  	
  ETHAN
  ALLEN GLOBAL, INC.,

  
	
   

  	
  as
  the Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  ETHAN
  ALLEN INTERIORS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
  Title:

  	
  President

  
				

 

Signature Page to Credit Agreement

Ethan Allen Global, Inc.

 

 

	
   

  	
  ETHAN
  ALLEN OPERATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ETHAN
  ALLEN REALTY, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ETHAN
  ALLEN RETAIL, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LAKE
  AVENUE ASSOCIATES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MANOR
  HOUSE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  M. Farooq Kathwari

  
	
   

  	
   

  	
  Name:

  	
  M.
  Farooq Kathwari

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

Signature Page to Credit
Agreement

Ethan Allen Global, Inc.

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually as a Lender, as the Swingline Lender, as the
  Issuing Bank and as Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  /s/
  Joseph A. Lisack 

  
	
   

  	
   

  	
  Name:

  	
  Joseph A. Lisack 

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

Signature Page to Credit
Agreement

Ethan Allen Global, Inc.

 

 

	
   

  	
  CAPITAL
  ONE LEVERAGE FINANCE CORP.,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  /s/
  Nick Malatestinic

  
	
   

  	
   

  	
  Name:

  	
  Nick Malatestinic

  
	
   

  	
   

  	
  Title:

  	
  SVP

  

 

Signature Page to Credit
Agreement

Ethan Allen Global, Inc.

 

 

SCHEDULE 2.01

 

COMMITMENTS

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
  Capital One Leverage Finance Corp.

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Aggregate Commitment:

  	
   

  	
  $

  	
  40,000,000

  	
   

  

 

 

SCHEDULE 2.06

 

EXISTING LETTERS OF CREDIT

 

	
  JPMorgan Chase Bank

  Letter of Credit Number

  	
   

  	
  Outstanding

  Amount

  	
   

  	
  Expiry / Maturity

  Date

  	
   

  	
  Beneficiary Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  T-244580

  	
   

  	
  $

  	
  579,174.00

  	
   

  	
  AUG 19, 2009

  	
   

  	
  INSURANCE
  COMPANY OF NORTH AMERICA

  	
   

  
	
  T-249589

  	
   

  	
  $

  	
  11,300,000.00

  	
   

  	
  JUL 12, 2010

  	
   

  	
  THE TRAVELERS
  INDEMNITY COMPANY

  	
   

  
	
  T-250558

  	
   

  	
  $

  	
  300,000.00

  	
   

  	
  AUG 19, 2009

  	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  	
   

  
	
  TPTS-233492

  	
   

  	
  $

  	
  15,000.00

  	
   

  	
  OCT 31, 2009

  	
   

  	
  SOUTHGATE WATER
  AND

  	
   

  
	
  TPTS-277995

  	
   

  	
  $

  	
  3,500.00

  	
   

  	
  DEC 31, 2009

  	
   

  	
  SOUTHEAST METRO
  STORMWATER

  	
   

  
	
  TPTS-312139

  	
   

  	
  $

  	
  49,517.10

  	
   

  	
  FEB 28, 2010

  	
   

  	
  CITY OF
  CENTENNIAL

  	
   

  
	
  TPTS-334627

  	
   

  	
  $

  	
  10,734.00

  	
   

  	
  MAR 31, 2010

  	
   

  	
  CITY OF
  BROOKFIELD

  	
   

  
	
  TPTS-334723

  	
   

  	
  $

  	
  1,867.00

  	
   

  	
  MAR 31, 2010

  	
   

  	
  CITY OF
  BROOKFIELD

  	
   

  
	
  TPTS-344509

  	
   

  	
  $

  	
  7,000.00

  	
   

  	
  JUL 31, 2009

  	
   

  	
  SOUTHGATE WATER
  DISTRICT

  	
   

  
	
  TPTS-344510

  	
   

  	
  $

  	
  2,960.00

  	
   

  	
  JUL 31, 2009

  	
   

  	
  SOUTHGATE
  SANITATION DISTRICT

  	
   

  
	
  TPTS-380846

  	
   

  	
  $

  	
  36,000.00

  	
   

  	
  AUG 31, 2009

  	
   

  	
  CITY OF PALM
  BEACH GARDENS

  	
   

  
	
  TPTS-381645

  	
   

  	
  $

  	
  10,000.00

  	
   

  	
  AUG 31, 2009

  	
   

  	
  TORGERSON
  PROPERTIES, INC

  	
   

  
	
  TPTS-674070

  	
   

  	
  $

  	
  135,000.00

  	
   

  	
  AUG 31, 2009

  	
   

  	
  CITY OF ARTESIA

  	
   

  
	
  TTTS-259870

  	
   

  	
  $

  	
  9,000.00

  	
   

  	
  MAY 31,
  2010

  	
   

  	
  COUNTY OF
  PULASKI

  	
   

  

 

 

ETHAN ALLEN INTERIORS INC. HAS CLAIMED CONFIDENTIAL TREATMENT OF
PORTIONS OF THIS DOCUMENT IN ACCORDANCE WITH RULE 24-B UNDER THE SECURITIES
EXCHANGE ACT OF 1934

 

SCHEDULE 3.06

To Credit Agreement

 

Disclosed Matters (Litigation)

 

List of Pending or Threatened Litigation in Excess of $1,000,000

 

*

 

*CONFIDENTIAL
INFORMATION AHS BEEN OMITTED AND FURNISHED SEPARATELY TO THE COMMISSION

 

 

SCHEDULE 3.14

To Credit Agreement

 

Insurance

 

 

SEE ATTACHED

 

 

Schedule of
Insurance

 

	
  Lockton - NY

  	
   

  	
   

  	
   

  	
  Ethan Allen Interiors, Inc

  
	
  7 Times Square, Suite 3802

  	
   

  	
  Property

  	
   

  	
  Ethan Allen Drive, PO Box 1966

  
	
  New York, NY 10036

  	
   

  	
   

  	
   

  	
  Danbury, CT 06813

  
	
  Phone: 646-572-7300

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  Amount or

  	
   

  	
   

  	
   

  	
  Policy

  	
   

  	
   

  	
   

  	
  Policy

  	
   

  
	
  Coverage

  	
   

  	
  Limits

  	
   

  	
  Location

  	
   

  	
  Term

  	
   

  	
  Company

  	
   

  	
  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All Risk - Manufacturing

  	
   

  	
  *

  	
   

  	
  All
  Manufacturing and distribution locations as on file.

  	
   

  	
  7/1/2008
  - 09

  	
   

  	
  Zurich

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All Risk - Retail

  	
   

  	
  *

  	
   

  	
  All
  Retail locations as on file.

  	
   

  	
  7/1/2008
  - 09

  	
   

  	
  Travelers

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  Rough
  Mill

  27 Railroad Ave.

  Orleans, VT 05860

  	
   

  	
  6/20/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  Rub &
  Pack Building

  27 Railroad Ave.

  Orleans, VT 05860

  	
   

  	
  6/20/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  Boiler
  House

  27 Railroad Ave.

  Orleans,
  VT 05860

  	
   

  	
  6/20/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  Saw
  Mill

  217 Main St.

  Beecher Falls, VT 05902

  	
   

  	
  6/20/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  Main
  Building

  217 Main St.Beecher Falls, VT 05902

  	
   

  	
  6/20/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  1800
  Banks Rd.

  Margate, FL 33063

  	
   

  	
  6/28/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  13680
  Pines Blvd.

  Pembroke Pines, FL 33027

  	
   

  	
  6/28/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  5139 Manheim Pike

  East Petersburg, PA 17520

  	
   

  	
  7/1/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  16240
  S. Tamiami Trl, Fort

  Myers, FL 33908

  	
   

  	
  7/22/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  Finish
  Mill

  27 Railroad Ave.

  Orleans, VT 05860

  	
   

  	
  7/1/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flood

  	
   

  	
  *

  	
   

  	
  200
  Murray Hill Parkway

  East Rutherford, NJ 07073

  	
   

  	
  7/1/2008
  - 09

  	
   

  	
  Selective

  	
   

  	
  *

  	
   

  

 

*
CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FURNISHED SEPARATELY TO THE
COMMISSION

 

This
Record of Insurance is intended to be used as a quick reference; please refer
to your actual policies for exact terms and conditions

 

	
  Revised
  5/21/2009

  	
   

  	
  SCHEDULE 3.14

  

 

 

SCHEDULE 3.15

To Credit Agreement

 

Capitalization and Subsidiaries

 

 

SEE ATTACHED

 

 

ETHAN ALLEN

 

	
  Name of Entity

  	
   

  	
  State
  of

  Domicile

  	
   

  	
  Inc/Qual

  Date

  	
   

  	
   

  	
   

  	
  Tax ID

  	
   

  	
  Mailing
  Address of

  CEO and Principal

  Place of Business

  	
   

  	
  Former
  Business

  Name

  	
   

  	
  Current
  or

  Former Trade

  Name(s)

  	
   

  	
  Owner
  & % of

  Ownership

  	
   

  	
  Number
  of Shares

  Authorized to

  Issue

  
	
  Ethan Allen Global, Inc.

  	
   

  	
  DE

  	
   

  	
  6/27/2005

  	
   

  	
  *

  	
   

  	
  20-2991357

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
   

  	
   

  	
  Ethan Allen

  	
   

  	
  Ethan Allen Interiors Inc.
  - 100% (100 shares)

  	
   

  	
  1,000 - $0.01 par value
  per share

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ethan Allen Retail, Inc.

