Document:

ex10-3.htm

     

    Exhibit
10.3

     

     

    
      

       

      TAX
SHARING AGREEMENT

       

      This Tax Sharing Agreement (this “Agreement”) is
entered into as of May 13, 2009, by and among Verizon Communications Inc., a
Delaware corporation (“Verizon”), New
Communications Holdings Inc., a newly formed Delaware corporation and a wholly
owned subsidiary of Verizon (“Spinco”), Frontier
Communications Corporation, a Delaware corporation (the “Company”), and the
entities set forth on Schedule A hereto (the “ILEC Spinco
Subsidiaries”).  Capitalized terms used in this Agreement and
not otherwise defined herein shall have the meanings ascribed to such terms in
the Merger Agreement, dated as of the date hereof, by and among Verizon, the
Company and Spinco (the “Merger Agreement”) or
the Distribution Agreement, dated as of the date hereof, by and between Verizon
and Spinco (the “Distribution
Agreement”).

       

       

      RECITALS

       

       

      WHEREAS, Verizon is the common parent
corporation of an affiliated group of corporations within the meaning of Section
1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”), that files a
consolidated U.S. federal income tax return;

       

      WHEREAS, pursuant to the Merger
Agreement and the Distribution Agreement, among other things, Verizon will
transfer or cause to be transferred to Spinco or one or more Subsidiaries of
Spinco (pursuant to certain preliminary restructuring transactions, including
Internal Spinoffs) all of the Spinco Assets, and Spinco and/or one or more
Subsidiaries of Spinco will assume or cause to be assumed all of the Spinco
Liabilities;

       

      WHEREAS, on the Distribution Date,
Verizon will distribute all of the issued and outstanding shares of Spinco
Common Stock on a pro rata basis to the holders of Verizon Common
Stock;

       

      WHEREAS, pursuant to the Merger
Agreement, immediately following the Distribution, Spinco will merge with and
into the Company pursuant to the Merger;

       

      WHEREAS, the parties to this Agreement
intend that (i)
each Internal Spinoff qualify as a distribution eligible for nonrecognition
under Sections 355(a), 355(c) and/or 361(c) of the Code, as applicable; (ii)
the Contribution, together with the Distribution, qualify as a tax-free
reorganization under Section 368(a)(1)(D) of the Code; (iii)
the Distribution qualify as a distribution of Spinco stock to Verizon
stockholders eligible for nonrecognition under Sections 355(a) and 361(c) of the
Code; (iv)
no gain or loss be recognized by Verizon for U.S. federal income tax purposes in
connection with the receipt of the Spinco Securities or the consummation of the
Debt Exchange; (v)
the Special Payment qualify as money transferred to creditors or distributed to
shareholders in connection with the reorganization within the meaning of Section
361(b)(1) of the Code, to the extent that Verizon distributes the Special
Payment to its creditors and/or shareholders in connection with the
transactions; (vi)
the Merger qualify as a tax-free reorganization pursuant to Section 368(a) of
the Code; and (vii)
no gain or loss be recognized as a result of such transactions for U.S. federal
income tax purposes by any of Verizon, Spinco, and their respective stockholders
and Subsidiaries (except to the extent of cash received in lieu of fractional
shares); and

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      WHEREAS, Verizon, Spinco, the Company
and the ILEC Spinco Subsidiaries desire to set forth their rights and
obligations with respect to Taxes due for periods before and after the
Distribution Date and other Tax matters relating to the transactions
contemplated by the Merger Agreement and the Distribution
Agreement.

       

      NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

       

       

      ARTICLE
I

       

      DEFINITIONS

       

       

      “Agreement” has the
meaning set forth in the preamble.

       

      “Applicable Federal
Rate” means the rate computed pursuant to Section 1274(d) of the Code,
compounded quarterly, with respect to the applicable period.

       

      “Code” has the meaning
set forth in the recitals.

       

      “Company” has the
meaning set forth in the recitals.

       

      “Company Group” means
the Company and all entities that are Subsidiaries of the Company immediately
following the Merger.

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Distribution
Agreement” has the meaning set forth in the preamble.

       

      “Distribution
Disqualification” means that (i) either
the Contribution, taken together with the Distribution, or any Internal Spinoff
intended to so qualify, fails to qualify as a tax-free reorganization under
Section 368(a)(1)(D) of the Code pursuant to which no gain or loss is recognized
for U.S. federal income tax purposes by any of Verizon, Spinco or their
Subsidiaries; (ii) any
of the Distribution or the Internal Spinoffs fails to qualify as a distribution
eligible for nonrecognition under Section 355 of the Code, pursuant to which no
gain or loss is recognized for U.S. federal income tax purposes by any of
Verizon, Spinco, their Subsidiaries, or the stockholders of Verizon, except to
the extent of cash received in lieu of fractional shares; (iii) the
Debt Exchange (if consummated) fails to constitute a transfer of qualified
property to Verizon’s creditors in connection with the reorganization within the
meaning of Section 361(c)(3) of the Code; and/or (iv) the
Special Payment fails to qualify as money transferred to creditors or
distributed to shareholders in connection with the reorganization within the
meaning of Section 361(b)(1) of the Code, but only to the extent that Verizon
distributes the Special Payment to its creditors or shareholders.  For
the avoidance of doubt, a Distribution Disqualification shall occur if Verizon
or any of its Subsidiaries recognizes gain pursuant to Section 355(d), 355(e)
and/or 355(f) of the Code with respect to the Distribution and/or any Internal
Spinoff.

       

      “Final Determination”
means a determination within the meaning of Section 1313 of the Code or any
similar provision of state or local tax law.

       

      “Income Taxes” means
any and all Taxes based upon or measured by net or gross income (including
alternative minimum tax under Section 55 of the Code) and including any
liability described in clauses (ii) or (iii) of the definition of “Taxes” that
relates to any such Tax.

       

      “Indemnified Party”
has the meaning set forth in Section 5.01.

       

      “Indemnifying Party”
has the meaning set forth in Section 5.01.

       

      “Merger Agreement” has
the meaning set forth in the preamble.

       

      “Non-Preparer Party”
has the meaning set forth in Section 2.02.

       

       

      
        
          
          

        

        
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      “Person” means any
individual, partnership, joint venture, corporation, limited liability company,
trust, unincorporated organization, government or department or agency of a
government.

       

      “Post-Distribution
Period” means any taxable year or other taxable period beginning after
the Distribution Date and, in the case of any taxable year or other taxable
period that begins before and ends after the Distribution Date, that part of the
taxable year or other taxable period that begins at the beginning of the day
after the Distribution Date.

       

      “Potential Disqualifying
Action” has the meaning set forth in Section 10.02(b).

       

      “Pre-Distribution
Period” means any taxable year or other taxable period that ends on or
before the Distribution Date and, in the case of any taxable year or other
taxable period that begins before and ends after the Distribution Date, that
part of the taxable year or other taxable period through the close of the
Distribution Date.

       

      “Spinco” has the
meaning set forth in the preamble.

       

      “Spinco Group” means
Spinco and all entities that are Subsidiaries of Spinco immediately following
the Contribution.  For the avoidance of doubt, any direct or indirect
predecessor by liquidation or merger as part of the Transactions of any such
entity shall also be considered to be part of the Spinco Group during the period
of its existence prior to the Contribution.

       

      “Spinco Return” has
the meaning set forth in Section 2.01(b).

       

      “Tax Attribute” means
any net operating loss carryover or carryback, net capital loss carryover or
carryback, investment tax credit carryover or carryback, foreign tax credit
carryover or carryback, charitable deduction carryover or carryback or other
similar item that could reduce Income Tax for a past or future taxable
period.

       

      “Tax Benefit” means,
(i) in
the case of a separate state, local or other Tax Return not described in clause
(ii), the sum of the amount by which the Tax liability (after giving effect to
any alternative minimum or similar Tax) of a corporation to the appropriate
Taxing Authority is reduced (including by deduction, entitlement to refund,
credit or otherwise, whether available in the current taxable year, as an
adjustment to taxable income in any other taxable year or as a carryforward or
carryback, as applicable) plus any interest from such government or jurisdiction
relating to such Tax liability, and (ii)
in the case of a consolidated federal Tax Return or combined, unitary or other
similar state, local or other Tax Return, the sum of the amount by which the Tax
liability of the affiliated group (within the meaning of Section 1504(a) of the
Code) or other relevant group of corporations to the appropriate government or
jurisdiction is reduced (including by deduction, entitlement to refund, credit
or otherwise, whether available in the current taxable year, as an adjustment to
taxable income in any other taxable year or as a carryforward or carryback, as
applicable) plus any interest from such government or jurisdiction relating to
such Tax liability, determined in the case of clauses (i) or (ii) by comparing
the Tax liability on the applicable Tax Return that would arise with and without
the item potentially giving rise to the Tax Benefit.

       

      
        
          
          

        

        
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      “Tax Contest” has the
meaning set forth in Section 5.01.

       

      “Tax Dispute” has the
meaning set forth in Article IX.

       

      “Tax Dispute
Arbitrator” has the meaning set forth in Article IX.

       

      “Tax Materials” has
the meaning set forth in Section 10.01(a).

       

      “Transactions” has the
meaning set forth in Section 2.04(a).

       

      “Verizon” has the
meaning set forth in the preamble.

       

      “Verizon Consolidated
Group” means any consolidated, combined or unitary group of which any
member of the Verizon Group is the common parent corporation at any
time.

       

      “Verizon Event” has
the meaning set forth in Section 2.04(a).

       

      “Verizon Group” means
Verizon and all Subsidiaries of Verizon at any time preceding, at or following
the Contribution, but shall not include any member of the Spinco
Group.

       

      “Verizon Return” has
the meaning set forth in Section 2.01(a).

       

      
        
          
          

        

        
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      ARTICLE
II

       

      TAX
RETURNS AND TAX PAYMENTS

       

       

      Section 2.01   Obligations to File Tax
Returns.

       

      (a)          Verizon
shall prepare and file or cause to be filed any Tax Return that is required to
be filed (whether before, on or after the Distribution Date) that includes both
(i)
one or more members of the Verizon Group and (ii)
one or more members of the Spinco Group (a “Verizon
Return”).  In the event that under applicable law any Verizon
Return must be filed by any member of the Company Group, the Company and Verizon
shall reasonably cooperate in filing such Verizon Return and, subject to Section
2.04, remitting any Taxes due in connection with such Verizon
Return.  All Verizon Returns shall be prepared on a basis that is
consistent with the Distribution Tax Opinion, the Merger Tax Opinions, the IRS
Ruling, and past practice.  Each member of the Spinco Group hereby
irrevocably authorizes and designates Verizon as its agent, coordinator and
administrator for the purpose of taking any and all actions necessary or
incidental to the filing of any such Verizon Return and, except as otherwise
provided herein, for the purpose of making payments to, or collecting refunds
from, any Taxing Authority in respect of a Verizon Return.  The
Company shall cause members of the Spinco Group to promptly prepare and deliver
to Verizon in a manner consistent with past practices pro forma Tax Returns and
tax information packages with respect to any Verizon Return.  Except
as otherwise provided herein, Verizon shall have the exclusive right to file,
prosecute, compromise or settle any claim for refund for Taxes in respect of a
Verizon Return for which Verizon bears responsibility hereunder and to determine
whether any refunds of such Taxes to which the Verizon Consolidated Group may be
entitled shall be received by way of refund or credit against the Tax liability
of the Verizon Consolidated Group, provided, however,
that the Company shall be entitled to participate in the pursuit of such Tax
refund claim at its own expense if the Company would receive such Tax refund
under the terms of this Agreement.

       

      (b)         The
Company shall prepare and file or cause to be filed any other Tax Return with
respect to one or more members of the Spinco Group that includes a portion of
the Pre-Distribution Period (a “Spinco Return”) that
is required to be filed after the Distribution Date.  For the
avoidance of doubt, the term “Spinco Return” includes any Tax Return (other than
a Verizon Return or a Tax Return described in Section 2.01(c)) for any taxable
period that includes a portion of the Pre-Distribution Period and relates to one
or more members of the Spinco Group.  In the event that under
applicable law any Spinco Return must be filed by any member of the Verizon
Group, the Company and Verizon shall reasonably cooperate in filing such Spinco
Return and, subject to Section 2.04, remitting any Taxes due in connection with
such Spinco Return.  All Spinco Returns shall be prepared on a basis
that is consistent with the Distribution Tax Opinion, the Merger Tax Opinions,
the IRS Ruling and past practice.  Except as otherwise provided
herein, the Company shall have the exclusive right to file, prosecute,
compromise or settle any claim for refund for Taxes in respect of a Spinco
Return for which the Company bears responsibility hereunder and to determine
whether any refunds of such Taxes to which members of the Spinco Group may be
entitled shall be received by way of refund or credit against the Tax liability
of such members, provided, however,
that Verizon shall be entitled to participate in the pursuit of such Tax refund
claim at its own expense if Verizon would receive such Tax refund under the
terms of this Agreement.

       

      
        
          
          

        

        
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      (c)          In
the event that any member of the Verizon Group conducts any portion of the
Spinco Business prior to the Distribution Date and is required to file any Tax
Return with respect to any item of income, loss, gain, deduction or credit
relating to the Spinco Business prior to the Distribution Date that is not a
Verizon Return or any member of the Spinco Group conducts any portion of the
Verizon Business prior to the Distribution Date and is required to file any Tax
Return with respect to any item of income, loss, gain, deduction or credit
relating to the Verizon Business prior to the Distribution Date that is not a
Verizon Return, the principles of this Agreement relating to Verizon Returns
shall apply to all such Tax Returns except as otherwise provided
herein.