  	
   

  	
  DE

  	
   

  	
  6/16/1989

  	
   

  	
  *

  	
   

  	
  06-1273300

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
  Changed Name 6/29/05 from Ethan Allen Inc.

  	
   

  	
  Ethan Allen, Ethan Allen
  Home Interiors

  	
   

  	
  Ethan Allen Global, Inc.
  - 100%

  	
   

  	
  1,000 - $0.01 par value
  per share

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ethan Allen Interiors Inc.

  	
   

  	
  DE

  	
   

  	
  5/25/1989

  	
   

  	
  *

  	
   

  	
  06-1275288

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Publicly Held

  	
   

  	
  151,655,000 (see
  footnote 1 below)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ethan Allen Operations, Inc.

  	
   

  	
  DE

  	
   

  	
  12/27/1994

  	
   

  	
  *

  	
   

  	
  06-1420986

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
  Ethan Allen Manufacturing Corporation; Name change
  filed 8/19/05

  	
   

  	
  Ethan Allen
  Manufacturing Corporation

  	
   

  	
  Ethan Allen Global, Inc.
  - 100%

  	
   

  	
  1,000 - $0.01 par value
  per share

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ethan Allen Realty, LLC

  	
   

  	
  DE

  	
   

  	
  6/24/2005

  	
   

  	
  *

  	
   

  	
  06-1753714

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ethan Allen Operations,
  Inc. - 100%

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lake Avenue Associates, Inc.

  	
   

  	
  CT

  	
   

  	
  11/2/1973

  	
   

  	
  *

  	
   

  	
  06-0901325

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
   

  	
   

  	
  Ethan Allen Hotel

  	
   

  	
  Ethan Allen Global, Inc.
  - 100% (250 shares)

  	
   

  	
  500 (see footnote 2
  below)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manor House, Inc.

  	
   

  	
  DE

  	
   

  	
  10/4/1974

  	
   

  	
  *

  	
   

  	
  06-0919150

  	
   

  	
  Ethan Allen Drive,

  Danbury, CT 06811

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ethan Allen Retail, Inc.
  - 100%

  	
   

  	
  1,000 - $100 par value
  per share

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Excluded Subsidiaries: Ethan Allen (UK) Ltd.
  (currently undergoing liquidation/dissolution), Cut and Sew Manufacturing
  Operations, S de R.L. de C.V., Cut and Sew Manufacturing Realty, S. de R.L.
  de C.V., Ethan Allen (Canada) Inc., Ethan Allen Carriage Ho

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Footnote 1 - 150,000,000 - Common Stock - $.01 par
  value per share; 600,000 Class B Common Stock - $.01 par value per share; and
  1,055,000 Preferred Stock - $0.01 par value per share

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Footnote 2 - 250 Class A Common Stock - $10 par value
  per share; and 250 Class B Common Stock - $10.00 par value per share

  

 

* CONFIDENTIAL INFORMATION HAS BEEN OMITTED
AND FURNISHED SEPARATELY TO THE COMMISSION

 

SCHEDULE 3.15

 

 

SCHEDULE 3.21

To Credit Agreement

 

Credit Card Processors

 

Name
and Address of Processing Agents for Ethan Allen

 

A.              American Express

American
Express Travel Related Services Company, Inc.

World
Financial Center

New
York, NY 10285

Kim
Goodman, Executive Vice President Merchant Services, North America

 

B.                Elavon

One
Concourse Parkway, Suite 200

Atlanta,
Georgia

 

C.                Paymentech LLC  (Credit Card and Gift Cards)

4221
Dallas Parkway

Dallas,
Texas  75254

 

D.               G.E. Money Bank

950
Forrer Boulevard

Kettering,
Ohio   45420

Attn:  Paul Beekman

 

 

SCHEDULE 6.01

 

Existing Indebtedness

 

1.                                       Western
Pennsylvania Teamsters and Employers Pension Fund - Notice of Withdrawal and
Demand for Payment of Withdrawal Liability (related to a closed facility).  $0.38 million, matures 01/01/23.

2.                                       10-year Senior
Unsecured Notes - $200 million, matures 10/1/15

3.                                       Ethan Allen
Hotel IRB (US Bank) - $4 million, matures 6/1/11

4.                                       Beecher Falls -
Town of Cannan (Building) - $0.3 million, matures 10/15/26

5.                                       Beecher Falls -
Town of Cannan (M&E) - $0.4 million, matures 10/15/11

6.                                       Private Label
Consumer Credit Card Program Agreement with GE (imbedded guarantee)

7.                                       Fratco Bank
subordination agreement / guarantee inventory repurchase of up to $0.9 million

8.                                       Letters of
Credit outstanding of $12.5 million (see schedule 2.06)

9.                                       Obligations to
pay M Farooq Kathwari under past and present employment agreements

 

 

SCHEDULE 6.02

To Credit Agreement

 

Existing Liens

 

I.              See Attached
UCC Lien Search Summary (as of April 20, 2009)

 

II.            Town of Canaan
Loans – Security Agreement dated 26th day of June 1996
– Balance as of 3/31/09 is $306,218 ($224,820 maturity date 10/15/2026
(Building); $81,398 maturity date 10/15/11 (Machinery and Equipment))

 

III.           Connecticut
Development Authority – Indenture dated May 1, 1993.  Payment of interest only on outstanding debt
of $3,855,000.  Maturity date 6/1/11.

 

 

ETHAN ALLEN UCC LIEN SEARCH SUMMARY

AS OF APRIL 20, 2009

 

	
  Secured
  Party

  	
   

  	
  File Number

  	
   

  	
  File Date

  	
   

  	
  Filing Type

  	
   

  	
  Filing Jurisdiction

  and Office

  	
   

  	
  Collateral Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.         ETHAN
  ALLEN GLOBAL, INC.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IBM Credit LLC

  	
   

  	
  54051869

  	
   

  	
  12/29/2005

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  74088208

  	
   

  	
  10/29/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  74125901

  	
   

  	
  10/30/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  900119601

  	
   

  	
  1/5/2009

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
  NMHG Financial Services
  Inc.

  	
   

  	
  63315983

  	
   

  	
  9/26/2006

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
  GE Money Bank

  	
   

  	
  71109783

  	
   

  	
  3/26/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Informational filing
  against all of the Debtor’s rights in the Secured Party’s property and
  related accounts, indebtedness and related documentation with respect to the
  credit card program offered by the Secured Party through the Debtor.

  
	
   

  	
   

  	
  72945060

  	
   

  	
  8/2/2007

  	
   

  	
  Amendment

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Amendment and
  restatement of collateral description

  
	
  Banc of America
  Leasing & Capital, LLC

  	
   

  	
  72108727

  	
   

  	
  6/5/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  72361706

  	
   

  	
  6/21/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  72803020

  	
   

  	
  7/25/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  73112546

  	
   

  	
  8/15/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  73910824

  	
   

  	
  10/17/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  74234364

  	
   

  	
  11/6/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  74417597

  	
   

  	
  11/20/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  74648555

  	
   

  	
  12/10/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  80199198

  	
   

  	
  1/16/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  81976958

  	
   

  	
  6/10/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  82803110

  	
   

  	
  8/15/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  82891370

  	
   

  	
  8/25/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  82902623

  	
   

  	
  8/26/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  82933107

  	
   

  	
  8/28/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
  83293873

  	
   

  	
  9/29/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  

 

 

	
  Secured
  Party

  	
   

  	
  File Number

  	
   

  	
  File Date

  	
   

  	
  Filing Type

  	
   

  	
  Filing Jurisdiction

  and Office

  	
   

  	
  Collateral Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bashian
  Bros., Inc.

  	
   

  	
  74919105

  	
   

  	
  12/26/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Informational filing
  against oriental rugs held on consignment basis.

  
	
  General Electric Capital
  Corp.

  	
   

  	
  82961645

  	
   

  	
  9/2/2008

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Specific Equipment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.        ETHAN
  ALLEN INTERIORS INC.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  No UCC filings found by search
  with Secretary of State of the State of Delaware.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.      ETHAN
  ALLEN OPERATIONS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  No UCC filings found by search
  with Secretary of State of the State of Delaware.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.      ETHAN
  ALLEN REALTY, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  No UCC filings found by search
  with Secretary of State of the State of Delaware.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  V.       ETHAN
  ALLEN RETAIL, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GE Money Bank

  	
   

  	
  71109783

  	
   

  	
  3/26/2007

  	
   

  	
  UCC-1

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Informational filing
  against all of the Debtor’s rights in the Secured Party’s property and
  related accounts, indebtedness and related documentation with respect to the
  credit card program offered by the Secured Party through the Debtor.

  
	
   

  	
   

  	
  72945060

  	
   

  	
  8/2/2007

  	
   

  	
  Amendment

  	
   

  	
  Secretary of State of
  the State of Delaware

  	
   

  	
  Amendment and
  restatement of collateral description

  
	
  VI.      LAKE
  AVENUE ASSOCIATES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  No UCC filings found by search
  with Secretary of State of the State of Connecticut.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.     MANOR
  HOUSE, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  No UCC filings found by search
  with Secretary of State of the State of Delaware.

  	
   

  	
   

  

 

 

Ethan Allen Interiors Inc.