       

      Section 2.02   Review of Tax
Returns.  No later than thirty (30) days prior to the date on
which any Verizon Return or Spinco Return is required to be filed (taking into
account any valid extensions), if the party that is not responsible for
preparing such Tax Return under Section 2.01 (the “Non-Preparer Party”)
is responsible for any portion of the Taxes reported on such Tax Return, the
party responsible for preparing such Tax Return under Section 2.01 shall (a)
submit or cause to be submitted to the Non-Preparer Party such Tax Return for
review and comment and (b)
shall consider in good faith any changes to such Tax
Return reasonably requested by the Non-Preparer Party, to the extent that such
changes relate to items for which the Non-Preparer Party has responsibility
hereunder.

       

      Section 2.03   Obligation to Remit
Taxes.  Verizon and the Company shall each timely remit or
cause to be timely remitted to the applicable Taxing Authority any Taxes due in
respect of any Tax Return that such party is required to file or cause to be
filed (or, in the case of a Tax for which no Tax Return is required to be filed,
which is otherwise payable by such party or a member of such party’s affiliated
group to any Taxing Authority) and shall be entitled to reimbursement for such
payments to the extent provided herein; provided, however,
that in the case of any Tax Return, the Non-Preparer Party shall remit to the
Party required to file such Tax Return in immediately available funds the amount
of any Taxes reflected on such Tax Return for which the Non-Preparer Party is
responsible hereunder at least two (2) Business Days before payment of the
relevant amount is due to a Taxing Authority.

       

      
        
          
          

        

        
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      Section 2.04   Tax Sharing and
Indemnification Obligations.

       

      (a)          Spinco
and, from and after the Effective Time, the Company and each ILEC Spinco
Subsidiary shall be jointly and severally liable for and shall indemnify and
hold the Verizon Group harmless against any Taxes

       

      (i)
resulting from the Internal Spinoffs, the Contribution, the Distribution, the
Debt Exchange or any transaction associated therewith (the “Transactions”),
including Taxes arising from any Distribution Disqualification, in each case to
the extent that such Taxes arise as a result of (A)
any action (or failure to take any reasonably required action to avoid a
Distribution Disqualification, so long as, with respect to any failure to take
such action, the Company or any of its Affiliates is aware of the need for such
action or has been notified by Verizon of the need for such action), whether or
not otherwise permitted under Section 10.02, by any member of the Spinco Group
following the Effective Time or by the Company or any of its Affiliates
(excluding the Spinco Group) at any time (other than the Merger and any action
which Spinco or the Company is specifically obligated or permitted to take under
the Transaction Agreements or the Tax Materials so long as any such permitted
action would not result in a breach of any representation, covenant or
obligation of Spinco, any member of the Spinco Group or the Company under this
Agreement or any Tax Material) or (B)
an issuance of stock by the Company or any of its Affiliates or any change in
the ownership (by vote or value, including as a result of any shift in voting
power) of any such entities that causes Section 355(d), Section 355(e) and/or
Section 355(f) of the Code to apply to the Distribution and/or any Internal
Spinoff,

       

      (ii)
resulting from any breach by the Company or, after the Effective Time, any
member of the Spinco Group of any representation, covenant or obligation of the
Company or Spinco under this Agreement, any other Transaction Agreement or any
Tax Material, to the extent that Taxes resulting from such breach are
attributable to (A)
a Distribution Disqualification or (B)
a breach of Section 6.02(a) hereof, or

       

      (iii)
of the Spinco Group or any member thereof and arising in the Post-Distribution
Period or otherwise payable with respect to a Spinco Return, or relating to the
income, employees, assets or transactions of the Spinco Business and payable
with respect to a Tax Return described in Section 2.01(c) that is not a Verizon
Return, but not including in each case any Taxes attributable to the income,
employees, assets or transactions of the Verizon Business or any Taxes
attributable to the Transactions.

       

       

      
        
          
          

        

        
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      Notwithstanding
anything herein to the contrary, Spinco, the Company and the ILEC Spinco
Subsidiaries shall not be required to indemnify the Verizon Group under Section
2.04(a)(i)(A) or Section 2.04(a)(ii) for any Taxes that would have been imposed
or incurred in the absence of any action, failure to act or breach of any
representation, covenant or obligation under any Transaction Agreement or any
Tax Material by the Company, Spinco and/or any of their
Affiliates.  In the event that any Taxes arise with respect to the
Transactions (except as a result of Section 355(d), Section 355(e) or Section
355(f) of the Code) as a result of both (and neither one alone) a fact or
circumstance described under Section 2.04(a)(i)(A) or Section 2.04(a)(ii) and
any action by Verizon or breach by Verizon of any representation, covenant or
obligation under any Transaction Agreement or any Tax Material, such Taxes shall
be borne equally by Verizon, on the one hand, and the Company, Spinco and the
ILEC Spinco Subsidiaries, on the other hand.

       

      Further
notwithstanding anything herein to the contrary, Spinco, the Company and the
ILEC Spinco Subsidiaries shall not be required to indemnify the Verizon Group
under Section 2.04(a)(i)(B) for any Taxes resulting from the application of
Section 355(d), Section 355(e) and/or Section 355(f) of the Code that would have
been imposed or incurred solely as a result of (x)
a breach by Verizon of the representation set forth in Section 10.01(a)(iii)
and/or (y)
an acquisition following the Distribution by any member of the Verizon Group of
stock of the Company or any of its Affiliates (clauses (x) and/or (y), a “Verizon
Event”).  In the event that any Taxes arise with respect to the
Transactions as a result of Section 355(d), Section 355(e) and/or Section 355(f)
of the Code, and such Taxes would not have been imposed or incurred but for
(i)
one or more issuances of stock or changes in ownership described in Section
2.04(a)(i)(B) that are not solely Verizon Events and (ii)
one or more Verizon Events, such Taxes shall be borne equally by Verizon, on the
one hand, and the Company, Spinco and the ILEC Spinco Subsidiaries, on the other
hand.

       

      (b)         Except
for Taxes for which Spinco, the Company or any of the ILEC Spinco Subsidiaries
is responsible under Section 2.04(a) or any other provision of this Agreement,
Verizon shall be liable for and shall indemnify and hold the Company and its
Subsidiaries and the Spinco Group harmless against any Taxes (i)
of the Verizon Group or any Verizon Consolidated Group or any member thereof or
attributable to the income, employees, assets or transactions of the Verizon
Business, (ii)
of the Spinco Group or any member thereof arising in any period, or portion
thereof, ending on or before the Effective Time or (iii)
resulting from the Transactions, including Taxes arising from any Distribution
Disqualification.

       

      
        
          
          

        

        
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      (c)         For
all purposes of this Agreement, Taxes shall be allocated to the Pre-Distribution
Period and the Post-Distribution Period based on an actual or hypothetical
closing of the books at the close of the Distribution Date, except that property
Taxes and similar Taxes shall be allocated on a daily pro rata basis between
such periods.

       

      (d)         The
parties’ responsibilities for Distribution/Merger Transfer Taxes shall be
governed by Section 11.1 of the Merger Agreement.

       

      (e)          Except
as set forth in this Agreement and in consideration of the mutual indemnities
and other obligations of this Agreement, any and all prior Tax sharing or
allocation agreements, arrangements or practices between any member of the
Verizon Group and any member of the Spinco Group shall be terminated as of the
Distribution Date, and no member of the Spinco Group shall have any continuing
rights or obligations thereunder.

       

      (f)          The
Company shall be entitled to any refund of or credit for Taxes for which the
Company is responsible under this Agreement, and Verizon shall be entitled to
any refund of or credit for Taxes for which Verizon is responsible under this
Agreement.  A party receiving a refund to which another party is
entitled pursuant to this Agreement shall pay the amount to which such other
party is entitled within five (5) days after the receipt of the
refund.  Each party shall be entitled to offset any amount which it is
owed under the Transaction Agreements by any amounts owed to it by the other
party under this Section 2.04(f) or any other provision of this
Agreement.

       

      (g)         All
indemnification obligations in respect of Taxes pursuant to this Agreement shall
be increased to
include (i)
all reasonable accounting, legal and other professional fees and court costs
incurred in connection with such Taxes, (ii)
with respect to Taxes related to the Transactions, all costs, damages or
settlement payments associated with any stockholders litigation in respect of
adverse Tax consequences of the Transactions, provided, in the case of settlement
payments, that any settlement of such litigation for an amount equal to or in
excess of $5 million shall not be made without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld, delayed or
conditioned, and (iii)
Taxes resulting from indemnification payments hereunder, and shall be reduced by any Tax
Benefit realized by the Indemnified Party in respect of Taxes or other losses
subject to indemnification under this Agreement.

       

      
        
          
          

        

        
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      (h)         The
parties agree that any payments made among the parties pursuant to this
Agreement or any other Transaction Agreement shall be treated, to the extent
permitted by law, for all Tax purposes as contributions to or distributions from
Spinco made immediately prior to the Distribution.

       

       

      ARTICLE
III

       

      CARRYBACKS;
AMENDED RETURNS; COMPENSATION DEDUCTIONS

       

      Section 3.01   Carrybacks.  Without
the consent of Verizon, no member of the Spinco Group shall carry back any Tax
Attribute (unless required to carry back such Tax Attribute by law) from a
Post-Distribution Period to a Pre-Distribution Period, provided that if the
carryback is required by law, Verizon (or any other member of the Verizon Group
receiving any Tax Benefit with respect to such carryback) shall promptly remit
to the Company any Tax Benefit it realizes with respect to any such
carryback.

       

      Section 3.02   Amended
Returns.  The Company shall not, and shall not permit any
member of the Spinco Group to, file any amended Spinco Return with respect to
which Verizon would have any increased liability for Taxes under Section
2.04(b), or any Verizon Return, without the prior written consent of Verizon,
which consent may be withheld in Verizon’s sole discretion.  Verizon
shall not, and shall not permit any member of the Verizon Group to, file any
amended Verizon Return with respect to which the Company or Spinco would have
any increased liability for Taxes under Section 2.04(a) without the prior
written consent of the Company, which consent may be withheld in the Company’s
sole discretion.

       

      Section 3.03   Tax Benefit
Realized.  For purposes of this Agreement, a Tax Benefit shall
be deemed to have been realized at the time any refund of Taxes is received or
applied against other Taxes due, or at the time of filing of a Tax Return
(including any relating to estimated Taxes) on which a loss, deduction or credit
is applied in reduction of Taxes which would otherwise be payable.  If
any Tax Benefit is subsequently reduced or disallowed as a result of an audit,
the party that had previously received a payment (or was entitled to reduce a
payment that such party was otherwise required to make) on account of such Tax
Benefit shall promptly pay an amount equal to the amount so reduced or
disallowed to the other party.

       

       

      
        
          
          

        

        
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        Section 3.04   Deductions with Respect to
Debt Exchange, Compensation, Etc.

         

      

      (a)         Verizon
and the other members of the Verizon Group shall be entitled to claim on their
Tax Returns all Tax Benefits resulting from any loss, deduction, credit or other
item which decreases Taxes paid or payable, or increases Tax basis, associated
with the Debt Exchange, but not including debt issuance costs, issuance expenses
or out-of-pocket expenses required to be amortized by Spinco.  For the
avoidance of doubt and notwithstanding anything to the contrary contained herein
or in any other Transaction Agreement, to the extent Verizon exchanges Spinco
Securities with an issue price in excess of the principal amount of the debt
retired in the Debt Exchange, Verizon shall be entitled to claim a Tax Benefit
associated with such excess, and no member of the Company Group shall claim or
be entitled to claim any portion of such excess as a Tax Benefit.

       

      (b)         All
deductions for United States federal, state and local Income Tax purposes
resulting from the exercise of compensatory options issued prior to the
Distribution Date with respect to stock of Verizon shall be taken by Verizon or
a member of the Verizon Group, and no party to this Agreement shall take any
position on any Tax Return which is inconsistent with such treatment, unless
required to do so pursuant to a Final Determination to such effect.

       

      (c)          If,
by reason of a subsequent Final Determination as to the treatment of any tax
deductions related to the compensatory options referred to in Section 3.04(b)
above, a Taxing Authority determines that a member of the Company Group is
entitled to such deduction, then the Company shall, and shall cause the Spinco
Group to, pay to Verizon the amount of any Tax Benefits that result therefrom
within ten (10) days of the date on which such Tax Benefits are
realized.

       

      (d)         The
principles of paragraphs (b) and (c) shall apply, mutatis mutandis, to other
items of compensation expense or transaction expense that are economically borne
by members of the Verizon Group, including, for the avoidance of doubt,
severance bonuses or other similar compensatory payments made by Verizon to
employees who are transferred to Spinco or its Subsidiaries in connection with
the Contribution and any Spinco transaction expenses paid by Verizon pursuant to
Section 11.1 of the Merger Agreement.

       

      
        
          
          

        

        
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      ARTICLE
IV

       

      PAYMENTS

       

      Section 4.01   Payments.  Except
as otherwise provided in Section 2.03 or Section 3.04, payments due under this
Agreement shall be made no later than thirty (30) days after the receipt or
crediting of a refund, the realization of a Tax Benefit for which the other
party is entitled to reimbursement, the delivery of notice of payment of a Tax
for which the other party is responsible under this Agreement, or the delivery
of notice of a Final Determination which results in such other party becoming
obligated to make a payment hereunder to the other party
hereto.  Payments due hereunder, but not made within such 30-day
period, shall be accompanied with interest at a rate equal to the Applicable
Federal Rate from the due date of such payment.

       

      Section 4.02   Notice.  Verizon
and the Company shall give each other prompt written notice of any payment that
may be due to the provider of such notice under this Agreement.