ABL Revolver - May 2009
(data as of 3/31/09 in millions)

Schedule 6.04

 

Existing
Investments, Loans and Advances

 

	
   

  	
   

  	
  Investments

  	
   

  	
  Loans &
  Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ethan Allen Canada

  	
   

  	
  $

  	
  4.4

  	
   

  	
  $

  	
  3.9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lake Ave Assoc (EA
  Hotel)

  	
   

  	
  $

  	
  0.7

  	
   

  	
  $

  	
  1.8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cut & Sew -
  Mexico

  	
   

  	
  $

  	
  3.1

  	
   

  	
  $

  	
  0.4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash & Cash
  Equivalents (Permitted Investments):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
  Citizens

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
  PNC

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
  Wachovia

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
  BoA

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
  Scotia

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
  *

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   51.2

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notes Receivable:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
   

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
   

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
   

  	
   

  	
  *

  	
   

  
	
  *

  	
   

  	
   

  	
   

  	
  *

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   0.7

  	
   

  

 

*  CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
FURNISHED SEPARATELY TO THE COMMISSION

 

 

SCHEDULE 6.10

To Credit Agreement

 

Existing Restrictions

 

1.               None

 

 

EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and Assumption”)
is dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below
(as amended, the “Credit Agreement”), receipt of a copy of which is
hereby acknowledged by the Assignee.  The
Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration,
the Assignor hereby irrevocably sells and assigns to the Assignee, and the
Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by the Administrative Agent as
contemplated below (i) all of the Assignor’s rights and obligations in its
capacity as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including any letters of credit, guarantees, and swingline loans included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations
sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [and
  is an Affiliate/Approved Fund of [identify Lender](1)]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower:

  	
   

  	
  Ethan
  Allen Global, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Agent:

  	
   

  	
  JPMorgan
  Chase Bank, N.A., as the administrative agent under the Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit
  Agreement:

  	
   

  	
  The
  Credit Agreement dated as of May 29, 2009 among Ethan Allen
  Global, Inc., the other Loan Parties parties thereto, the Lenders
  parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

  

 

(1) Select as applicable.

 

 

6.                                       Assigned
Interest:

 

	
  Facility Assigned(2)

  	
   

  	
  Aggregate Amount of

  Commitment/Loans for

  all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned of

  Commitment/Loans(3)

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

Effective
Date:  
                          
      , 20      
[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE
OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The Assignee agrees to deliver to the
Administrative Agent a completed Administrative Questionnaire in which the
Assignee designates one or more Credit Contacts to whom all syndicate-level
information (which may contain material non-public information about the
Borrower, the Loan Parties and their Related Parties or their respective
securities) will be made available and who may receive such information in
accordance with the Assignee’s compliance procedures and applicable laws,
including Federal and state securities laws.

 

The terms set forth in this
Assignment and Assumption are hereby agreed to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

(2) Fill in the appropriate terminology
for the types of facilities under the Credit Agreement that are being assigned
under this Assignment.

(3) Set forth, to at least 9 decimals,
as a percentage of the Commitment/Loans of all Lenders thereunder.

 

 

	
  [Consented to
  and](4) Accepted:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK, N.A., as

  	
   

  
	
  Administrative Agent and as Issuing Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Consented
  to:](5)

  	
   

  
	
   

  	
   

  
	
  ETHAN
  ALLEN GLOBAL, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
  Title:

  	
   

  

 

 

(4) To be added only if the consent of
the Administrative Agent and/or the Issuing Bank is required by the terms of
the Credit Agreement.

(5) To be added only if the consent of
the Borrower is required by the terms of the Credit Agreement.

 

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

1.  Representations and
Warranties.

 

1.1   Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

 

1.2.  Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it satisfies the requirements, if any,
specified in the Credit Agreement that are required to be satisfied by it in
order to acquire the Assigned Interest and become a Lender, (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iv) it has received a copy
of the Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Section       
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is
a Foreign Lender, attached to the Assignment and Assumption is any
documentation required to be delivered by it pursuant to the terms of the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii) it
will perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.

 

2.   Payments.    From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3.  General Provisions.
This Assignment and Assumption shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument.  Delivery of an executed
counterpart of a signature page of this Assignment and Assumption by
facsimile shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption.  This
Assignment and Assumption shall be construed in accordance with and governed by
the law of the State of New York, but giving effect to federal laws applicable
to national banks.

 

 

EXHIBIT
B

 

OPINION OF LOAN PARTIES’
COUNSEL

 

[Attached]

 

 

May 29, 2009

 

To
the Lenders and the Administrative

Agent
Referred to Below

c/o
JPMorgan Chase Bank, N.A. 

As Administrative Agent 

270 Park Avenue

New York, New York 10017

 

Ladies and Gentlemen:

 

We have acted as special
counsel to Ethan Allen Interiors Inc., a Delaware corporation (“Holdings”),
and certain of its subsidiaries, including Ethan Allen Global, Inc., a
Delaware corporation (the “Borrower”), Ethan Allen Retail, Inc., a
Delaware corporation (“Retail”), Ethan Allen Operations, Inc., a
Delaware corporation (“Operations”), Lake Avenue Associates, Inc.,
a Connecticut corporation (“Lake Avenue”) , Manor House, Inc., a
Delaware corporation (“Manor House”), Ethan Allen Realty, LLC, a
Delaware limited liability company (“Realty”, and collectively with
Holdings, the Borrower, Retail, Operations, Lake Avenue, and Manor House, the “Loan
Parties”)  in connection with Credit
Agreement dated as of May 29, 2009, (the “Credit Agreement”) among
the Borrower, Holdings, the other Loan Parties party thereto, JPMorgan Chase
Bank, N.A., a national banking association, in its capacity as contractual
representative (the “Administrative Agent”), and the Lenders party
thereto (the “Lenders”).  This
opinion is delivered to you at the request of Holdings and the Borrower
pursuant to Section 4.01 of the Credit Agreement.  Unless otherwise indicated herein,
capitalized terms used herein and not defined herein shall have the meanings
given to them in the Credit Agreement.

 

In connection with this
opinion, we have examined and relied upon copies, certified or otherwise
identified to our satisfaction, of (i) the Credit Agreement, (ii) the
Pledge and Security Agreement, dated as of May 29, 2009 (the “Security
Agreement”), among Holdings, the Borrower, the other Loan Parties, and the
Administrative Agent for itself and for the Lenders, (iii) the Financing
Statements (as hereinafter defined), related to the security interests granted
by the Loan Parties pursuant to the Security Agreement, and (iv) such
other

 

 

records, agreements,
certificates and instruments, and information from officers and other
representatives of the Loan Parties and governmental and regulatory officials
as we have deemed necessary as a basis for this opinion.  The documents described in clauses (i) and
(ii) of the immediately preceding sentence are sometimes referred to
herein as the “Agreements.”

 

In our examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity of any documents submitted to us
as copies to their respective originals, the authenticity of the originals of
such copies and the legal capacity of all natural persons.  We have also assumed, with your consent and
without undertaking, or having any duty to undertake, any independent
investigation or inquiry, that the representations, warranties and statements
as to factual matters (except any of the foregoing expressly covered by the
opinions set forth below) made in the Credit Agreement and the Security
Agreement by the Loan Parties or in the respective certificates of the Loan
Parties and their respective officers mentioned above, are true and correct and
have assumed the compliance by each of the Lenders and the Administrative Agent
with the terms of the Agreements to which it is a party.

 

In rendering the opinions
expressed below, we have assumed the following:

 

(a)           the accuracy and completeness of all reports and
certificates received from public officials and others;

 

(b)           the absence of fraud, misrepresentation, omission or
deceit on the part of any party to the Agreements;

 

(c)           the absence of any mutual mistake of fact or
misunderstanding, duress or undue influence involved in the negotiation,
execution, delivery or performance of the Agreements;

 

(d)           neither the Administrative Agent or
any Lender nor any of the representatives of any thereof has any notice or
knowledge (actual or constructive) of any adverse claim, lien, security
interest, encumbrance, interest or other condition of title affecting any
investment property or instruments (as each such term is defined in Article 9-102
of the UCC, as hereinafter defined) that are part of the Collateral;

 

(e)           all items of Collateral for which
possession must be taken by a secured party in order to perfect its security
interest under Section 9-313 of the Uniform Commercial Code of New York
(the “New York UCC”) or the Uniform Commercial Code of Delaware (the “Delaware
UCC”) or the Uniform Commercial Code of Connecticut (Connecticut UCC”,
and collectively with the New York UCC and the Delaware UCC, the “UCC”)
shall be in the possession or constructive possession of the Administrative
Agent and not in the possession of any Loan Party, or any Affiliate, agent or
any other Person acting on behalf of any Loan Party;

 

2

 

(f)            each Loan Party has acquired good
and sufficient title to each existing item of Collateral existing on the date
hereof and has “rights” in and to such Collateral within the meaning of Section 9-203
of the UCC consistent with and sufficient for purposes of the Agreements, and
the same will be true of each item of Collateral arising after the date hereof;

 

(g)           the Collateral is (A) either
located in the State of New York or is of a type as to which the creation and
enforcement of a security interest therein is governed solely by Article 9
of the New York UCC and (B) except as expressly stated in paragraph (5) below,
is of a type as to which a security interest can be perfected solely by filing
a financing statement; and

 

(h)           each Loan Party has received legally
sufficient consideration and that “value” (as defined in Section 1-201 of
the UCC) “has been given” (as required by Section 9-203 of the UCC) for
the execution of the Agreements to which it is a party and the granting of
security interests in its property pursuant thereto.

 

We have also assumed that
there is no other agreement or understanding among the parties to the
Agreements, written or oral, or any waiver of a right or remedy, or any usage
of trade or course of dealing between the parties to each of the Agreements,
that would, in any case, modify, define, supplement or qualify any of the terms
of the Agreements.

 

As to various questions of
fact material to the opinions rendered herein, we have relied upon the
statements, representations and warranties in the documents examined by us, and
nothing has come to our attention which would indicate that we are not
justified in relying on such statements, representations and warranties.  We have assumed the due execution and
delivery, pursuant to due authorization, of the documents that we have examined
by each party thereto, that each such party is existing and (to the extent
applicable) in good standing under the laws of its jurisdiction of organization
or formation and has the full power, authority and legal right to enter into
and perform its obligations under each such document to which it is a party,
and that all necessary consents, licenses, approvals, authorizations,
registrations, declarations,  filings and
other acts (governmental or otherwise) and all other conditions precedent with
respect to the legal and valid execution and delivery of, and performance
under, the documents that we have examined by each party thereto, in each case
other than, with respect to the laws of the State of New York, each of the Loan
Parties, have been made or satisfied or have occurred and are in full force and
effect.  We have also assumed that all of
the documents we have examined are binding and enforceable obligations of each
party thereto other than the Loan Parties.

 

We do not assume any
responsibility for the accuracy, completeness or fairness of any information,
including, but not limited to, financial information, furnished to you by any
of the Loan Parties or any of their Affiliates concerning the business, assets
and affairs of the Loan Parties or any of their Affiliates or any other
information furnished to you by or on behalf of any of the Loan Parties or any
of their Affiliates or furnished by us to you, except for our conclusions of
law in this opinion letter.

 

3

 

References in this opinion
to our “knowledge” or “known to us” or similar phrases mean the actual
knowledge (i.e., conscious awareness) of the attorneys currently in this firm
who our records indicate have devoted substantive attention to matters directly
relating to the Agreements and the transactions contemplated thereby, and mean
that such attorneys have not been informed by the Loan Parties that the matters
stated are factually incorrect and have no actual knowledge (i.e., conscious awareness) that the matters stated are
factually incorrect.  Except as expressly
set forth herein, we have not undertaken any independent investigation,
examination, or inquiry to determine the existence or absence of any facts (and
have not caused the review of any court file or indices) and no inference as to
our knowledge concerning any facts should be drawn as a result of the limited
representation undertaken by us.

 

We express no opinion on any
matter not specifically set forth herein and we understand that you are relying
upon, and receiving contemporaneously with the delivery of this opinion, the
legal opinion of Pamela A. Banks of Holdings (the “Other Opinion”),
addressing various matters set forth therein and that you are not relying upon
us with respect to matters covered in the Other Opinion.  In rendering this opinion, we have relied
upon the Other Opinion solely as to the matters opined upon in the Other
Opinion.

 

Based
upon and subject to the foregoing, and to the limitations and qualifications
stated herein, it is our opinion that:

 

(1)           Assuming
due authorization, execution and delivery thereof by the parties thereto, each
of the Credit Agreement and the Security Agreement is a valid and legally
binding agreement of each Loan Party that is a party thereto, enforceable
against it in accordance with its terms.

 

(2)           No
Lender is required to obtain or effect any registration or filing with, consent
or approval of or other action by any Governmental Authority of the United
States of America or the State of New York in connection with the transactions
contemplated by the Credit Agreement and the Security Agreement, other than (a) such
filings, registrations, consents, approvals and other actions which may be
required in order to perfect the liens and security interests granted pursuant
to the Credit Agreement and the Security Agreement and (b) those that have
been made or obtained and are in full force and effect or as to which the
failure to be made or obtained or to be in full force and effect would not
reasonably be expected to result, individually or in the aggregate, in a
Material Adverse Effect.

 

(3)           Under
the New York UCC, the Security Agreement is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a valid security
interest in the Collateral described therein, to the extent that the creation
of security interests in the Collateral is governed by Article 9 of the
New York UCC.

 

4

 

(4)           The
UCC-1 financing statements (the “Financing Statements”) in the forms
attached as Annex A hereto are in appropriate form for filing in the
office of the Secretary of the State of the jurisdiction of incorporation or
organization of the Loan Parties indicated on Exhibit B (the “Filing
Offices”).  Upon filing and proper
indexing of the Financing Statements in the Filing Offices of the jurisdiction
of incorporation or organization of each Loan Party, the security interest of
the Administrative Agent, for the benefit of the Secured Parties, in the
Collateral described therein will be perfected under the Uniform Commercial
Code in effect in the states of incorporation or organization indicated on Exhibit B
of such Loan Parties (the “State UCCs”) to the extent that a security
interest in such Collateral can be perfected by the filing of a financing
statement in the Filing Offices (such Collateral, “Article 9 Collateral”).

 

(5)           Under
the New York UCC, the execution and delivery of the Security Agreement,
together with delivery and the continued possession by the Administrative
Agent, in the State of New York, of certificates evidencing all Collateral
consisting of instruments or investment property, issued or endorsed in the
name of the Administrative Agent, or in blank or together with stock powers or
other instruments of transfer properly executed in the name of the
Administrative Agent, or in blank with respect thereto, will create a valid and
duly perfected lien on and a security interest in such Collateral pledged on
the date hereof under the Security Agreement. 
Subject to the limitations contained in Section 9-331 of the New
York UCC, the Administrative Agent will acquire such lien and security interest
free of adverse claims (as defined in Section 8-102 of the New York UCC).

 

(6)           None
of the Loan Parties is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.

 

The foregoing opinions
are subject to the following limitations and qualifications:

 

The opinions set forth in
the numbered paragraphs above are subject to the following limitations and
qualifications:

 

(a)           Except as expressly
set forth in paragraph 4 above, we express no opinion concerning any law
of any jurisdiction other than (i) the laws of the State of New York, (ii) the
laws of the State of Connecticut and (iii) the Federal laws of the United
States of America. Without limiting the foregoing, we express no opinion with
respect to the applicability or the effect of the laws of any other
jurisdiction, municipal laws or rules, ordinances, regulations or orders of any
agency within any state or municipality. 
Our opinions set forth below are based upon our consideration of those
statutes, rules and regulations which, in our experience, are normally
applicable to the transactions contemplated by the Agreements.

 

5

 

(b)           We express no
opinion with respect to the enforceability of any agreement, contract or
document or any provision thereof (i) to the extent such enforceability
may be subject to, or affected by, applicable bankruptcy, insolvency,
reorganization, receivership, moratorium, arrangement, assignment for the
benefit of creditors or similar laws affecting the rights and remedies of
creditors generally (including, without limitation, fraudulent transfer or
conveyance laws) and judicially developed doctrines relevant to any such laws
and which are in effect at the time when enforcement is sought or general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity), including, without limitation, commercial
reasonableness, good faith and fair dealing and the requirement that the right,
remedy or penalty sought be proportionate to the breach, default or injury, (ii) to
the extent that such enforceability may be affected by requirements as to
compliance with, and limitations imposed by, procedural requirements relating
to the exercise of remedies, (iii) providing for specific performance,
injunctive relief or other equitable remedies, regardless of whether such
enforceability is sought in a proceeding in equity or at law, (iv) to the
extent such enforceability may be limited by Article 9 of the UCC as in
effect on the date hereof limiting the right or ability of a person to waive or
vary certain provisions of Article 9 of the UCC, (v) with respect to
applicable law limiting certain rights and remedies of the Administrative Agent
and the Lenders (but, assuming that the Administrative Agent and the Lenders
act in accordance with the general principles of equity in enforcing their
rights and remedies, the matters identified in this paragraph do not, in our
opinion, render the Agreements invalid as a whole or substantially interfere
with the realization by the Administrative Agent, for the benefit of the
Secured Parties, of the principal benefits intended to be provided by the
Credit Agreement and the Security Agreement), (vi) providing for
indemnification and contribution, which provisions may be limited by applicable
federal and state securities laws and general principles of public policy, (vii) requiring
any waiver of stay or extension laws, diligent performance or other acts which
may be unenforceable under principles of public policy, or (viii) providing
for a choice of jurisdiction.

 

(c)           We express no
opinion with respect to the enforceability of any agreement, contract or
document or any provision thereof (i) to the effect that failure to
exercise or delay in exercising a right or remedy will not operate as a waiver
of the right or remedy, (ii) releasing, exculpating or exempting a party
from, or requiring indemnification of any Person for, liability for its own
action or inaction, to the extent the action or inaction involves gross
negligence, recklessness, willful misconduct or wrongful or unlawful conduct, (iii) purporting
to preclude modification thereof through conduct, custom or course of
performance, action or dealing, (iv) requiring the payment or
reimbursement of

 

6

 

fees, costs, expenses, or
other amounts without regard to whether they are reasonable in nature or amount or (v) that
purportedly waives any right granted pursuant to statute which may not be
legally waived or the effectiveness of any purported waiver by any Person of any
right granted pursuant to statute which may not be legally waived.

 

(d)           We express no
opinion as to the enforceability of any agreement, contract or document or any
provision thereof, with respect to (i) the choice of New York law in any
action or proceeding in a Federal court or state court outside the State of New
York, or in any action or proceeding in any forum outside the United States, (ii) any
consent to jurisdiction of any Federal court, (iii) any consent to venue
or an inconvenient forum, (iv) provisions which purport to change or alter
the manner in which service of process may be effected under applicable law or (v) relate
to setoffs in respect of participations purchased in Loans.