       

       

      ARTICLE
V

       

      TAX
CONTESTS

       

       

      Section 5.01   Notice.  Verizon
or the Company, as applicable (the “Indemnified Party”),
shall promptly notify the other party (the “Indemnifying Party”)
in writing upon receipt by the Indemnified Party or any Affiliate thereof of a
written communication from any Taxing Authority with respect to any pending or
threatened audit, dispute, suit, action, proposed assessment or other proceeding
(a “Tax
Contest”) concerning any Taxes for which the Indemnifying Party may be
liable under this Agreement.  The failure of the Indemnified Party to
promptly notify the Indemnifying Party shall only relieve the Indemnifying Party
from its obligation to indemnify for such Taxes to the extent that the
Indemnifying Party is materially prejudiced by such failure (whether as a result
of the forfeiture of substantive rights or defenses or otherwise).

       

      Section 5.02   Control of
Contests.  Verizon shall have sole control of any Tax Contest
related to (a)
any Verizon Return or (b)
the Tax-Free Status of the Transactions, including the exclusive right to
communicate with agents of the Taxing Authority and to control, resolve, settle
or agree to any deficiency, claim or adjustment proposed, asserted or assessed
in connection with or as a result of any such Tax Contest, provided, however,
that in the case of any such Tax Contest that may affect Taxes for which the
Company has responsibility hereunder, the Company may participate fully in the
Tax Contest at its own expense.  The Company shall have sole control
of any Tax Contest related to any Spinco Return, including the exclusive right
to communicate with agents of the Taxing Authority and to control, resolve,
settle or agree to any deficiency, claim or adjustment proposed, asserted or
assessed in connection with or as a result of any such Tax Contest, provided, however,
that in the case of any such Tax Contest that may affect Taxes for which Verizon
has responsibility hereunder, Verizon may participate fully in the Tax Contest
at its own expense.  In the case of any such Tax Contest relating to
Taxes for which the potential liability of the Indemnifying Party under this
Agreement equals or exceeds $1,000,000, (A)
the Indemnified Party shall not settle or concede any such Tax Contest without
the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, delayed or conditioned and (B)
absent a settlement of such Tax Contest pursuant to subclause (A) above, the
Indemnified Party shall be required to pursue, at the Indemnifying Party’s
expense, such Tax Contest through one level of appellate judicial review (it
being understood that the Indemnified Party shall have no obligation to pursue
such Tax Contest beyond one level of appellate judicial review).

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

       

      ARTICLE
VI

       

      COOPERATION

       

       

      Section 6.01   General.

       

      (a)         Verizon
and the Company shall cooperate with each other in the filing of any Tax Returns
and the conduct of any Tax Contest and each shall execute and deliver such
powers of attorney and make available such other documents as are reasonably
necessary to carry out the intent of this Agreement.  Each party
agrees to notify the other party in writing of any audit adjustments which do
not result in Tax liability but can be reasonably expected to affect Tax Returns
of the other party, or any of its Subsidiaries, for a Post-Distribution
Period.

       

                      (b)        
Verizon
shall, and shall cause the Verizon Subsidiaries to, make information in the
possession of the Verizon Group available to the Company for purposes of
preparation and compilation by the Company and the Company’s advisors of those
reports and studies necessary for the Company in order for it to comply with its
Tax reporting and filing obligations in Post-Distribution Periods, including but
not limited to studies related to the earnings and profits of Spinco as of the
Effective Time and the Tax basis in assets and the stock of corporate
subsidiaries.

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

       

      Section 6.02   Consistent
Treatment.

       

      (a)         Unless
and until there has been a Final Determination to the contrary, each party
agrees to treat (i)
each of (A)
the Contribution, together with the Distribution and (B)
each Internal Spinoff intended to so qualify, as a tax-free reorganization
qualifying under Section 368(a)(1)(D) of the Code, (ii)
each of the Internal Spinoffs and the Distribution as a transaction qualifying
under Sections 355 and 361 of the Code, (iii)
the Debt Exchange (if consummated) as a transfer of qualified property to
Verizon’s creditors in connection with the reorganization within the meaning of
Section 361(c)(3) of the Code; and (iv)
the Merger as a reorganization qualifying for nonrecognition under Section
368(a) of the Code, pursuant to each of which no gain or loss is recognized by
any of Verizon, Spinco, the Company and their respective shareholders and
Subsidiaries (except to the extent of cash received in lieu of fractional
shares).

       

      (b)         Unless
and until there has been a Final Determination to the contrary, or unless there
is manifest error, the Company shall file or cause to be filed all Tax Returns
of a member of the Spinco Group or relating to the Spinco Business and shall
conduct any Tax Contests in respect of a member of the Spinco Group or the
Spinco Business in a manner consistent with Verizon’s determination of the
adjusted Tax basis of any asset and the amount of any Tax Attribute or any
similar item held by the Spinco Group at the time of the
Distribution.

       

       

      ARTICLE
VII

       

      RETENTION
OF RECORDS; ACCESS

       

      The Verizon Group and the Company Group
shall (a)
subject to the provisions of the Transition Services Agreement, in accordance
with their respective then current record retention policies or for the period
required by applicable law, if longer, retain records, documents, accounting
data and other information (including computer data) necessary for the
preparation and filing of all Tax Returns in respect of Taxes of any member of
either the Verizon Group or the Spinco Group for any Pre-Distribution Period or
any Post-Distribution Period or for any Tax Contests relating to such Tax
Returns; and (b)
give to the other party reasonable access to such records, documents, accounting
data and other information (including computer data) and to its personnel
(insuring their cooperation) and premises, for the purpose of the review or
audit of such Tax Returns to the extent relevant to an obligation or liability
of a party under this Agreement or for purposes of the preparation or filing of
any such Tax Return, the conduct of any Tax Contest or any other matter
reasonably and in good faith related to the Tax affairs of the requesting
party.  Subject to the provisions of the Transition Services
Agreement, at any time after the Distribution Date that the Company Group or the
Verizon Group proposes to destroy such material or information, it shall first
notify the other group in writing and such other group shall be entitled to
receive at its cost and expense such materials or information proposed to be
destroyed.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

       

       

      ARTICLE
VIII

       

      SURVIVAL

       

      Notwithstanding any other provision in
this Agreement, all representations under this Agreement shall survive until 30
days after the expiration of the statute of limitations period (giving effect to
any written waiver, mitigation or extension thereof) applicable to the matters
covered thereby and the resolution of all disputes under this Agreement with
respect to any such matter that arose during such period.  All
covenants and agreements contained in this Agreement shall survive
indefinitely.

       

       

      ARTICLE
IX

       

      DISPUTE
RESOLUTION

       

      Verizon and the Company shall attempt
in good faith to resolve any disagreement arising with respect to this
Agreement, including, but not limited to, any dispute in connection with a claim
by a third party (a “Tax
Dispute”).  Either party may give the other party written
notice of any Tax Dispute not resolved in the normal course of
business.  If the parties cannot agree by the tenth Business Day
following the date on which one party gives such notice, then the parties shall
promptly retain the services of a nationally recognized law or accounting firm
reasonably acceptable to the parties (the “Tax Dispute
Arbitrator”).  The Tax Dispute Arbitrator shall be instructed
to resolve the Tax Dispute and such resolution shall be (a)
set forth in writing and signed by the Tax Dispute Arbitrator, (b)
delivered to each party involved in the Tax Dispute as soon as practicable after
the Tax Dispute is submitted to the Tax Dispute Arbitrator but no later than the
15th
day after the Tax Dispute Arbitrator is instructed to resolve the Tax Dispute,
(c)
made in accordance with this Agreement, and (d)
final, binding and conclusive on the parties involved in the Tax Dispute on the
date of delivery of such resolution.  The Tax Dispute Arbitrator shall
only be authorized on any one issue to decide in favor of and choose the
position of either of the parties involved in the Tax Dispute or to decide upon
a compromise position between the ranges presented by the parties to the Tax
Dispute Arbitrator.  The Tax Dispute Arbitrator shall base its
decision solely upon the presentations of the parties to the Tax Dispute
Arbitrator at a hearing held before the Tax Dispute Arbitrator and upon any
materials made available by either party and not upon independent
review.  The fees and expenses of the Tax Dispute Arbitrator shall be
borne 50% by Verizon and 50% by the Company.  The Company and Verizon
shall keep the decision of the Tax Dispute Arbitrator confidential.

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

       

       

      ARTICLE
X

       

      REPRESENTATIONS,
WARRANTIES AND COVENANTS

       

            Section
10.01   Representations and
Warranties; Certain Procedures.

       

                 (a)              Verizon
hereby represents and warrants that (i) it
has examined (or upon receipt will examine) (A) the
IRS Ruling and any other rulings issued by the IRS in connection with the
Distribution, (B) the
Distribution Tax Opinion, (C) each
IRS Submission, (D) the
Distribution Tax Representations and (E) any
other materials delivered or deliverable by Verizon, Spinco and their Affiliates
in connection with the rendering by Verizon Tax Counsel of the Distribution Tax
Opinion and the issuance by the IRS of the IRS Ruling and such other rulings
(all of the foregoing, collectively, the “Tax Materials”),
(ii) the
facts presented and the representations made therein, to the extent descriptive
of or otherwise relating to Verizon, Spinco and their Affiliates, are or will be
true, correct and complete in all material respects from the time presented or
made through and including the Distribution Date and (iii)
except as set forth in a Schedule to this Agreement, or as provided for in a
“safe harbor” under Treasury Regulation Section 1.355-7(d), during the two years
preceding the date of this Agreement, and until the date of the Distribution,
there has been and will be no change in ownership of Verizon Common Stock as
part of the same plan as the Distribution, all within the meaning of Section
355(e) of the Code.  Verizon represents and warrants that the
representations and warranties set forth in this Section 10.01(a) shall be true
and correct as of the date of this Agreement and at all times through and
including the Distribution Date.

       

                 (b)              The
Company hereby agrees, represents and warrants that (i) upon
receipt, it shall promptly examine the Tax Materials and drafts thereof, (ii)
within (A)
ten (10) Business Days following such receipt, in the case of the initial draft
of the Ruling Request, (B)
five (5) Business Days following such receipt, in the case of any other Tax
Materials, or (C)
such other time period following such receipt as may be necessary to comply with
deadlines imposed by any Taxing Authority, to the extent that the Company does
not believe that the facts presented and the representations made therein which
are descriptive of or otherwise relating to the Company are accurate, the
Company shall inform Verizon of any items that it believes are inaccurate and
shall propose specific changes to the Tax Materials with respect to such items
so as to make them true, correct and complete in all material respects, and
(iii)
all other such facts and representations relating to the Company with respect to
which the Company proposes no specific changes pursuant to clause (ii) hereof
will be true, correct and complete in all material respects.  The
Company further represents and warrants that neither the Company nor any
Subsidiary of the Company owns any shares of Verizon Common Stock or any rights,
warrants or options to acquire, or securities convertible into or exchangeable
for, Verizon Common Stock.  The Company represents that the
representations and warranties set forth in this Section
10.01(b) shall be true and correct as of the date of this Agreement or,
with respect to the Tax Materials, as of the date immediately following the
deadline specified in clause (ii) above, and at all times through and including
the Distribution Date. Verizon hereby covenants that it shall provide the
Company with the Tax Materials promptly following Verizon’s receipt thereof,
and, in the case of any Tax Materials to be submitted by Verizon to a Taxing
Authority, shall coordinate with the Company to provide the Company with the
maximum feasible time to review and comment on such material prior to its
submission.

       

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

            Section
10.02   Covenants Relating to the
Distribution.

       

                 (a)              The
Company shall not, nor shall it permit any of its Subsidiaries to take any
action, including entering into any agreement, understanding or arrangement or
any substantial negotiations with respect to any transaction or series of
transactions that could (i)
reasonably be expected to cause a Distribution Disqualification to occur or
(ii)
jeopardize, directly or indirectly, the conclusions of any ruling received from
the IRS, or opinion of counsel received from Company Tax Counsel or Verizon Tax
Counsel, in connection with the Transactions; provided, however,
that the foregoing shall not prohibit the Merger.

       

                 (b)              Until
the first day after the second anniversary of the Distribution Date, the Company
shall not, nor shall it permit any of its Subsidiaries to, take any action
(including entering into any agreement, understanding or arrangement or any
substantial negotiations with respect to any transaction or series of
transactions) that might cause a Distribution Disqualification to occur,
including any action or failure to act that is inconsistent with any
representation made in the Tax Materials (any such action or failure to act, a
“Potential
Disqualifying Action”).

       

                 (c)               Until
the first day after the second anniversary of the Distribution Date, the Company
shall not enter into any agreement, understanding or arrangement or any
substantial negotiations with respect to any transaction (including a merger to
which the Company is a party) involving the acquisition (including by the
Company or any of its Subsidiaries) of stock of the Company or a shift of
ownership (by vote or value) of the Company, and shall not issue any additional
shares of capital stock, modify its certificate of incorporation (or other
organizational documents) so as to modify the terms or conditions of any class
of stock, or transfer or modify any option, warrant, convertible obligation or
other instrument that provides for the right or possibility to issue, redeem or
transfer any equity interest in the Company (or enter into any agreement,
understanding, arrangement or any substantial negotiations with respect to any
such issuance, transfer or modification).  Notwithstanding the
foregoing,

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      (i)          The
Company may issue additional equity interests in the Company to a person in a
transaction to which Section 83 or Section 421(a) or (b) of the Code
applies in connection with the person’s performance of services as an employee,
director or independent contractor of (A)
the Company or its Subsidiaries, (B)
any other person that is related to the Company under Section 355(d)(7)(A) of
the Code or (C)
a corporation the assets of which the Company acquires in a reorganization under
Section 368 of the Code (including Spinco or any of its Subsidiaries), provided that such
stock is not excessive by reference to the services performed by such person and
such person or a coordinating group of which the person is a member will not be
a controlling shareholder or a ten-percent shareholder of the Company (within
the meaning of Treasury Regulations Section 1.355-7(h)(3) and (14)) immediately
after the issuance of such common stock;

       

      (ii)         The
Company may issue additional shares of common stock of the Company to a
retirement plan of the Company or any other person that is treated as the same
employer as the Company under Section 414(b), (c), (m), or (o) of the Code
that qualifies under Section 401(a) or 403(a) of the Code, provided that the
stock acquired by all of the qualified plans of the Company and such other
persons during the four-year period beginning two years before the Distribution
Date does not, in the aggregate, represent more than ten percent of the total
combined voting power of all classes of stock of the Company entitled to vote or
more than ten percent of the total value of shares of all classes of stock of
the Company; and

       

      (iii)        The
Company may issue additional shares of common stock of the Company (A)
in a pro rata stock split or reverse stock split or (B)
pursuant to a “poison pill” plan meeting the requirements of Revenue Ruling
90-11 through which all holders of common stock of the Company, except the
holder that is the subject of the poison pill, receive a pro rata distribution
of common stock of the Company with respect to their common stock of the
Company.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

       

      The intent of the foregoing clauses
(i), (ii) and (iii) is to permit certain equity issuances by the Company, but
(in the case of clauses (i) and (ii)) solely to the extent such issuances would
comply with Safe Harbor 8 or 9 set forth in Treasury Regulations Section
1.355-7(d)(8) or (9), and in each case so that such issuances would not cause
Verizon or any of its Subsidiaries to recognize gain pursuant to Section 355(d),
355(e) and/or 355(f) of the Code with respect to the Distribution and/or any
Internal Spinoff.  To the extent the Treasury Regulations (or the
Code) are amended and such amendments could affect the Tax-Free Status of the
Transactions, such amendments shall automatically be incorporated by reference
into the requirements of the foregoing clauses (i), (ii) and (iii) and/or the
other relevant parts of this Section 10.02, if applicable.

       

      (d)         Until
the first day after the second anniversary of the Distribution Date, the Company
shall not, and shall not permit any of its Subsidiaries to, repurchase any
shares of stock of the Company except to the extent consistent with the
requirements of Section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696,
as the same may be modified or supplemented from time to time, and only to the
extent not revoked.

       

      (e)         Until
the first day after the second anniversary of the Distribution Date, the Company
shall (i)
cause its wholly owned Subsidiaries that were wholly owned Subsidiaries of
Spinco at the time of the Distribution to continue the active conduct of the
Spinco Business (determined in accordance with Section 355(b) of the Code) to
the extent so conducted by those Subsidiaries immediately prior to the
Distribution and (ii)
continue such active conduct of the Spinco Business to the extent the Company
directly holds any portion of the Spinco Business immediately after the
Merger.  The Company shall neither cause nor permit any such
Subsidiary of Spinco to dissolve, liquidate, merge or consolidate with any other
Person or to become a disregarded entity for U.S. federal income tax
purposes. 

       

         
           
(f)          Until the first
day after the second anniversary of the Distribution Date, the Company shall not
voluntarily dissolve, liquidate, merge or consolidate with any other person,
unless, in the case of a merger or consolidation, the Company is the survivor of
the merger or consolidation and the transaction otherwise complies with the
other provisions of this Section 10.02.

       

          
           (g)         Notwithstanding
the foregoing, the provisions of this Section
10.02 shall not prohibit the Company from implementing any Potential
Disqualifying Action or any other action described in Section 10.02(c), (d), (e)
or (f), subject to, and without limiting or modifying, the Company’s
indemnification obligations under Section 2.04(a), if (i)
the Company obtains the written consent of Verizon (which consent may be given
or withheld in Verizon's sole discretion), (ii)
the Company obtains a supplemental ruling from the IRS or an opinion of a
nationally recognized law firm, in form and substance reasonably satisfactory to
Verizon, that the taking of such action will not adversely affect, directly or
indirectly, the Tax-Free Status of the Transactions or result in a Distribution
Disqualification or (iii)
such action would be permitted under Section 10.02(c)(i), (ii), or
(iii).

       

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

       

      (h)         Notwithstanding
anything else to contrary contained in this Agreement or any other Transaction
Agreement, the Company hereby agrees that (i)
it will not, and will not permit any of its Subsidiaries to, directly or
indirectly, (A)
pre-pay, pay down, redeem, retire or otherwise acquire, however effected, any of
the Spinco Securities prior to their maturity, (B)
take any action that might result in any Person other than the Company being
treated after the Merger as the obligor for U.S. federal income tax purposes
under the Spinco Securities or any other debt obligations of Spinco incurred
pursuant to the Special Payment Financing, or (C)
take any action that might result in any “significant modification” of the
Spinco Securities within the meaning of Treasury Regulations Section 1.1001-3(e)
and (ii)
it will not take or permit to be taken any action at any time that could
jeopardize, directly or indirectly, the qualification, in whole or in part, of
any of the Spinco Securities as “securities” within the meaning of Section
361(a) of the Code; provided that, the
foregoing shall not prohibit the Company from implementing any of the above
actions, subject to, and without limiting or modifying, the Company’s
indemnification obligations under Section 2.04(a), if (x)
the Company complies with the requirements of Section 10.02(g) or (y)
failure to take such action would violate the credit agreements entered into in
connection with the Special Payment Financing (each as executed as of the
Distribution Date).

       

       

      ARTICLE
XI

       

      MISCELLANEOUS
PROVISIONS

       

      To the extent not inconsistent with any
specific term of this Agreement, the following sections of the Distribution
Agreement shall apply in relevant part to this Agreement: 9.7 (Entire
Agreement), 9.3 (Interpretation), 9.2 (Notices), 9.10 (Amendments; Waivers), 9.9
(Counterparts), 9.4 (Severability), 9.11 (Termination), 9.8 (Governing Law),
9.13 (Jurisdiction; Service of Process) and 9.12 (Waiver of Jury Trial). Except as provided in
the preceding sentence, and except as specifically provided in the Merger
Agreement and the Transition Services Agreement, this Agreement shall be the
exclusive agreement among the parties with respect to all Tax matters, including
indemnification in respect of Tax matters.  In the event of any
conflict between this Agreement and any other Transaction Agreement, this
Agreement shall control.

       

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      ARTICLE
XII

       

      SUCCESSORS
AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES

       

      This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their successors and permitted assigns, but neither this Agreement
nor any of the rights, interests and obligations hereunder shall be assigned by
any party hereto without the prior written consent of the other
parties.  This Agreement is solely for the benefit of Verizon, Spinco
and the Company and their respective Subsidiaries and Affiliates and is not
intended to confer upon any other Persons any rights or remedies
hereunder.  The obligations of Spinco and the Company under this
Agreement shall be binding upon any Person that acquires all or substantially
all the assets or stock of the Company, whether by merger, amalgamation or
consolidation, asset purchase, stock purchase or subscription or otherwise, and
the Company shall not enter into any agreement for any such transaction that
does not so expressly provide in writing.  The obligations of Verizon
under this Agreement shall be binding upon any Person that acquires all or
substantially all the assets or stock of Verizon, whether by merger,
amalgamation or consolidation, asset purchase, stock purchase or subscription or
otherwise, and Verizon shall not enter into any agreement for any such
transaction that does not so expressly provide in writing.  This
Agreement is being entered into by Verizon, the Company and Spinco on behalf of
themselves and the members of their respective affiliated
groups.  This Agreement shall constitute a direct obligation of each
member of the Verizon Group and each member of the Company Group and shall be
deemed to have been readopted and affirmed on behalf of any entity that becomes
a Subsidiary of Verizon or the Company in the future.

       

       

      ARTICLE
XIII

       

      EFFECTIVENESS

       

      All covenants and agreements of the
parties contained in this Agreement (except for the covenants and agreements
contained in Article X, which shall be effective immediately) shall be subject
to and conditioned upon the Merger becoming effective.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      

       

       

                     
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

       

       

      
        
          	 	VERIZON
      COMMUNICATIONS INC.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 /s/  John
      W. Diercksen	 
	 	 	John
      W. Diercksen	 
	 	 	
                  Executive
      Vice President Strategy, Planning and
      Development

                	 
	 	 	 	 

        

      

                 

      
         

      

      
        
          
            	 	NEW
      COMMUNICATIONS HOLDINGS INC.	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 /s/ 
      Stephen E. Smith	 
	 	 	Stephen
      E. Smith	 
	 	 	Vice
      President	 
	 	 	 	 

          

        

         

      

      
         

      

      
        
          
            	 	FRONTIER
      COMMUNICATIONS CORPORATION	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 /s/  Donald R.
      Shassian	 
	 	 	Donald
      R. Shassian	 
	 	 	Executive
      Vice President and Chief Financial Officer	 
	 	 	 	 

          

        

         

        
           

          
            
              	 	CONTEL
      OF THE SOUTH, INC.	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	 /s/ 
      Daniel S. Meade	 
	 	 	Daniel
      S. Meade	 
	 	 	Chief
      Executive Officer	 
	 	 	 	 

            

          

           

           

           

          
            
              
              

            

            
              23

              
                

              

            

            
              
              

            

          

           

          
             

            
              
                	 	NEW
      COMMUNICATIONS OF THE CAROLINAS INC.	 
	 	 	 	 
	
                         

                      	
                        By:
      

                      	 /s/ 
      Stephen E. Smith	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

              

            

             

            
               

              
                
                  	 	NEW
      COMMUNICATIONS ILEC HOLDINGS INC.	 
	 	 	 	 
	
                           

                        	
                          By:
      

                        	 /s/ 
      Stephen E. Smith	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

                

              

               

              
                 

                
                  
                    	 	NEW
      COMMUNICATIONS ONLINE AND LONG DISTANCE INC.	 
	 	 	 	 
	
                             

                          	
                            By:
      

                          	 /s/ 
      Stephen E. Smith	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

                  

                

                 

                
                   

                  
                    
                      	 	NEW
      COMMUNICATIONS OF THE SOUTHWEST INC.	 
	 	 	 	 
	
                               

                            	
                              By:
      

                            	 /s/ 
      Stephen E. Smith	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 	 

                    

                  

                   

                  
                     

                    
                      
                        
                        

                      

                      
                        24

                        
                          

                        

                      

                      
                        
                        

                      

                    

                     

                     

                     

                    
                      
                        	 	VERIZON
      NORTH INC.	 
	 	 	 	 
	
                                 

                              	
                                By:
      

                              	 /s/ 
      Daniel S. Meade	 
	 	 	Name: 
      Daniel S. Meade	 
	 	 	Title:   
      Chief Executive Officer	 
	 	 	 	 

                      

                    

                     

                    
                       

                      
                        
                          	 	VERIZON
      NORTHWEST INC.	 
	 	 	 	 
	
                                   

                                	
                                  By:
      

                                	 /s/ 
      Daniel S. Meade	 
	 	 	Name: 
      Daniel S. Meade	 
	 	 	Title:   
      Chief Executive Officer	 
	 	 	 	 

                        

                      

                       

                      
                         

                        
                          
                            	 	VERIZON
      WEST COAST INC.	 
	 	 	 	 
	
                                     

                                  	
                                    By:
      

                                  	 /s/  Daniel S.
      Meade	 
	 	 	Name: 
      Daniel S. Meade	 
	 	 	Title:   
      Chief Executive Officer	 
	 	 	 	 

                          

                        

                         

                        
                           

                          
                            
                              	 	VERIZON
      WEST VIRGINIA INC.	 
	 	 	 	 
	
                                       

                                    	
                                      By:
      

                                    	 /s/ Daniel S.
      Meade	 
	 	 	Name: 
      Daniel S. Meade	 
	 	 	Title:   
      Chief Executive Officer	 
	 	 	 	 

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

       

      25ex10-1.htm

    EXHIBIT
10.1

    

     

    
      
        

      

    

     

    

     

    CREDIT
AGREEMENT

     

    dated as
of

     

    May 13,
2009

     

    among

     

    JONES
APPAREL GROUP, INC.,

    JONES
APPAREL GROUP HOLDINGS, INC.,

    JONES
APPAREL GROUP USA, INC.,

    JONES
RETAIL CORPORATION,

    NINE WEST
FOOTWEAR CORPORATION,

    ENERGIE
KNITWEAR, INC.,

    JONES
INVESTMENT CO. INC.,

    JONES
JEANSWEAR GROUP, INC.,

    L.E.I.
GROUP, INC.,

    NINE WEST
DEVELOPMENT CORPORATION and

    VICTORIA
+ CO LTD.,

    as U.S.
Borrowers

     

    JONES
APPAREL GROUP CANADA, LP, as Canadian Borrower

     

    The
Lenders Party Hereto,

     

    JPMORGAN
CHASE BANK, N.A.,

    as
Administrative Agent,

     

    JPMORGAN
CHASE BANK, NA., TORONTO BRANCH,

    as
Canadian Administrative Agent,

     

    JPMORGAN
CHASE BANK, N.A.  AND GENERAL ELECTRIC CAPITAL
CORPORATION,

    as Joint
Collateral Agents

     

    CITIBANK,
N.A., as Syndication Agent,

    and

    BANK OF
AMERICA, N.A, WACHOVIA BANK, NATIONAL ASSOCIATION

    and
SUNTRUST BANK, as Documentation Agents

    ___________________________

    

    J.P.
MORGAN SECURITIES INC., CITIGROUP GLOBAL MARKETS INC., BANC OF

    AMERICA
SECURITIES LLC, WACHOVIA CAPITAL MARKETS LLC, SUNTRUST

    ROBINSON
HUMPHREY, INC. AND GENERAL ELECTRIC CAPITAL CORPORATION,

    as Joint
Bookrunners,

    and

    J.P.
MORGAN SECURITIES INC. AND CITIGROUP GLOBAL MARKETS INC.,

    as Joint
Lead Arrangers

     

    
      
        

      

    

     

    CHASE BUSINESS
CREDIT

     

     

    
      
         

      

      
        
        

        
          

        

      

      
        Table of Contents 

      

    

     

    TABLE OF CONTENTS

     

    Page

     

    
      	
              ARTICLE
      I           
      Definition

            	
                 
      1

            
	
                         
      SECTION 1.01.