 

(e)           We express no
opinion as to compliance with applicable state and federal antifraud statutes, rules or
regulations,

 

(f)            We express no
opinion as to compliance with applicable tax, environmental, pension, employee
benefit, zoning, land use, anti-money laundering or antitrust statutes, laws, rules or
regulations of state or federal law or any matters, statutes, regulations, laws
or proceedings pertaining to patents, trademarks or copyrights.

 

(g)           Any reference to
performance of a document by a party means performance of the obligations of
such party thereunder.

 

(h)           With respect to the
opinions in paragraphs 3, 4 and 5, the security interests of the
Administrative Agent, for the benefit of the Secured Parties, are subject to or
limited by (i) the requirement to file a continuation statement within six
months before the fifth anniversary of the date of filing of the original
financing statement perfecting a security interest, (ii) the requirement
to file a new financing statement under the circumstances set forth in Section 9-316
or Section 9-507 of the UCC, (iii) the rights of purchasers and
holders of instruments, documents and chattel paper under Section 9-330
and Section 9-331 of the UCC, (iv) the provisions of Section 9-315
of the UCC relating to proceeds, and (v) the rights of buyers of goods
under Section 9-320 and 9-323 of the UCC. 
We express no opinion as to the creation, validity or enforceability of
any security interests in consumer goods, motor vehicles, minerals,
health-care-insurance receivables, commercial tort claims arising after the
date hereof, claims arising in tort other than commercial tort claims or timber
to be cut or growing crops.

 

7

 

(i)            in the case of
property which becomes Collateral after the date hereof, Section 552 of
Title 11 of the United States Code (the “Bankruptcy Code”) limits the
extent to which property acquired by a debtor after the commencement of a case
under the Bankruptcy Code may be subject to a security interest arising from
the Security Agreement entered into by the debtor before the commencement of
such case;

 

(j)            we express no
opinion as to the validity or enforceability of any security interests in goods
(as defined by the UCC) which have been bought by a buyer in the ordinary
course of business (as defined in Section 1-201 of the UCC);

 

(k)           We express no opinion with respect to any
Person’s rights in or title to any property or the priority of any security
interest or lien created under the Agreements, including without limitation,
the relative priority of any security interest or lien as against (i) any
claim or lien in favor of the United States of America or any agency or
instrumentality thereof (including, without limitation, federal tax liens and
liens under Title IV f the Employee Retirement Income Security Act of 1974, as
amended) or (ii) the claim of a lien creditor to the extent set forth in Section 9-317
of the New York UCC.

 

(l)            In rendering the opinions in this
paragraphs 3 and 4, insofar as they are based upon the State UCCs, with
your consent, we have relied solely on our review of the CCH Secured
Transactions Guide, without any investigation of the legal decisions or other
statutory provisions in effect that may affect the interpretation of the State
UCCs.

 

(m)          Except as expressly set forth in
paragraphs 3, 4 and 5, we express no opinion as to (i) the creation,
validity or perfection of any security interest or lien,  on any item of Collateral other than the
Collateral existing on the date hereof and the Article 9 Collateral, (ii) the
effect of perfection or priority purported to be created by any agreement,
contract or document, or (iii) the sufficiency of the description of any
collateral contained in any agreement, contract or document or any financing
statements or other documents delivered in connection therewith.  Without limiting the foregoing, we express no
opinion as to the creation, validity or perfection of any security interest in (i) in
any item of Collateral which is expressly excluded from the application of Article 9
of the UCC, (ii) in any item of Collateral which consists of fixtures (as
defined in Section 9-102 of the UCC) or (iii) in any item of
Collateral which is subject to (A) a statute or treaty of the United
States which provides for a national or international registration or a
national or international certificate of title for the perfection of a security
interest therein or which specifies a place of filing 

 

8

 

different from
that specified in the UCC for filing to perfect such security interest or (B) a
certificate of title statute.

 

(n)           We express no opinion as to the
perfection of any security interest in any proceeds other than identifiable
cash proceeds to the extent set forth in Section 9-315 of the New York
UCC.

 

(o)           We express no opinion as to (i) any
provision of any agreement, contract or document which is intended (A) to
establish any standard as the measure of the performance by any party thereto
of such party’s obligations of good faith, diligence, fair dealing,
reasonableness or care or the fulfillment of the duties imposed on any secured
creditor with respect to the disposition or redemption of collateral,
accounting for surplus proceeds of collateral, or accepting collateral in
discharge of liabilities owed to any creditor or unsecured creditor or (B) to
permit modification thereof only by means of an agreement in writing signed by
the parties thereto, (ii) any provision of any agreement, contract or
document requiring payment of attorneys’ fees, except to the extent that a
court determines such fees to be reasonable, (iii) any provision of any
agreement, contract or document insofar as it relates to post-judgment or
default interest rates or interest rates or interest on overdue amounts, (iv) any
provision of any agreement, contract or document which purports to require that
any collateral or property be held in trust or imposes fiduciary duties on any
party thereto and (v) the enforceability of any provision in any
agreement, contract or document which provides for the appointment of a process
agent for suits, actions or proceedings brought in the State of New York to the
extent that such process agent is not located in the State of New York.

 

This opinion is being
furnished to you solely for your benefit in connection with the Credit
Agreement.  This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.  At
your request, we hereby consent to reliance hereon by any assignee under the
Credit Agreement pursuant to an assignment that is made and consented to in
accordance with the express provisions of the Credit Agreement, on the
condition and understanding that (i) this letter speaks only as of the
date hereof, (ii) we have no responsibility or obligation to update this
letter, to consider its applicability or correctness to other than its
addressee(s), or to take into account changes in law, facts or any other
developments of which we may later become aware, and (iii) any such
reliance by a future assignee must be actual and reasonable under the
circumstances existing at the time of assignment, including any changes in law,
facts or any other developments known to or

 

9

 

reasonably knowable by the
assignee at such time.  Our opinions in
this letter are based upon the facts in existence and the laws in effect on the
date hereof.  We have no obligation to
update this opinion for events or changes in law or fact occurring after the
date hereof.

 

Very
truly yours,

 

10

 

Annex A

 

Forms of UCC-1 Financing Statements

 

 

Annex B

 

Jurisdictions of Holdings, the Borrower and the Loan Parties(6)

 

	
  Entity

  	
   

  	
  Jurisdiction of Incorporation / Organization

  
	
   

  	
   

  	
   

  
	
  Ethan
  Allen Interiors, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Ethan
  Allen Global Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Ethan
  Allen Operations, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Lake
  Avenue Associates, Inc.

  	
   

  	
  Connecticut

  
	
   

  	
   

  	
   

  
	
  Manor
  House, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Ethan
  Allen Realty LLC

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Ethan
  Allen Retail, Inc.

  	
   

  	
  Delaware

  

 

 

Writer’s Direct Number:  (203) 743-8496

Writer’s
Direct Facsimile: (203) 743-8254

 

OPINION OF COUNSEL FOR THE LOAN PARTIES

 

May 29, 2009

 

To the Lenders and the
Administrative

Agent Referred to Below

c/o JPMorgan Chase Bank N.A., as

Administrative Agent

270 Park Avenue

New York, New York 10017

 

Ladies and Gentlemen:

 

This opinion is furnished to you pursuant to
paragraph (a) of Section 4.01 of the Credit Agreement, dated as
of May 29, 2009, among Ethan Allen Interiors Inc., a Delaware corporation
(“Holdings”), Ethan Allen Global, Inc., a Delaware corporation (the “Borrower”),
Ethan Allen Retail, Inc., a Delaware corporation (“Retail”), Ethan
Allen Operations, Inc., a Delaware corporation (“Operations”), Lake
Avenue Associates, Inc., a Connecticut corporation (“Lake Avenue”)
, Manor House, Inc., a Delaware corporation (“Manor House”), Ethan
Allen Realty, LLC, a Delaware limited liability company (“Realty”, and
collectively with Holdings, the Borrower, Retail, Operations, Lake Avenue, and
Manor House, the “Loan Parties”), the banks and other financial
institutions identified therein as Lenders, and JPMorgan Chase Bank, as
Administrative Agent.  Unless otherwise
defined herein, terms used herein have the meanings provided in the Credit
Agreement.

 

I am general counsel of Holdings and the
Borrower and, in that capacity, have acted as counsel for the Loan Parties in
connection with (i) the Credit Agreement, (ii) the Pledge and
Security Agreement, dated as of May 29, 2009 (the “Security Agreement”;
collectively with the Credit Agreement, the “Agreements”), among Holdings,
the Borrower, the other Loan Parties, and the Administrative Agent and (iii) the
other Loan Documents.  For purposes of
this opinion, I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or advisable.

 

Upon the basis of the foregoing, I am of the
opinion that:

 

1.     Each Loan Party (a) is a corporation (or in the case of
Realty, a limited liability company) duly organized, validly existing and in
good standing under the laws of the jurisdiction of its

 

 

organization, (b) has
all requisite power and authority to own its property and assets and to carry
on its business as now conducted, (c) is qualified to do business in every
jurisdiction where such qualification is required, except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect,
and (d) has the corporate or other organizational power and authority to
execute, deliver and perform its obligations under each Agreement.

 

2.     The execution, delivery and performance by each Loan Party
(collectively, the “Transactions”) (a) have been duly authorized by all
requisite corporate (or other organizational) and, if required, stockholder (or
member) action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents, by-laws or operating agreement
of any of the Loan Parties, (B) any order of any Governmental Authority or
(C) any provision of any indenture, agreement or other instrument to which
any of the Loan Parties is a party or by which any of them or any of their
property is or may be bound, or (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument.

 

3.     Each Agreement has been duly executed and delivered by each of
the Loan Parties.

 

I am a member of the bar of the State of New
York and the foregoing opinion is limited to the laws of the State of New York,
the General Corporation Law of the State of Delaware and the Federal laws of
the United States of America.  This
opinion is rendered solely to you in connection with the above matter.  This opinion may not be relied upon by you
for any other purpose or relied upon by any other Person (other than your
successors and assigns as Lenders and Persons that acquire participations in
your Loans) without my prior written consent. 
My opinions in this letter are based upon the facts in existence and the
laws in effect on the date hereof.  I
have no obligation to update this opinion for events or changes in law or fact
occurring after the date hereof.

 

	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Pamela
  A. Banks

  	
   

  
	
  Vice
  President, General Counsel

  	
   

  
	
  and Secretary

  	
   

  

 

 

EXHIBIT
C

 

BORROWING BASE CERTIFICATE

 

[Attached]

 

 

	
  

  	
   

  	
  BORROWING BASE REPORT

  as of

  	
   

  

 

Obligor Number:

Loan Number:

 

Ethan Allen
Global, Inc.

(in $,
000 omitted)

 

	
   

  	
   

  	
   

  	
   

  	
  US

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Retail A/R (credit card)

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Less ineligibles

  	
   

  	
  —

  	
   

  
	
  3

  	
   

  	
  Eligible retail A/R

  	
   

  	
  —

  	
   

  
	
  4

  	
   

  	
  Advance rate %

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Retail A/R availability

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Wholesale A/R

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Less ineligibles

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Eligible wholesale A/R

  	
   

  	
  —

  	
   

  
	
  9

  	
   

  	
  Advance rate %

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  Wholesale A/R availability

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Total A/R availability

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Wholesale and Retail Finished Goods
  Inventory

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Less ineligibles

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Eligible FG/Retail inventory

  	
   

  	
  —

  	
   

  
	
  15

  	
   

  	
  NOLV calculation:

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  Eligible FG inventory
  as per above

  	
   

  	
  —

  	
   

  
	
  17

  	
   

  	
  NOLV rate

  	
   

  	
   

  	
   

  
	
  18

  	
   

  	
  Cost rate

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  Effective advance rate %

  	
   

  	
   

  	
   

  
	
  20

  	
   

  	
  FG inventory availability at 85% of NOLV

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  Plant
  Inventory

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  Less ineligibles

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  Eligible plant inventory

  	
   

  	
  —

  	
   

  
	
  24

  	
   

  	
  NOLV calculation:

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  NOLV rate

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  Cost rate

  	
   

  	
   

  	
   

  
	
  27

  	
   

  	
  Effective
  advance rate %

  	
   

  	
   

  	
   

  
	
  28

  	
   

  	
  Raw Material inventory
  availability

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
  Total inventory availability

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30

  	
   

  	
  Total Borrowing Base Availability
  before reserves

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31

  	
   

  	
  Less availability reserves:

  	
   

  	
   

  	
   

  
	
  32

  	
   

  	
  Rent Reserve

  	
   

  	
  —

  	
   

  
	
  33

  	
   

  	
  Customer Deposits @ 50%

  	
   

  	
   

  	
   

  
	
  34

  	
   

  	
  Other Reserves

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35

  	
   

  	
  Total availability reserves

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36

  	
   

  	
  Total Borrowing Base Availablility

  	
   

  	
  —

  	
   

  
	
  37

  	
   

  	
  Revolver Line

  	
   

  	
   

  	
   

  
	
  38

  	
   

  	
  Lesser of Borrowing Base
  Availabiliy & Commiment

  	
   

  	
  —

  	
   

  
	
  39

  	
   

  	
  Loan Balance

  	
   

  	
  —

  	
   

  
	
  40

  	
   

  	
  Letters of Credit Outstanding

  	
   

  	
   

  	
   

  
	
  41

  	
   

  	
  Availability

  	
   

  	
  —

  	
   

  

 

Pursuant to, and in
accordance with, the terms and provisions of that certain Credit Agreement
(“Agreement”), between JPMorgan Chase Bank, N.A. (“Chase”), as administrative
agent for the Lenders, the Loan Parties and Ethan Allen Global, Inc.
(“Borrower”), Borrower is executing and delivering to Chase this Collateral
Report accompanied by supporting data (collectively referred to as the
“Report”). Borrower warrants and represents to Chase that this Report is true
and correct, and is based on information contained in Borrower’s own financial
accounting records.  Borrower, by the
execution of this Report, hereby ratifies, confirms and affirms all of the
terms, conditions and provisions of the Agreement, and further certifies on
this            day of
                              ,
20    , that the Borrower is in compliance with said
Agreement.

 

	
   

  	
  BORROWER NAME:

  	
   

  	
   

  	
  AUTHORIZED SIGNATURE:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

	
  To:

  	
  The
  Lenders parties to the

  
	
   

  	
  Credit
  Agreement Described Below

  

 

This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of May 29, 2009 (as amended, modified, renewed
or extended from time to time, the “Agreement”) among Ethan Allen Global, Inc.
(the “Borrower”), Ethan Allen Interiors Inc., the other Loan Parties,
the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative
Agent for the Lenders and as the Issuing Bank. 
Unless otherwise defined herein, capitalized terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.     I am the duly elected                        of
the Borrower;

 

2.  I have reviewed the terms of
the Agreement and I have made, or have caused to be made under my supervision,
a detailed review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached financial
statements [for quarterly or monthly
financial statements add: and such financial statements present
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes];

 

3.   The examinations described
in paragraph 2 did not disclose, except as set forth below, and I have no
knowledge of (i) the existence of any condition or event which constitutes
a Default during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate or (ii) any
change in GAAP or in the application thereof that has occurred since the date
of the audited financial statements referred to in Section 3.04 of the
Agreement;

 

4.   I hereby certify that no Loan Party has
changed (i) its name, (ii) its chief executive office, (iii) principal
place of business, (iv) the type of entity it is or (v) its state of
incorporation or organization without having given the Agent the notice
required by Section 4.15 of the Security Agreement;

 

5. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower’s compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and
correct;  and

 

6.   Schedule II hereto
sets forth the computations necessary to determine the Applicable Rate
commencing on the Business Day this certificate is delivered.

 

Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the (i) nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event or (i) the
change in GAAP or the application thereof and the effect of such change on the
attached financial statements:

 

 

The foregoing certifications, together with the computations set forth
in Schedule I and Schedule II hereto and the financial statements delivered
with this Certificate in support hereof, are made and delivered this      day
of               ,
       .

 

	
   

  	
   

  	
  ETHAN
  ALLEN GLOBAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

 

SCHEDULE I

 

Compliance as of
                  ,
         with

Provisions of      and       of

the Agreement

 

 

SCHEDULE II

 

Borrower’s Applicable Rate
Calculation

 

 

EXHIBIT E

 

JOINDER AGREEMENT

 

THIS
JOINDER AGREEMENT (this “Agreement”), dated as of
[                    ],
20[    ], is entered into between
                                                                ,
a
                                  
(the “New Subsidiary”) and JPMORGAN CHASE BANK, N.A., in its capacity as
administrative agent (the “Administrative Agent”) under that certain
Credit Agreement, dated as of May 29, 2009, among Ethan Allen Global, Inc.
(the “Borrower”), Ethan Allen Interiors Inc., the Loan Parties party
thereto, the Lenders party thereto and the Administrative Agent (as the same
may be amended, modified, extended or restated from time to time, the “Credit
Agreement”).  All capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.

 

The
New Subsidiary and the Administrative Agent, for the benefit of the Lenders,
hereby agree as follows:

 

1.             The New Subsidiary hereby
acknowledges, agrees and confirms that, by its execution of this Agreement, the
New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and
a “Loan Guarantor” for all purposes of the Credit Agreement and shall have all
of the obligations of a Loan Party and a Loan Guarantor thereunder as if it had
executed the Credit Agreement.  The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Agreement,
including without limitation (a) all of the representations and warranties
of the Loan Parties set forth in Article III of the Credit Agreement, *[and]* (b) all
of the covenants set forth in Articles V and VI of the Credit Agreement *[and (c) all of the guaranty obligations set forth in Article X
of the Credit Agreement.  Without
limiting the generality of the foregoing terms of this paragraph 1, the New
Subsidiary, subject to the limitations set forth in Section 10.10 of the
Credit Agreement, hereby guarantees, jointly and severally with the other Loan
Guarantors, to the Administrative Agent and the Lenders, as provided in Article X
of the Credit Agreement, the prompt payment and performance of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) strictly in accordance with the terms
thereof and agrees that if any of the Guaranteed Obligations are not paid or
performed in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and
severally together with the other Loan Guarantors, promptly pay and perform the
same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.]*  *[The New Subsidiary has delivered
to the Administrative Agent an executed Loan Guaranty.]*

 

2.             If required, the New Subsidiary is,
simultaneously with the execution of this Agreement, executing and delivering
such Collateral Documents (and such other documents and instruments) as
requested by the Administrative Agent in accordance with the Credit Agreement.

 

3.             The New Subsidiary hereby waives
acceptance by the Administrative Agent and the Lenders of the guaranty by the
New Subsidiary upon the execution of this Agreement by the New Subsidiary.