            	
              Defined Terms

            	
                 
      1

            
	
                         
      SECTION 1.02.

            	
              Classification of Loans and
      Borrowings

            	
               
      56

            
	
                         
      SECTION 1.03.

            	
              Terms Generally

            	
               
      56

            
	
                         
      SECTION 1.04.

            	
              Accounting Terms; GAAP 

            	
               
      57

            
	
                         
      SECTION 1.05.

            	
              Currency Translations

            	
               
      57

            
	
              ARTICLE
      II           The
      Credits

            	
               
      57

            
	
                         
      SECTION 2.01.

            	
              Revolving Commitments

            	
               
      57

            
	
                         
      SECTION 2.02.

            	
              Loans and Borrowings

            	
               
      58

            
	
                         
      SECTION 2.03.

            	
              Requests for Revolving Borrowings

            	
               
      59

            
	
                         
      SECTION 2.04.

            	
              Protective Advances

            	
               
      60

            
	
                         
      SECTION 2.05.

            	
              Swingline Loans

            	
               
      61

            
	
                         
      SECTION 2.06.

            	
              Letters of Credit

            	
               
      63

            
	
                         
      SECTION 2.07.

            	
              Funding of Borrowings

            	
               
      68

            
	
                         
      SECTION 2.08.

            	
              Interest Elections

            	
               
      69

            
	
                         
      SECTION 2.09.

            	
              Termination and Reduction of Revolving Commitments;
      Increase in Revolving Commitments

            	
               
      71

            
	
                         
      SECTION 2.10.

            	
              Repayment and Amortization of Loans and B/As;
      Evidence of Debt

            	
               
      73

            
	
                         
      SECTION 2.11.

            	
              Prepayment of Loans and B/As

            	
               
      74

            
	
                         
      SECTION 2.12.

            	
              Fees

            	
               
      76

            
	
                         
      SECTION 2.13.

            	
              Interest

            	
               
      78

            
	
                         
      SECTION 2.14.

            	
              Alternate Rate of Interest

            	
               
      79

            
	
                         
      SECTION 2.15.

            	
              Increased Costs

            	
               
      79

            
	
                         
      SECTION 2.16.

            	
              Break Funding Payments

            	
               
      80

            
	
                         
      SECTION 2.17.

            	
              Taxes

            	
               
      81

            
	
                         
      SECTION 2.18.

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

            	
               
      84

            
	
                         
      SECTION 2.19.

            	
              Mitigation Obligations; Replacement of
      Lenders

            	
               
      87

            
	
                         
      SECTION 2.20.

            	
              Returned Payments

            	
               
      88

            
	
                          SECTION 2.21.

            	
              Bankers’ Acceptances

            	
               
      88

            
	
                         
      SECTION 2.22.

            	
              Circumstances Making Bankers’ Acceptances
      Unavailable

            	
               
      92

            
	
                         
      SECTION 2.23.

            	
              Defaulting Lenders

            	
               
      92

            
	
                         
      SECTION 2.24.

            	
              Excess Resulting From Exchange Rate
      Change

            	
               
      94

            
	
              ARTICLE
      III         Representations and
      Warranties

            	
               
      95

            
	
                          SECTION 3.01.

            	
              Organization; Powers

            	
               
      95

            
	
                         
      SECTION 3.02.

            	
              Authorization; Enforceability

            	
               
      95

            
	
                         
      SECTION 3.03.

            	
              Governmental Approvals; No
    Conflicts

            	
               
      95

            
	
                         
      SECTION 3.04.

            	
              Financial Condition; No Material Adverse
      Change

            	
               
      96

            
	
                         
      SECTION 3.05.

            	
              Properties

            	
               
      96

            
	
                         
      SECTION 3.06.

            	
              Litigation and Environmental
    Matters

            	
               
      96

            
	
                         
      SECTION 3.07.

            	
              Compliance with Laws and
    Agreements

            	
               
      97

            
	
                         
      SECTION 3.08.

            	
              Investment Company Status

            	
               
      97

            

       

       

      
        
           

        

        
          i

          
            

          

        

        
          Table of Contents 

        

      

       

       

      	
                         
      SECTION 3.09.

            	
              Taxes

            	
               
      97

            
	
                         
      SECTION 3.10.

            	
              ERISA

            	
               
      97

            
	
                         
      SECTION 3.11.

            	
              Disclosure

            	
               
      98

            
	
                         
      SECTION 3.12.

            	
              No Default

            	
               
      98

            
	
                         
      SECTION 3.13.

            	
              Solvency

            	
               
      98

            
	
                         
      SECTION 3.14.

            	
              Insurance

            	
               
      99

            
	
                         
      SECTION 3.15.

            	
              Capitalization and Subsidiaries

            	
               
      99

            
	
                         
      SECTION 3.16.

            	
              Security Interest in Collateral

            	
               
      99

            
	
                         
      SECTION 3.17.

            	
              Employment Matters

            	
               
      99

            
	
                          SECTION 3.18.

            	
              Credit Card Arrangements

            	
              100

            
	
                         
      SECTION 3.19.

            	
              PATRIOT Act and Other Specified
    Laws

            	
              100

            
	
                         
      SECTION 3.20.

            	
              Margin Regulations

            	
              100

            
	
              ARTICLE
      IV        
      Conditions

            	
              101

            
	
                         
      SECTION 4.01.

            	
              Effective Date

            	
              101

            
	
                         
      SECTION 4.02.

            	
              Each Credit Event

            	
              104

            
	
              ARTICLE
      V          Affirmative
      Covenants

            	
              105

            
	
                         
      SECTION 5.01.

            	
              Financial Statements; Borrowing Base and Other
      Information

            	
              105

            
	
                         
      SECTION 5.02.

            	
              Notices of Material Events

            	
              109

            
	
                         
      SECTION 5.03.

            	
              Existence; Conduct of Business

            	
              110

            
	
                         
      SECTION 5.04.

            	
              Payment of Obligations

            	
              110

            
	
                         
      SECTION 5.05.

            	
              Maintenance of Properties

            	
              110

            
	
                          SECTION 5.06.

            	
              Books and Records; Inspection
    Rights

            	
              110

            
	
                          SECTION 5.07.

            	
              Compliance with Laws and Contractual
      Obligations

            	
              111

            
	
                         
      SECTION 5.08.

            	
              Use of Proceeds

            	
              111

            
	
                         
      SECTION 5.09.

            	
              Insurance

            	
              111

            
	
                         
      SECTION 5.10.

            	
              Casualty and Condemnation

            	
              111

            
	
                         
      SECTION 5.11.

            	
              Appraisals

            	
              112

            
	
                         
      SECTION 5.12.

            	
              Field Examinations

            	
              112

            
	
                          SECTION 5.13.

            	
              Depository Banks

            	
              112

            
	
                         
      SECTION 5.14.

            	
              Additional Collateral; Further
      Assurances

            	
              113

            
	
                         
      SECTION 5.15.

            	
              Credit Card Notification
    Agreements

            	
              115

            
	
                         
      SECTION 5.16.

            	
              Post Closing Requirements

            	
              115

            
	
              ARTICLE
      VI         Negative
      Covenants

            	
              115

            
	
                         
      SECTION 6.01.

            	
              Indebtedness

            	
              115

            
	
                         
      SECTION 6.02.

            	
              Liens

            	
              117

            
	
                         
      SECTION 6.03.

            	
              Fundamental Changes

            	
              118

            
	
                         
      SECTION 6.04.

            	
              Investments, Loans, Advances, Guarantees and
      Acquisitions

            	
              119

            
	
                         
      SECTION 6.05.

            	
              Asset Sales

            	
              121

            
	
                         
      SECTION 6.06.

            	
              Sale and Leaseback Transactions

            	
              122

            
	
                         
      SECTION 6.07.

            	
              Swap Agreements

            	
              123

            
	
                         
      SECTION 6.08.

            	
              Restricted Payments; Certain Payments of
      Indebtedness

            	
              123

            
	
                         
      SECTION 6.09.

            	
              Transactions with Affiliates

            	
              124

            

       

       

      
        
           

        

        
          ii

          
            

          

        

        
          Table of Contents 

        

      

       

       

      	
                         
      SECTION 6.10.

            	
              Restrictive Agreements

            	
              124

            
	
                         
      SECTION 6.11.

            	
              Amendment of Material Documents

            	
              125

            
	
                         
      SECTION 6.12.

            	
              Fixed Charge Coverage Ratio

            	
              125

            
	
                         
      SECTION 6.13.

            	
              Open Account Agreements

            	
              125

            
	
              ARTICLE VII       
      Events of Default

            	
              125

            
	
              ARTICLE VIII       The
      Administrative Agent and Canadian Administrative Agent, Joint Collateral
      Agents; Other Agents

            	
              129

            
	
                         
      SECTION 8.01.

            	
              The Administrative Agent and the Canadian
      Administrative Agent

            	
              129

            
	
                         
      SECTION 8.02.

            	
              The Joint Collateral Agents

            	
              132

            
	
                         
      SECTION 8.03.

            	
              Other Agents

            	
              134

            
	
              ARTICLE
      IX        
      Miscellaneous

            	
              135

            
	
                         
      SECTION 9.01.

            	
              Notices

            	
              135

            
	
                         
      SECTION 9.02.

            	
              Waivers; Amendments

            	
              136

            
	
                         
      SECTION 9.03.

            	
              Expenses; Indemnity; Damage
Waiver

            	
              139

            
	
                         
      SECTION 9.04.

            	
              Successors and Assigns

            	
              141

            
	
                         
      SECTION 9.05.

            	
              Survival

            	
              144

            
	
                         
      SECTION 9.06.

            	
              Counterparts; Integration;
      Effectiveness

            	
              145

            
	
                         
      SECTION 9.07.

            	
              Severability

            	
              145

            
	
                         
      SECTION 9.08.

            	
              Right of Setoff

            	
              145

            
	
                         
      SECTION 9.09.

            	
              Governing Law; Jurisdiction; Consent to Service of
      Process

            	
              146

            
	
                         
      SECTION 9.10.

            	
              WAIVER OF JURY TRIAL

            	
              146

            
	
                         
      SECTION 9.11.

            	
              Headings

            	
              147

            
	
                         
      SECTION 9.12.

            	
              Confidentiality

            	
              147

            
	
                         
      SECTION 9.13.

            	
              Several Obligations; Nonreliance; Violation of
      Law

            	
              148

            
	
                         
      SECTION 9.14.

            	
              USA PATRIOT Act

            	
              148

            
	
                         
      SECTION 9.15.

            	
              Disclosure

            	
              148

            
	
                         
      SECTION 9.16.

            	
              Appointment for Perfection

            	
              149

            
	
                         
      SECTION 9.17.

            	
              Interest Rate Limitation

            	
              149

            
	
                         
      SECTION 9.18.

            	
              Judgment Currency

            	
              149

            
	
                         
      SECTION 9.19.

            	
              Canadian Anti-Money Laundering
      Legislation

            	
              149

            
	
                          SECTION 9.20.

            	
              Lender Loss Sharing Agreement

            	
              150

            
	
                          SECTION 9.21.

            	
              No Fiduciary Duty

            	
              152

            
	
              

                ARTICLE
      X          Loan Guaranty of
      US. Obligations

              

            	
              153

            
	
                         
      SECTION 10.01.

            	
              Guaranty

            	
              153

            
	
                          SECTION 10.02.

            	
              Guaranty of Payment

            	
              153

            
	
                         
      SECTION 10.03.

            	
              No Discharge or Diminishment of Loan
      Guaranty

            	
              153

            
	
                         
      SECTION 10.04.

            	
              Defenses Waived

            	
              154

            
	
                         
      SECTION 10.05.

            	
              Rights of Subrogation

            	
              154

            
	
                         
      SECTION 10.06.

            	
              Reinstatement; Stay of
    Acceleration

            	
              155

            
	
                         
      SECTION 10.07.

            	
              Information

            	
              155

            
	
                         
      SECTION 10.08.

            	
              Maximum Liability

            	
              155

            
	
                         
      SECTION 10.09.

            	
              Contribution

            	
              155

            
	
                         
      SECTION 10.10.

            	
              Liability Cumulative

            	
              156

            
	
                         
      SECTION 10.11.

            	
              Common Enterprise

            	
              156

            

       

       

      
        
           

        

        
          iii

          
            

          

        

        
          Table of Contents 

        

      

       

       

      	
              ARTICLE
      XI         The Borrower
      Representative

            	
              156

            
	
                         
      SECTION 11.01.

            	
              Appointment; Nature of
    Relationship

            	
              156

            
	
                         
      SECTION 11.02.

            	
              Powers

            	
              157

            
	
                         
      SECTION 11.03.

            	
              Employment of Agents

            	
              157

            
	
                         
      SECTION 11.04.

            	
              Notices

            	
              157

            
	
                         
      SECTION 11.05,

            	
              Successor Borrower
Representative

            	
              157

            
	
                         
      SECTION 11.06.

            	
              Execution of Loan Documents; Borrowing Base
      Certificate

            	
              157

            
	
                         
      SECTION 11.07.

            	
              Reporting

            	
              158

            

    SCHEDULES:

     

    Revolving
Commitment Schedule

    Schedule I
-- Borrowers and U.S. Loan Guarantors Signatory

    Schedule
2.06(1) -- Existing Letters of Credit

    Schedule
3.05 -- Properties

    Schedule
3.06 -- Disclosed Matters

    Schedule
3.14 -- Insurance

    Schedule
3.15 -- Capitalization and Subsidiaries

    Schedule
3.18 – Credit Card Arrangements

    Schedule
6.01 -- Existing Indebtedness

    Schedule
6.02 -- Existing Liens

    Schedule
6.04 -- Existing Investments

    Schedule
6.05 -- Asset Sales

    Schedule
6.10 -- Existing Restrictions

     

    EXHIBITS:

     

    Exhibit A
-- Form of Assignment and Assumption

    Exhibit B
-- Form of Opinion of Borrower’s Counsel

    Exhibit C
-- Form of Borrowing Base Certificate

    Exhibit D
-- Form of Compliance Certificate

    Exhibit E
-- Joinder Agreement

    Exhibit F
-- Form of U.S. Tax Compliance Certificate

    Exhibit G
-- Form of Borrowing Request

    Exhibit H
-- Form of Discount Note

     

     

    
      
         

      

      
        iv

        
          

        

      

      
        Table of Contents 

      

    

     

     

                                  
CREDIT AGREEMENT dated as of May 13, 2009 (as it may be amended or modified from
time to time, this “Agreement”), among
JONES APPAREL GROUP, INC., a Pennsylvania corporation, JONES APPAREL GROUP
HOLDINGS, INC., a Delaware corporation, JONES APPAREL GROUP USA, INC., a
Delaware corporation, JONES RETAIL CORPORATION, a New Jersey corporation, NINE
WEST FOOTWEAR CORPORATION, a Delaware corporation, ENERGIE KNITWEAR, INC., a
Delaware corporation, JONES INVESTMENT CO. INC., a Delaware corporation, JONES
JEANSWEAR GROUP, INC., a New York corporation, L.E.I. GROUP, INC., a Delaware
corporation, NINE WEST DEVELOPMENT CORPORATION, a Delaware corporation, and
VICTORIA + CO LTD., a Rhode Island corporation, as Borrowers, JONES APPAREL
GROUP CANADA, LP, an Ontario limited partnership, as Canadian Borrower, the
other Loan Parties party hereto, the Lenders party hereto, JPMORGAN CHASE BANK,
N.A., as Administrative Agent, JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as
Canadian Administrative Agent, J.P. MORGAN SECURITIES INC. and GENERAL ELECTRIC
CAPITAL CORPORATION, as Joint Collateral Agents, CITIBANK, N.A., as Syndication
Agent, and BANK OF AMERICA, N.A., WACHOVIA BANK, NATIONAL ASSOCIATION and
SUNTRUST BANK, as Documentation Agents.

     

    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 whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.

     

    “Acceptance Fee” has
the meaning assigned to such term in Section 2.21(m).

     

    “Account” has the
meaning assigned to such term in the U.S. 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, and its successors and assigns in such capacity.

     

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

     

     

    
      
         

      

      
        1

        
          

        

      

      
        Table of Contents 

      

    

     

     

    “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.

     

    “Agents” means,
individually and collectively as the context may require, the Administrative
Agent, the Canadian Administrative Agent, the Joint Collateral Agents, the
Syndication Agent and the Documentation Agents.

     

    “Aggregate Borrowing
Base” means the aggregate amount of the U.S. Borrowing Base and the
Canadian Borrowing Base; provided that the
maximum amount of the Canadian Borrowing Base which may be included in the
Aggregate Borrowing Base is the Canadian Sublimit.

     

    “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 one-month rate appearing on the Reuters Screen LIBOR01
Page (or on any successor or substitute 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.

     

    “Alternative Currency”
means (a) Pounds Sterling, (b) the Euro or (c) any other lawful currency (other
than dollars) acceptable to the Issuing Banks which, in the case of this clause
(c), is freely transferable and convertible into dollars in the United States
currency market and is freely available to the applicable Issuing Bank in the
London interbank deposit market.

     

    “AML Legislation” has
the meaning assigned to such term in Section 9.19.

     

    “Applicable
Percentage” means (a) with respect to Revolving Loans, LC Exposure or
Swingline Loans, the percentage of the total Revolving Commitments equal to such
Lender’s Revolving Commitment (or, if the Revolving Commitments have terminated
or expired, such Lender’s share of the total Revolving Exposure at that time),
(b) with respect to U.S. Revolving Loans, U.S. LC Exposure or U.S. Swingline
Loans, a percentage of the total U.S. Commitments equal to such U.S. Lender’s
U.S. Commitment (or, if the U.S. Commitments have terminated or expired, such
U.S. Lender’s share of the total U.S. Revolving Exposure at that time) and (c)
with respect to Canadian Revolving Loans, Canadian LC Exposure or Canadian
Swingline Loans, a percentage of the total Canadian Commitments equal to such
Canadian Lender’s Canadian Commitment (or, if the Canadian Commitments have
terminated or expired, such Canadian Lender’s share of the total Canadian
Revolving Exposure at that time); provided
that in the case of Section 2.23 when a Defaulting Lender shall
exist, any such Defaulting Lender’s Revolving Commitment (or U.S. Commitment or
Canadian Commitment, as applicable) shall be disregarded in any of such
calculations.

     

     

    
      
         

      

      
        2

        
          

        

      

      
        Table of Contents 

      

    

     

     

    “Applicable Rate”
means, for any day, with respect to any ABR Loan, Canadian Prime Rate Loan,
Eurodollar Loan or BA Drawing, as the case may be, the applicable rate per annum
set forth below under the caption “ABR Spread”, “Canadian Prime Spread”,
“Eurodollar Spread” or “BA Drawing Spread”, as the case may be, based upon the
daily average Availability during the most recently completed fiscal quarter of
the Company (the “Average
Availability”); provided that until
the last day of the second fiscal quarter ending after the Effective Date, the
Applicable Rate shall be the applicable rate per annum set forth below in
Category 2:

     

    
      	
              Availability

            	
              ABR
      Spread and Canadian Prime Spread

            	
              Eurodollar
      Spread and BA Drawing Spread

            
	
              Category
      1

              ≥
      $400,000,000

            	
              3.25%

            	
              4.25%

            
	
              Category
      2

               <
      $400,000,000 but ≥ 200,000,000

            	
              3.50%

            	
              4.50%

            
	
              Category
      3

              <
      200,000,000

            	
              3.75%

            	
              4.75%

            

    

    

    For purposes of the foregoing, the
Applicable Rate shall be determined as of the end of each fiscal quarter of the
Company based upon the Borrowing Base Certificate that is delivered from time to
time pursuant to Section 5.01(g), with any changes to the Applicable Rate
resulting from changes in the Average Availability to be effective on the first
day of the first month following delivery of such Borrowing Base Certificate;
provided that
the Average Availability shall be deemed to be in Category 3 (A) at any time
that any Event of Default has occurred and is continuing (other than an Event of
Default arising from the failure to deliver any Borrowing Base Certificate) or
(B) if the Company fails to deliver any Borrowing Base Certificate that is
required to be delivered pursuant to Section 5.01(g), during the period from the
expiration of the time for delivery thereof until five days after each such
Borrowing Base Certificate 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, interest due under this
Agreement shall be immediately recalculated at such higher rate for any such
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 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.

     

     

    
      
         

      

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

     

    “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 Revolving
Commitment.

     

    “Available Revolving
Commitment” means, at any time, the Revolving Commitment then in effect
minus
the Revolving Exposure of all Revolving Lenders at such time.

     

    “BA Drawing” means
B/As accepted and purchased, and any BA Equivalent Loan made in lieu of such
acceptance and purchase, on the same date and as to which a single Contract
Period is in effect.

     

    “BA Equivalent Loan”
has the meaning assigned to such term in Section 2.21(j).

     

    “Bankers’ Acceptance”
and “B/A” means
a bill of exchange, including a depository bill issued in accordance with the
Depository Bills and Notes Act (Canada), denominated in Canadian Dollars, drawn
by the Canadian Borrower and accepted by a Canadian Lender (the foregoing to
include a Discount Note except where the context otherwise
requires).

     

    “Banking Services”
means each and any of the following bank services provided at any time 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, including, without limitation, liabilities arising in respect of
guarantees and indemnifications in favor of steamship lines or other carriers of
Inventory.  For the avoidance of doubt, the Open Account Obligations
do not constitute Banking Services Obligations.

     

    “Banking Services
Reserves” means all Reserves which the Joint Collateral Agents from time
to time establish, in their Permitted Discretion, for Banking Services then
provided or outstanding; provided that any
such Reserves shall be net of any cash securing the Banking
Services.

     

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

     

    “Bonds” has the
meaning assigned to such term in Section 8.01.

     

     

    
      
         

      

      
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    “Borrower” or “Borrowers” means,
individually and collectively as the context may require, the Company, Jones
Apparel USA, Jones Holdings, Jones Retail, Nine West Footwear, Energie Knitwear,
Jones Investment, Jones Jeanswear, L.E.I., Nine West Development, Victoria and
the Canadian Borrower.

     

    “Borrower
Representative” means the Company, in its capacity as contractual
representative of the Borrowers pursuant to Article XI.

     

    “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 and, in the case of BA Drawings, as to which a single Contract Period is
in effect, (b) a Swingline Loan and (c) a Protective Advance.

     

    “Borrowing Base”
means, individually and collectively as the context may require, the Aggregate
Borrowing Base, the U.S. Borrowing Base and the Canadian Borrowing
Base.

     

    “Borrowing Base
Certificate” means a certificate, signed and certified as accurate and
complete by a Financial Officer of the Borrower Representative, in substantially
the form of Exhibit
C or another form which is acceptable to the Joint Collateral Agents in
their Permitted Discretion, setting forth the Canadian Borrowing Base and the
U.S. Borrowing Base.

     

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

     

    “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 (a) when used in connection with a Eurodollar Loan or any
U.S. Letter of Credit denominated in an Alternative Currency, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in
deposits in the London interbank market in (i) dollars, in the case of
Eurodollar Loans, or (ii) such Alternative Currency, in the case of U.S. Letters
of Credit; (b) in the case of U.S. Letters of Credit denominated in Euros, the
term “Business Day” shall also exclude any day which is not a TARGET Day as
determined by the Administrative Agent; and (c) when used in connection with any
Canadian Loan or Canadian Letter of Credit, the term “Business Day” shall also
exclude any day in which commercial banks in Toronto, Canada are
authorized or required by law to remain closed.

     

    “Canadian Administrative
Agent” means JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity
as administrative agent for the Canadian Lenders hereunder, and its successors
in such capacity.

     

    “Canadian
Availability” means (a) the lesser of (x) the Canadian Sublimit and (y)
the sum of (i) the Canadian Borrowing Base plus
(ii) solely to the extent the total Canadian Revolving Exposure exceeds the
Canadian Borrowing Base, the U.S. Availability (if any, to the extent that it is
available), minus
(b) the total Canadian Revolving Exposure.

     

    “Canadian Borrower”
means Jones Apparel Group Canada, LP, an Ontario limited
partnership.

     

     

    
      
         

      

      
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    “Canadian Borrowing
Base” means, at any time (without duplication),

     

    the
sum of

     

    (a)           (i)
the product of (A) 85% multiplied by (B) the Eligible Accounts of the Canadian
Borrower at such time plus
(ii) the product of (A) 90% multiplied by (B) the Eligible Credit Card Accounts
Receivable of the Canadian Borrower at such time,

     

    plus

     

    (b)           the
lesser of (i) the product of 85% multiplied by the Net Orderly Liquidation Value
percentage in respect of Retail Inventory of the Canadian Borrower identified in
the most recent inventory appraisal ordered by the Joint Collateral Agents
multiplied by the Eligible Retail Inventory of the Canadian Borrower, valued at
the lower of cost (determined in accordance with the historical practices of the
Borrowers prior to the Effective Date) or market value, at such time and (ii)
the product of 75% multiplied by the Eligible Retail Inventory of the Canadian
Borrower, valued at the lower of cost (determined in accordance with the
historical practices of the Borrowers prior to the Effective Date) or market
value, at such time,

     

    plus

     

    (c)           the
lesser of (i) the product of 85% multiplied by the High Season or Low Season, as
applicable, Net Orderly Liquidation Value percentage in respect of Wholesale
Inventory of the Canadian Borrower identified in the most recent inventory
appraisal ordered by the Joint Collateral Agents multiplied by the Eligible
Wholesale Inventory of the Canadian Borrower, valued at the lower of cost
(determined in accordance with the historical practices of the Borrowers prior
to the Effective Date) or market value, at such time and (ii) the product of 75%
multiplied by the Eligible Wholesale Inventory of the Canadian Borrower, valued
at the lower of cost (determined in accordance with the historical practices of
the Borrowers prior to the Effective Date) or market value, at such
time,

     

    minus

     

    (d)           without
duplication, Reserves established by the Joint Collateral Agents in their
Permitted Discretion.

     

    The Joint Collateral Agents may, in
their Permitted Discretion, reduce the advance rates set forth above (and
subsequently increase the advance rates up to the levels set forth above),
adjust Reserves or reduce one or more of the other elements used in computing
the Canadian Borrowing Base (and subsequently increase such elements up to the
levels set forth above).  Any changes after the Effective Date in how
the Borrowers value their Inventory in accordance with their historical
practices prior to the Effective Date shall be subject to the approval of the
Joint Collateral Agents.

     

    “Canadian Collection Deposit
Account” has the meaning assigned to such term in the U.S. Security
Agreement.