 

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

 

 

5.             THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

 

IN
WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly
executed by its authorized officer, and the Administrative Agent, for the
benefit of the Lenders, has caused the same to be accepted by its authorized
officer, as of the day and year first above written.

 

	
   

  	
   

  	
  [NEW
  SUBSIDIARY]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Acknowledged
  and accepted:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as Administrative

  
	
   

  	
   

  	
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT F

 

LIST OF CLOSING DOCUMENTS

 

Attached

 

 

ETHAN ALLEN GLOBAL, INC.

 

CREDIT FACILITIES

 

May 29, 2009

 

LIST OF CLOSING DOCUMENTS(7)

 

A.            LOAN DOCUMENTS

 

1.                                       Credit
Agreement (the “Credit Agreement”) by and among Ethan Allen Global, Inc.,
a Delaware corporation (the “Borrower”), Ethan Allen Interiors Inc., a
Delaware corporation (“Holdings”), the other Loan Parties party thereto,
the financial institutions from time to time parties thereto as Lenders (the “Lenders”)
and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for
itself and the other Lenders (the “Administrative Agent”), evidencing a
revolving credit facility to the Borrower from the Lenders in an initial
aggregate principal amount of $40,000,000.

 

SCHEDULES

 

	
  Schedule 2.01

  	
  —

  	
  Commitments

  
	
  Schedule 2.06

  	
  —

  	
  Existing Letters of Credit

  
	
  Schedule 3.06

  	
  —

  	
  Disclosed Matters

  
	
  Schedule 3.14

  	
  —

  	
  Insurance

  
	
  Schedule 3.15

  	
  —

  	
  Capitalization and Subsidiaries

  
	
  Schedule 3.21

  	
  —

  	
  Credit Card Processors

  
	
  Schedule 6.01

  	
  —

  	
  Existing Indebtedness

  
	
  Schedule 6.02

  	
  —

  	
  Existing Liens

  
	
  Schedule 6.04

  	
  —

  	
  Existing Investments

  
	
  Schedule 6.10

  	
  —

  	
  Existing Restrictions

  

 

EXHIBITS

 

	
  Exhibit A

  	
  —

  	
  Form of Assignment and Assumption

  
	
  Exhibit B

  	
  —

  	
  Forms of Opinions of Loan Parties’ Counsels

  
	
  Exhibit C

  	
  —

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit D

  	
  —

  	
  Form of Compliance Certificate

  
	
  Exhibit E

  	
  —

  	
  Joinder Agreement

  
	
  Exhibit F

  	
  —

  	
  List of Closing Documents

  

 

2.                                     Promissory
notes executed by the Borrower in favor of each of the Lenders, if any, which
has requested a note pursuant to Section 2.10(f) of the Credit
Agreement.

 

(7) Each capitalized term used herein and not
defined herein shall have the meaning assigned to such term in the
above-defined Credit Agreement.  Items
appearing in bold and italics shall be prepared and/or provided by the Borrower
and/or Borrower’s counsel.

 

 

3.                                       Pledge and
Security Agreement executed by the Loan Parties, together
with pledged instruments and allonges, stock certificates, stock powers
executed in blank, pledge instructions and acknowledgments, as appropriate.

 

	
  Exhibit A

  	
  —

  	
  Type of Entity; Principal Place of Business or
  Chief Executive Office; FEIN; State Organization Number; Jurisdiction of
  Incorporation; Properties Leased by the Grantors; Properties Owned by the
  Grantors; Public Warehouses or Other Locations

  
	
  Exhibit B

  	
  —

  	
  Deposit Accounts; Lock Boxes; Securities Accounts

  
	
  Exhibit C

  	
  —

  	
  Letter of Credit Rights; Chattel Paper

  
	
  Exhibit D

  	
  —

  	
  Patents; Trademarks; Copyrights

  
	
  Exhibit E

  	
  —

  	
  [Intentionally Omitted]

  
	
  Exhibit F

  	
  —

  	
  [Intentionally Omitted]

  
	
  Exhibit G

  	
  —

  	
  List of Pledged Collateral, Securities and other
  Investment Property

  
	
  Exhibit H

  	
  —

  	
  UCC Financing Statement Filing Locations

  
	
  Exhibit I

  	
  —

  	
  Form of Amendment

  
	
  Exhibit J

  	
  —

  	
  [Intentionally Omitted]

  
	
  Exhibit K

  	
  —

  	
  Commercial Tort Claims

  

 

4.                                       Confirmatory
Grant of Security Interest in United States Patents made by certain of the Loan
Parties in favor of the Administrative Agent for the benefit of the Lenders.(8)

 

	
  Schedule A

  	
  —

  	
  Registered Patents; Patent Applications; Other
  Patents

  
	
  Schedule B

  	
  —

  	
  License Agreements

  

 

5.                                       Confirmatory
Grant of Security Interest in United States Trademarks made by certain of the
Loan Parties in favor of the Administrative Agent for the benefit of the
Lenders.(2)

 

	
  Schedule A

  	
  —

  	
  Registered Trademarks; Trademark and Service Mark
  Applications; Other Trademarks

  
	
  Schedule B

  	
  —

  	
  License Agreements

  

 

6.                                       Certificates
of Insurance listing the Administrative Agent as (x) lender loss payee for
the property, casualty and business interruption insurance policies of the Loan
Parties, together with long-form lender loss payable endorsements or
assignments, as appropriate, and (y) additional insured with respect to
the liability insurance of the Loan Parties, together with additional insured
endorsements.

 

B.            UCC/INTELLECTUAL PROPERTY DOCUMENTS

 

7.                                       UCC, tax lien
and name variation search reports naming each Loan Party from the appropriate
offices in relevant jurisdictions.

 

8.                                       UCC financing
statements naming each Loan Party as debtor and the Administrative Agent as
secured party as filed with the appropriate offices in applicable
jurisdictions.

 

9.                                       Intellectual
property search reports under the name of each Loan Party in each of the U.S.
Copyright Office and the U.S. Patent and Trademark Office.

 

(8) Executed copies of confirmatory grants to
be delivered by the Borrower (or its counsel) at closing, but shall be held in
escrow until IP Collateral Trigger Date.

 

 

C.            CORPORATE DOCUMENTS

 

10.                                 Certificate
of the Secretary or an Assistant Secretary of each Loan Party certifying (i) that
there have been no changes in the Certificate of Incorporation or other charter
document of such Loan Party, as attached thereto and as certified as of a
recent date by the Secretary of State (or the equivalent thereof) of the
jurisdiction of its organization, since the date of the certification thereof
by such Secretary of State (or the equivalent thereof), (ii) the By-Laws
or other applicable organizational document, as attached thereto, of such Loan
Party as in effect on the date of such certification, (iii) resolutions of
the Board of Directors or other governing body of such Loan Party authorizing
the execution, delivery and performance of each Loan Document to which it is a
party, and (iv) the names and true signatures of the incumbent officers of
each Loan Party authorized to sign the Loan Documents to which it is a party,
and (in the case of the Borrower) authorized to request a Borrowing or the
issuance of a Letter of Credit under the Credit Agreement.

 

11.                                 Good
Standing Certificate (or analogous documentation if applicable) for each Loan
Party from the Secretary of State (or the equivalent thereof) of the
jurisdiction of its organization, to the extent generally available in such
jurisdiction.

 

D.            OPINIONS

 

12.                                 Opinion
of Kelley Drye and Warren LLP, counsel for the Loan Parties.

 

13.                                 Opinion
of Pamela A. Banks, General Counsel for the Loan Parties.

 

E.             CLOSING CERTIFICATES AND MISCELLANEOUS

 

14.                                 A
certificate signed by the chief financial officer of Holdings, dated as of the
Effective Date, stating: (i) that no Default has occurred and is
continuing; (ii) that the representations and warranties contained in Article III
of the Credit Agreement are true and correct as of such date, (iii) certifying
any other factual matters as may be reasonably requested by the Administrative
Agent and (iv) that, after giving effect to the Transactions, the Loan
Parties, taken as a whole, are solvent and will be solvent subsequent to
incurring the Indebtedness in connection with the Transactions.

 

15.                                 Funding Account
notice.

 

16.                                 Borrowing Base
Certificate.

 

17.                                 Letter of
Credit application.

 

F.             POST-CLOSING
DOCUMENTS

 

18.                                 Collateral
Access Agreements.

 

19.                                 Processor
Control Agreements.

 

 

20.                                 Deposit
Account Control Agreements, with respect to each deposit account of each Loan
Party, in form and substance satisfactory to the Administrative Agent, executed
by such Loan Party, the financial institution at which such deposit account is
maintained, and the Administrative Agent.

 

21.                                 Securities
Account Control Agreements, with respect to each securities account of each
Loan Party, in form and substance satisfactory to the Administrative Agent,
executed by such Loan Party, the financial institution at which such securities
account is maintained, and the Administrative Agent.Exhibit 10.5

 

Execution Copy

 

FOURTH
AMENDMENT, dated as of August 17, 2009 (this “Amendment”), to the
CREDIT AGREEMENT dated as of May 11, 2007 (the “Agreement”), among
AGILENT TECHNOLOGIES, INC. (the “Company”), a Delaware corporation, the
LENDERS party thereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

 

WHEREAS,
the Lenders have agreed to extend credit to the Company under the Credit
Agreement on the terms and subject to the conditions set forth therein; and

 

WHEREAS, the Company has requested that the
Lenders amend certain provisions of the Credit Agreement and the Lenders whose
signatures appear below, constituting at least the Required Lenders, are
willing to amend the Credit Agreement on the terms and subject to the
conditions set forth herein;

 

NOW, THEREFORE, in consideration of the
mutual agreements herein contained and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties
hereto hereby agree as follows:

 

SECTION 1.  Defined Terms.  Capitalized terms used but not otherwise
defined herein (including in the recital hereto) have the meanings assigned to
them in the Credit Agreement.