     

     

    
      
         

      

      
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    “Canadian Commitment”
means, with respect to each Lender, the commitment, if any, of such Canadian
Lender to make Canadian Revolving Loans and to acquire participations in
Canadian Letters of Credit and Canadian Swingline Loans hereunder, expressed as
an amount representing the maximum possible aggregate amount of such Canadian
Lender’s Canadian 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 Canadian Lender pursuant to Section
9.04.  The initial amount of each Canadian Lender’s Canadian
Commitment is set forth on the Revolving Commitment
Schedule, or in the Assignment and Assumption pursuant to which such
Canadian Lender shall have assumed its Canadian Commitment, as applicable. The
Canadian Commitment is a sub-facility of the Revolving Commitment and is not in
addition to the Revolving Commitment.

     

    “Canadian Dollars” and
“Cdn.$” means
dollars in the lawful currency of Canada.

     

    “Canadian Funding
Office” means the office of JPMorgan Chase Bank, N.A., Toronto Branch
specified in Section 9.01 or such other office as may be specified from time to
time by the Administrative Agent or the Canadian Administrative Agent by written
notice to the Canadian Borrower and the Canadian Lenders.

     

    “Canadian Guarantee”
means, individually and collectively as the context may require, (a) the
Guarantee of Jones Canada GP, dated as of the date hereof, in favor of the
Administrative Agent (for the benefit of the Canadian Lender Parties) and (b)
the Guarantee of Jones Canada LP, dated as of the date hereof, in favor of the
Administrative Agent (for the benefit of the Canadian Lender Parties), in each
case as amended, restated or otherwise modified from time to time.

     

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

     

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

     

    “Canadian Lender
Parties” means, individually and collectively as the context may require,
the Canadian Administrative Agent, the Issuing Banks issuing Canadian Letters of
Credit and the Canadian Lenders.

     

    “Canadian Lenders”
means the Persons listed on the Revolving Commitment
Schedule as having a Canadian Commitment (provided that such
Person or an Affiliate of such Person also has a U.S. Commitment) and any other
Person that shall acquire a Canadian Commitment (provided that at such
time such Person or an Affiliate of such Person has, or is acquiring, a U.S.
Commitment pursuant to an Assignment and Assumption), other than any such Person
that ceases to be a Canadian Lender pursuant to an Assignment and
Assumption.  Each Canadian Lender shall be a financial institution
that is listed on Schedule I, II, or III of the Bank Act (Canada) or is not a
foreign bank for purposes of the Bank Act (Canada), and if such financial
institution is not resident in Canada and is not deemed to be resident in Canada
for purposes of the ITA, that financial institution deals at arm’s length with
each Canadian Borrower for purposes of the ITA.

     

     

    
      
         

      

      
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    “Canadian Letter of
Credit” means any Letter of Credit or similar instrument (including a
bank guarantee) acceptable to the applicable Issuing Bank issued hereunder for
the purpose of providing credit support for the Canadian Borrower.

     

    “Canadian Loan
Documents” means, individually and collectively as the context may
require, the Canadian Guarantee, the Canadian Security Agreement and all other
agreements, instruments and certificates delivered, from time to time in
connection therewith, in each case as amended, restated or otherwise modified
from time to time.

     

    “Canadian Loan
Parties” means, individually and collectively as the context may require,
Jones Canada GP, Jones Canada LP, the Canadian Borrower and its Subsidiaries,
and any other Person who becomes a party to a guarantee that guarantees the
payment of, or a security agreement that secures the repayment of, the Canadian
Obligations, in each case pursuant to Section 5.14(c), together with their
successors and assigns.

     

    “Canadian Loans”
means, individually and collectively as the context may require, the Canadian
Revolving Loans, the Canadian Swingline Loans and the Canadian Protective
Advances.

     

    “Canadian Obligations”
means all unpaid principal of and accrued and unpaid interest on the Canadian
Loans, all Canadian LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Canadian Loan Parties
to the Canadian Lenders or to any Canadian Lender, the Administrative Agent, the
Canadian Administrative Agent, any Issuing Bank with respect to Canadian Letters
of Credit or any indemnified party arising under the Loan
Documents.

     

    “Canadian Pension
Plans” means each pension plan required to be registered under Canadian
federal or provincial law that is maintained or contributed to by a Canadian
Loan Party for its employees or former employees, but does not include the
Canada Pension Plan or the Quebec Pension Plan as maintained by the Government
of Canada or the Province of Quebec, respectively.

     

    “Canadian Prime Rate”
means on any day, the greater of (a) the annual rate of interest announced from
time to time by the Canadian Administrative Agent as being its reference rate
then in effect for determining interest rates on Canadian Dollar-denominated
commercial loans made by it in Canada and (b) the CDOR Rate for a one-month term
in effect from time to time plus
1% per annum.

     

    “Canadian Prime Rate
Loan” means a Loan denominated in Canadian Dollars the rate of interest
applicable to which is based upon the Canadian Prime Rate.

     

    “Canadian Protective
Advance” has the meaning assigned to such term in
Section 2.04(a).

     

     

    
      
         

      

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

     

    “Canadian Revolving
Loan” means a Revolving Loan made to the Canadian Borrower.

     

    “Canadian Security
Agreement” means, individually and collectively as the context may
require, (a) the General Security Agreement, dated as of the date hereof, of the
Canadian Borrower in favor of the Administrative Agent (for the benefit of the
Canadian Lender Parties), (b) the General Security Agreement, dated as of the
date hereof, of Jones Canada GP in favor of the Administrative Agent (for the
benefit of the Canadian Lender Parties), (c) the General Security Agreement,
dated as of the date hereof, of Jones Canada LP in favor of the Administrative
Agent (for the benefit of the Canadian Lender Parties), (d) the Securities
Pledge Agreement, dated as of the date hereof, between Jones Canada LP and the
Administrative Agent (for the benefit of the Canadian Lender Parties), (e) the
Securities Pledge Agreement, dated as of the date hereof, of Jones Canada LP in
favor of the Administrative Agent (for the benefit of the U.S. Lender Parties)
and (f) the Deed of Hypothec, dated as of the date hereof, between the Canadian
Borrower and the Administrative Agent (for the benefit of the Canadian Lender
Parties), and any other pledge or security agreement entered into, after the
Effective Date, by any Canadian Loan Party pursuant to the terms of this
Agreement or any other Loan Document, including Section 5.14(c), as the same may
be amended, restated or otherwise modified from time to time.

     

    “Canadian
Secured Obligations” means all Canadian Obligations, together with all
(a) Banking Services Obligations of the Canadian Loan Parties; (b) Swap
Obligations of the Canadian Loan Parties owing to one or more Canadian Lenders
or their respective Affiliates; provided
that at or prior to the time that any transaction relating to such Swap
Obligation is executed, the Canadian Lender or Affiliate of a Canadian Lender
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 Canadian Secured Obligation entitled to the benefits of the
Collateral Documents in favor of the Canadian Lender Parties; and (c) the Open
Account Obligations of Open Account Obligors that are Canadian Loan
Parties.

     

    “Canadian
Sublimit” means $25,000,000, as such sublimit may be reduced or
terminated in accordance with Section 2.09.

     

    “Canadian Swingline
Lender” means JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity
as lender of Canadian Swingline Loans hereunder, and its successors and assigns
in such capacity.

     

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

     

     

    
      
         

      

      
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    “Canadian U.S. Borrowing Base
Utilization” means the excess of (a) the total Canadian Revolving
Exposure of all the Canadian Lenders minus
(b) the Canadian Borrowing Base.

     

    “Capital Expenditures”
means, without duplication, any expenditure for any purchase or other
acquisition of any asset which would be set forth in a consolidated statement of
cash flows of the Company 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.

     

    “CDOR Rate” means on
any day, with respect to a particular term as specified herein, the annual rate
of discount or interest which is the arithmetic average of the discount rates
for such term applicable to Canadian Dollar bankers’ acceptances identified as
such on the Reuters Screen CDOR Page at approximately 10:00 a.m. on such day, or
if such day is not a Business Day, then on the immediately preceding Business
Day (as adjusted by the Canadian Administrative Agent after 10:00 a.m. to
reflect any error in any posted rate or in the posted average annual rate). If
such rate does not appear on the Reuters Screen CDOR Page as provided in
preceding sentence, the CDOR Rate on any day shall be calculated as the
arithmetic average of the annual discount rates for such term applicable to
Canadian Dollar bankers’ acceptances of, and as quoted by, the Schedule I
Reference Banks, as of 10:00 a.m. on that day, or if that day is not a Business
Day, then on the immediately preceding Business Day.

     

    “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 the Company; (b) occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Company by Persons
who were neither (i) nominated by the board of directors of the Company nor (ii)
appointed by directors so nominated; (c) cessation of ownership (directly or
indirectly) by the Company, free and clear of all Liens or other encumbrances,
of 100% of the outstanding voting Equity Interests of the other Borrowers or any
other Loan Party on a fully diluted basis; or (d) the occurrence under the (i)
Indenture or (ii) any other indenture or other instrument to which the Company
or any other Loan Party is a party evidencing any debt in excess of $50,000,000,
of any “change in control” or similar event obligating the Company or any other
Loan Party to repurchase, redeem or repay all or any part of the debt or Equity
Interests provided for therein.

     

    “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 any 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.

     

     

    
      
         

      

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

     

    “Citibank Open Account
Agent” means Citibank, N.A. and any of its successors and assigns that is
a Lender or Affiliate thereof in its capacity as agent for each Citibank Open
Account Bank.

     

    “Citibank Open Account
Agreement” means that certain Amended and Restated Open Account Paying
Agency Agreement, dated as of February 5, 2009, between Citibank, N.A., the
Company and the other Open Account Obligors that are parties thereto, as any of
the foregoing may be amended, modified, restated or replaced from time to time
in accordance with Section 6.11.

     

    “Citibank Open Account
Bank” means Citibank, N.A. and any Lender or Affiliate thereof that may
become a party to the Citibank Open Account Agreement.

     

    “Citibank Open Account
Cap” means,
with respect to the Citibank Open Account Agreement at any time such Agreement
is in effect or any Citibank Open Account Obligations are outstanding, (a) until
the date that is 90 days after the Effective Date, $40,000,000, and (b) on any
date thereafter, such lesser amount as may be specified in a written notice by
the Citibank Open Account Agent and the Company to the Administrative Agent;
provided
that, without the consent of the Company and the Administrative Agent, the
Citibank Open Account Agent may specify such lesser amount pursuant to
this clause (b) only once during the term of this Agreement.

     

    “Citibank Open Account
Obligations” means the “Payment Obligation”, as defined in Section 5 of
the Citibank Open Account Agreement, including without limitation, the
obligation of the applicable Open Account Obligors under the Citibank Open
Account Agreement to pay or reimburse the Citibank Open Account Agent and each
Citibank Open Account Bank for each (a) overadvance made pursuant to Section 4
(iii) of the Citibank Open Account Agreement or (b) “Vendor Financing” provided
for and as defined in Section 5 of the Citibank Open Account Agreement, together
with fees, interest and expenses accruing thereon or that are otherwise payable
with respect thereto.

     

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

     

    “Collateral” means any
and all personal/movable property owned, leased or operated by a Person covered
by the Collateral Documents and any and all other personal/movable property of
any Loan Party, now existing or hereafter acquired, that may at any time be or
become subject to a security interest, hypothec or Lien in favor of the
Administrative Agent, on behalf of the Lender Parties (to secure the U.S.
Secured Obligations) and the Canadian Lender Parties (to secure the Canadian
Secured Obligations), as the case may be.

     

     

    
      
         

      

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

     

    “Collateral Documents”
means, individually and collectively as the context may require, the Canadian
Security Agreement, each additional security and pledge agreement of a Canadian
Loan Party entered into pursuant to Section 5.14(c), the U.S. Security
Agreement, each Collateral Access Agreement, each Trademark Security Agreement,
each Credit Card Notification Agreement, each Deposit Account Control Agreement,
each Lock Box Agreement and each other document granting a Lien upon the
Collateral as security for payment of the Secured Obligations.

     

    “Collection Deposit
Account” has the meaning assigned to such term in the U.S. 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 Borrowers at
such time.  The Commercial LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total Commercial LC Exposure at
such time.

     

    “Commercial Letter of
Credit” means any Letter of Credit issued for the purpose of providing
the primary payment mechanism in connection with the purchase of any materials,
goods or services by a Borrower in the ordinary course of business of such
Borrower.

     

    “Company” means Jones
Apparel Group, Inc., a Pennsylvania corporation.

     

    “Compliance
Certificate” means a certificate, signed and certified as accurate and
complete by a Financial Officer of the Borrower Representative, in substantially
the form of Exhibit
D or another form which is mutually acceptable to the Joint Collateral
Agents and the Borrower Representative.

     

    “Contract Period”
means the term selected by the Canadian Borrower applicable to Bankers’
Acceptances in accordance with Section 2.21(b).

     

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

     

    “Credit Card Accounts
Receivable” means (a) any receivables due to any Borrower from a credit
card issuer in connection with purchases of Inventory of such Borrower on credit
cards issued by Visa, MasterCard, American Express, Discover and any other
credit card issuers or providers that are reasonably acceptable to the
Administrative Agent, and (b) debit cards and mall cards issued by issuers or
providers that are reasonably acceptable to the Administrative Agent, in each
case which have been earned by performance by such Borrower but not yet paid to
such Borrower by the credit card issuer or the credit card processor, as
applicable.

     

     

    
      
         

      

      
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    “Credit Card Notification
Agreements” means each Credit Card Notification Agreement, in form and
substance satisfactory to the Administrative Agent, executed by the Borrowers
and delivered to the Borrowers’ credit card providers, as the same may be
amended, restated or otherwise modified from time to time.

     

    “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.