 

SECTION 2.  Amendment of Certain Definitions: Section 1.01
of the Credit Agreement is hereby amended:

 

(a)  by inserting a definition of “Acquisition Period,” reading as follows:

 

“Acquisition Period”
means the period beginning on August 17, 2009 and ending on the later of (i) August 1,
2010 and (ii) the first day of the month following the ninth full calendar
month after the closing of the merger provided for in the Varian Merger Agreement
(or, if the Varian Merger Agreement shall be terminated prior to August 1,
2010, the date of such termination).

 

(b)  by inserting a definition of “Acquisition Period Indebtedness,” reading as follows:

 

“Acquisition Period
Indebtedness” means Indebtedness (other than Repurchase Obligations
Indebtedness) incurred by the Company and its Subsidiaries during the period
beginning on August 17, 2009 and ending on the date of the closing of the
merger provided for in the Varian Merger Agreement (or, if the Varian Merger
Agreement shall be terminated prior to August 1, 2010, the date of such
termination), in an aggregate amount not to exceed $1,000,000,000.

 

 

(c)  by changing the definition of “Consolidated Total
Indebtedness” therein to read as follows:

 

“Adjusted Consolidated
Total Indebtedness” means, at any time, (a) all Indebtedness of the
Company and the Subsidiaries at such time other than Repurchase Obligations (and
guaranties thereof) and, during the Acquisition Period, other than Acquisition
Period Indebtedness, plus (b) Adjusted Repurchase Obligation Indebtedness
at such time, minus (c) all Indebtedness at such time consisting of
obligations of the Company and the Subsidiaries as account parties in respect
of letters of credit and letters of guaranty that do not support Indebtedness,
all determined on a consolidated basis in accordance with GAAP. In the event
that the Company or any Subsidiary shall have completed since any date as of
which Adjusted Consolidated Total Indebtedness is to be determined an
acquisition or disposition of any Person, division or business unit in which
the aggregate consideration paid or received shall have exceeded $300,000,000,
Adjusted Consolidated Total Indebtedness shall be determined for such period on
a pro forma basis as if such acquisition or disposition, and any related
incurrence or repayment of Indebtedness, had occurred on such date.

 

(d)  by changing the definition of “Adjusted Repurchase Obligation Indebtedness”
therein to read as follows:

 

“Adjusted Repurchase
Obligation Indebtedness” means, at any time, an amount (but not less than
zero) equal to (a) the aggregate amount of all Indebtedness consisting of
Repurchase Obligations at such time minus (b) the lesser of (i) Adjusted
Repurchase Obligation Restricted Cash at such time and (ii) $2,000,000,000.

 

(e)  by inserting a definition of “Varian Merger Agreement,” reading as follows:

 

“Varian Merger Agreement” means the
Agreement and Plan of Merger between the Company, Cobalt Acquisition Corp and
Varian, Inc. dated July 26, 2009, as such agreement may from time to
time be amended.

 

(f)  by changing the definition of “World
Trade Master Repurchase Agreement” therein to read as follows:

 

2

 

“World
Trade Master Repurchase Agreement” means the Master Repurchase Agreement
dated as of November 17, 2008, between Agilent Technologies World Trade, Inc.,
a wholly owned subsidiary of the Company, and Lloyds TSB Bank plc.  or any other person that shall succeed by
amendment or assignment to the rights and obligations of Lloyds TSB Bank plc. thereunder,
as such agreement may be amended from time to time.

 

SECTION 3.  Amendment of Section 6.01.  Clause (c) of Section 6.01 of the
Credit Agreement is amended to read as follows:

 

(c) Repurchase
Obligations in an amount at any time outstanding not in excess of the lesser of
(i) the sum of (A) $500,000,000 and (B) the amount of World
Trade Indebtedness outstanding on the date hereof and (ii) the Repurchase
Obligation Restricted Cash at such time; and the preferred stock of Agilent
Technologies (Cayco) Limited (or any other Subsidiary referred to in the definition of Repurchase
Obligation Restricted Cash in Section 1.01) relating thereto;

 

SECTION 4.  Amendment of Section 6.02.  Clause (j) of Section 6.02 of the
Credit Agreement is amended to read as follows:

 

(j)            other Liens securing or deemed to
exist in connection with Indebtedness and sales of accounts receivable and
interests therein pursuant to Securitization Transactions; provided that
the sum, without duplication, of (i) the aggregate principal amount of the
outstanding Indebtedness secured by Liens or deemed to exist in connection with
Securitization Transactions permitted by this clause (j), (ii) the
outstanding Indebtedness permitted by Section 6.01(i) and (iii) the
Attributable Debt in respect of Sale-Leaseback Transactions permitted by Section 6.03(b) does
not at any time exceed the greater of (A) $75,000,000 during the
Acquisition Period, or $300,000,000 at any time other than during the
Acquisition Period (and (B) 10% of Consolidated Stockholders’ Equity.

 

SECTION 5.  Representations, Warranties and
Agreements.  The Company hereby
represents and warrants to and agrees with each Lender and the Administrative
Agent that:

 

(a)  The representations and warranties
set forth in Article III of the Credit Agreement, as amended hereby, are
true and correct in all material respects on and as of the Amendment Effective
Date (as defined below) and after giving effect to this Amendment, with the
same effect as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case they were true and correct as of such earlier date.

 

(b)  As of the Amendment Effective Date,
after giving effect to this Amendment, no Default or Event of Default will have
occurred and be continuing.

 

3

 

SECTION 6.  Effectiveness.  This Amendment shall become effective as of
the date (the “Amendment Effective Date”) on which the Administrative
Agent shall have received duly executed counterparts hereof that, when taken
together, bear the authorized signatures of the Company and Lenders
constituting at least the Required Lenders.

 

SECTION 7.  Credit Agreement.  Except as specifically stated herein, the
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof.  As used therein, the
terms “Agreement”, “herein”, “hereunder”, “hereto”, “hereof” and words of
similar import shall, unless the context otherwise requires, refer to the
Credit Agreement as modified hereby.

 

SECTION 8.  Applicable Law.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 9.  Counterparts.  This Amendment may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which, when taken together,
shall constitute a single instrument. Delivery of an executed counterpart of a
signature page of this Amendment by telecopy shall be effective as
delivery of a manually executed counterpart hereof.

 

SECTION 10.  Expenses.  The Company agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements
of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent.

 

4

 

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

 

 

	
   

  	
  AGILENT
  TECHNOLOGIES, INC.,

  
	
   

  	
   

  
	
   

  	
  by:

  
	
   

  	
   

  	
  /s/Hillard
  C. Terry, III

  
	
   

  	
   

  	
  Name:

  	
  Hillard
  C. Terry, III 

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President, Treasurer

  

 

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A.,

  INDIVIDUALLY AND AS ADMINISTRATIVE AGENT,

  
	
   

  	
   

  
	
   

  	
  by:

  
	
   

  	
   

  	
  /s/Ann
  B. Kerns

  
	
   

  	
   

  	
  Name:

  	
  Ann
  B. Kerns

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

5

 

To
approve the Fourth Amendment to the AGILENT TECHNOLOGIES, INC. Credit
Agreement:

 

 

	
  JPMORGAN
  CHASE BANK, N.A.,

  	
   

  
	
   

  	
   

  
	
  by:

  	
   

  
	
   

  	
  /s/Ann
  B. Kerns

  	
   

  
	
   

  	
  Name:

  	
  Ann
  B. Kerns 

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

 

	
  BANK
  OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  
	
  by:

  	
   

  
	
   

  	
  /s/Kevin
  McMahon

  	
   

  
	
   

  	
  Name:

  	
  Kevin
  McMahon

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  

 

 

	
  CITIBANK,
  NA.

  	
   

  
	
   

  	
   

  
	
  by:

  	
   

  
	
   

  	
  /s/Avrum
  M. Spiegel

  	
   

  
	
   

  	
  Name:

  	
  Avrum
  M. Spiegel

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

 

	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH

  	
   

  
	
   

  	
   

  
	
  by:

  	
   

  
	
   

  	
  /s/John
  D. Toronto

  	
   

  
	
   

  	
  Name:

  	
  John
  D. Toronto

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  

 

 

	
  by:

  	
   

  
	
   

  	
  /s/Christopher
  Reo Day

  	
   

  
	
   

  	
  Name:

  	
  Christopher
  Reo Day

  	
   

  
	
   

  	
  Title:

  	
  Associate

  	
   

  

 

6

 

	
  STANDARD
  CHARTERED BANK,

  	
   

  
	
   

  	
   

  
	
  by:

  	
   

  
	
   

  	
  /s/James
  P. Hughes A2386

  	
   

  
	
   

  	
  Name:

  	
  James
  P. Hughes A2386

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  

 

 

	
  by:

  	
   

  
	
   

  	
  /s/Robert
  K. Reddington

  	
   

  
	
   

  	
  Name:

  	
  Robert
  K. Reddington

  	
   

  
	
   

  	
  Title:

  	
  AVP/Credit
  Documentation

  Credit Risk Control

  	
   

  

 

7

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