     

    “Customer Credit Liability
Reserves” means, at any time, the sum of (a) 50% of the aggregate
remaining amount at such time of outstanding gift certificates and gift cards
sold by the Borrowers entitling the holder thereof to use all or a portion of
the certificate or gift card to pay all or a portion of the purchase price of
Inventory and (b) 100% of the aggregate amount at such time of outstanding
customer deposits and merchandise credits entitling the holder thereof to use
all or a portion of such deposit or credit to pay all or a portion of the
purchase price of Inventory.

     

    “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 reasonably 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 Business Days of the date required to be
funded by it hereunder, (b) notified any Borrower, the Administrative Agent, any
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 five Business Days after request by
the Administrative Agent, to confirm that it will comply with the terms of this
Agreement relating to its obligations to fund prospective Loans and
participations in then outstanding Letters of Credit and Swingline Loans; provided that any
such Lender shall cease to be a Defaulting Lender under this clause (c) upon
receipt of such confirmation by the Administrative Agent, (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 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,
interim receiver, receiver and manager, administrator, liquidator, conservator,
trustee 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, interim receiver,
receiver and manager,  liquidator, conservator, administrator, trustee
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; unless, in the case of any Lender referred to in this clause (e),
the Company, the Administrative Agent, the Swingline Lender and each Issuing
Lender shall determine in their sole and absolute discretion that such Lender
intends and has the ability, and has all approvals required to enable it, to
continue to perform its obligations as a Lender hereunder in accordance with all
of the terms of this Agreement.

     

     

    
      
         

      

      
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    “Deposit Account Control
Agreement” has the meaning assigned to such term in the U.S. Security
Agreement.

     

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

     

    “Discount Note” means
a non-interest bearing promissory note denominated in Canadian Dollars,
substantially in the form of Exhibit H, issued by the Canadian Borrower to a Non
BA Lender to evidence a BA Equivalent Loan.

     

    “Discount Proceeds”
means for any Bankers’ Acceptance issued hereunder, an amount calculated on the
applicable date of Borrowing or conversion or continuation by multiplying (a)
the face amount of the Bankers’ Acceptance by (b) the quotient obtained by
dividing (i) one by (ii) the sum of one plus
the product of (A) the Discount Rate applicable to the Bankers’ Acceptance and
(B) a fraction, the numerator of which is the applicable Contract Period and the
denominator of which is 365, with the quotient being rounded up or down to the
fifth decimal place and .00005 being rounded up.

     

    “Discount Rate” means
with respect to an issue of Bankers’ Acceptances with the same maturity date,
(a) for a Revolving Lender which is a Schedule I Lender, the CDOR Rate for the
appropriate term, and (b) for a Revolving Lender which is not a Schedule I
Lender, the arithmetic average (rounded upwards to the nearest multiple of
0.01%) of the actual discount rates (expressed as annual rates) for B/As for
such term accepted by three Schedule I banks (that are acceptable to the
Canadian Administrative Agent) in accordance with their normal practices at or
about 10:00 a.m. (Toronto time) on the date of issuance but not to exceed the
actual rate of discount applicable to B/As established pursuant to clause (a)
for the same B/A issue plus
0.1% per annum.

     

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

     

    “Documentation Agents”
means, individually and collectively as the context may require, Bank of
America, N.A., Wachovia Bank, National Association and SunTrust Bank, in their
respective capacities as documentation agents hereunder, and each of their
successors and assigns in such capacity.

     

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

     

    “Dollar Amount” means
(a) with regard to any Obligation or calculation denominated in dollars, the
amount thereof, and (b) with regard to any Obligation or calculation denominated
in an Alternative Currency, the amount of dollars which is equivalent to the sum
of (i) the amount so expressed in an Alternative Currency at the applicable
quoted spot rate on the appropriate page of the Reuter’s Screen as determined by
the Administrative Agent at the relevant time; plus
(ii) any amounts owed by the Borrowers pursuant to Section 2.06(f).

     

     

    
      
         

      

      
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    “Domestic Subsidiary”
means each Subsidiary of a Borrower that is organized under the laws of the
United States, any State of the United States or the District of
Columbia.

     

    “Dominion Period”
means any period (a) during which any Default under paragraph (a) of Article VII
or any Event of Default has occurred and is continuing or (b) that constitutes a
Level 2 Minimum Availability Period; provided that if the
applicable circumstances described in clause (a) or (b)  shall cease
to exist the Borrower may, not more than twice during each period of 12
consecutive months, request that the Administrative Agent discontinue the
applicable Dominion Period, and the Administrative Agent will promptly comply
with such request and will provide notification of such discontinuance to the
Borrower’s credit card processors.

     

    “Draft” means (a) a
blank bill of exchange, within the meaning of the Bills of Exchange Act
(Canada), drawn by the Canadian Borrower on a Canadian Lender, denominated in
Canadian Dollars and bearing such distinguishing letters and numbers as such
Canadian Lender may determine, but which at such time, except as otherwise
provided herein, has not been completed or accepted by such Canadian Lender, or
(b) a depository bill within the meaning of the Depository Bills and Notes Act
(Canada); provided, however, that the
Canadian Administrative Agent may require such Canadian Lender to use a general
form of Bankers’ Acceptance satisfactory to the Canadian Borrower and such
Canadian Lender, each acting reasonably, provided by the Canadian Administrative
Agent for such purpose in place of each Canadian Lender’s own form.

     

    “EBITDAR” means, for
any period, Net Income for such period plus
without duplication and to the extent deducted in determining Net Income for
such period, the sum of (a) Interest Expense for such period, (b) income tax
expense for such period, (c) all amounts attributable to depreciation and
amortization expense for such period, (d) any non-cash charges for such period
(but excluding any non-cash charge in respect of an item that was included in
Net Income in a prior period), (e) cash restructuring charges, cash charges in
connection with store closures and other non-recurring cash charges, in each
case related to cost reduction and brand exiting related activities in an
aggregate amount not to exceed $18,000,000 during the term of this Agreement and
(f) Rentals, all calculated for the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP.

     

    “Effective Date” means
the date on which the conditions specified in Section 4.01, with respect to the
each of the U.S. Commitment and the Canadian Commitment, are satisfied as
provided in Section 4.01 or waived in accordance with Section 9.02.

     

    “Eligible Accounts”
means, at any time, the Accounts of a Borrower which the Joint Collateral Agents
determine, in their Permitted Discretion, are eligible as the basis for the (i)
extension of Revolving Loans and Swingline Loans and (ii) the issuance of
Letters of Credit.  Without limiting the Joint Collateral Agents’
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 (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be);

     

     

    
      
         

      

      
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    (b)           which
is subject to any Lien other than (i) a Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be) or (ii) a Permitted Encumbrance which does not have priority
over the Lien in favor of the Administrative Agent (for the benefit of the
Lender Parties or the Canadian Lender Parties, as the case may be);

     

    (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; provided that (x) no
Accounts owing by Specified Customers shall be ineligible solely as a result of
this paragraph (c) except to the extent such Accounts are unpaid more than 120
days after the date of the original invoice therefor and (y) the availability
represented in the Borrowing Base by such Accounts owing by Specified Customers
that are unpaid more than 90 days but less than 120 days after the date of the
original invoice therefor shall not exceed $15,000,000 at any time, or (ii) has
been written off the books of the Borrower 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 under this Agreement
(other than as a result of the operation of paragraph (e) below);

     

    (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 all the Borrowers exceeds
20% of the aggregate amount of Eligible Accounts of all the Borrowers; provided that (i) no
Accounts owing by Macy’s, Inc. or its Affiliates shall be ineligible solely as a
result of this paragraph (e) except to the extent the aggregate amount of
Accounts owing from Macy’s, Inc. and its Affiliates to all the Borrowers exceeds
30% (or, in the case of the Accounts owing from Macy’s, Inc. and its Affiliates
and Wal-Mart Stores, Inc. and its Affiliates to all the Borrowers exceeds 50%)
of the aggregate amount of Eligible Accounts of all the Borrowers; and (ii) no
Accounts owing by Wal-Mart Stores, Inc. or its Affiliates shall be ineligible
solely as a result of this paragraph (e) except to the extent the aggregate
amount of Accounts owing from Wal-Mart Stores, Inc. and its Affiliates to all
the Borrowers exceeds 30% (or, in the case of the Accounts owing from Macy’s,
Inc. and its Affiliates and Wal-Mart Stores, Inc. and its Affiliates to all the
Borrowers exceeds 50%) of the aggregate amount of Eligible Accounts of all the
Borrowers;

     

    (f)           with
respect to which any (i) covenant has been breached or
(ii)  representation or warranty is not true in all material respects,
in each case to the extent contained in this Agreement, the U.S. Security
Agreement or the Canadian Security Agreement; provided that each
such representation and warranty shall be true and correct in all respects to
the extent it is already qualified by a materiality standard;

     

    (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 reasonably satisfactory to the Administrative Agent which has been
sent to the Account Debtor, (iii) represents a progress billing, (iv) is
contingent upon the Borrower’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
or (vi) relates to payments of interest;

     

     

    
      
         

      

      
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    (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 Borrower 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, interim receiver, custodian, trustee,
monitor, administrator, sequestrator or liquidator of its assets, (ii) has had
possession of all or a material part of its property taken by any receiver,
interim receiver, custodian, trustee, monitor, administrator, sequestrator 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,
provincial, territorial 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 substantially all of its
assets;

     

    (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 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;

     

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

     

    (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 which is
in the possession of the Administrative Agent,  (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., the “Assignment of Claims
Act”), has been complied with to the Administrative Agent’s satisfaction,
or (iii) the federal government of Canada, unless the Financial Administration
Act (Canada), as amended, has been complied with to the Administrative Agent’s
satisfaction 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; provided that
Accounts in an aggregate amount of up to $7,500,000 that would otherwise be
ineligible solely as a result of non-compliance with the requirements of the
Assignment of Claims Act shall nevertheless be eligible for purposes of clause
(ii);

     

     

    
      
         

      

      
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    (o)           which
is owed by any Affiliate, employee, officer, director, agent or stockholder of
any Loan Party;

     

    (p)           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;

     

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

     

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

     

    (s)           which
is owed by an Account Debtor located in the States of New Jersey, Minnesota,
Indiana, West Virginia or any other State which requires filing of a “Notice of
Business Activities Report” or other similar report in order to permit the
Borrower to which such Account is owed to seek judicial enforcement in such
jurisdiction of payment of such Account, unless such Borrower has qualified to
do business in New Jersey, Minnesota, Indiana, West Virginia or such other
States, has filed a Notice of Business Activities Report or similar report with
the appropriate Governmental Authority in each such State and the foregoing is
duly effective, or is exempt from such filing requirement;

     

    (t)           with
respect to which such Borrower 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
Borrower created a new receivable for the unpaid portion of such
Account;

     

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

     

    (v)           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 Borrower has or has had an
ownership interest in such goods, or which indicates any party other than such
Borrower as payee or remittance party;

     

    (w)           which
is a Credit Card Accounts Receivable or Licensee Receivable; or

     

    (x)           which
the Joint Collateral Agents, in their Permitted Discretion, determine may not be
paid by reason of the Account Debtor’s inability to pay or which the Joint
Collateral Agents in their Permitted Discretion otherwise determine is
unacceptable for any reason whatsoever.

     

     

    
      
         

      

      
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    In the event that a Financial Officer
has knowledge that any Account Debtor with respect to an Eligible Account ceases
to comply with the requirements of paragraphs (j), (k) or (l), such Borrower or
the Borrower Representative 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 Joint Collateral Agents’ 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 such Borrower 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 such
Borrower to reduce the amount of such Account.

     

    “Eligible Credit Card
Accounts Receivable” means, at any time, the Credit Card Accounts
Receivable of a Borrower which the Joint Collateral Agents determine, in their
Permitted Discretion, are eligible as the basis for the (i) extension of
Revolving Loans and Swingline Loans and (ii) the issuance of Letters of
Credit.  Without limiting the Joint Collateral Agents’ discretion
provided herein, Eligible Credit Card Accounts Receivable shall not include any
Credit Card Accounts Receivable:

     

    (a)           which
is not earned or does not represent the bona fide amount due to a Borrower from
a credit card processor and/or credit card issuer that originated in the
ordinary course of business of the applicable Borrower;

     

    (b)           which
is not owned by a Borrower;

     

    (c)           in
which the payee of such Credit Card Accounts Receivable is a Person other than a
Borrower;

     

    (d)           which  does
not constitute an Account (as defined in the UCC or the PPSA, as
applicable);

     

    (e)           which
has been outstanding more than five Business Days;

     

    (f)           with
respect to which the applicable credit card issuer or credit card processor has
(i) applied for, suffered, or consented to the appointment of any receiver,
interim receiver, custodian, trustee, monitor, administrator, sequestrator or
liquidator of its assets, (ii) has had possession of all or a material part of
its property taken by any receiver, interim receiver, custodian, trustee,
monitor, administrator, sequestrator 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, provincial, territorial 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;

     

    (g)           which
is not a valid, legally enforceable obligation of the applicable credit card
issuer with respect thereto;

     

     

    
      
         

      

      
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    (h)           which
is not subject to a first priority perfected security interest in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be);

     

    (i)           which
is subject to any Lien other than (i) a Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be) and (ii) any Permitted Encumbrances contemplated by the
processor agreements and for which appropriate Reserves (as determined by the
Joint Collateral Agents in their Permitted Discretion) have been
established;

     

    (j)           with
respect to which any (i) covenant has been breached or (ii) representation or
warranty is not true in all material respects, in each case to the extent
contained in this Agreement, the U.S. Security Agreement, the Canadian Security
Agreement or in the credit card agreements relating to such Credit Card Accounts
Receivable; provided that each
such representation and warranty shall be true and correct in all respects to
the extent already qualified by a materiality standard;

     

    (k)           which
is subject to risk of set-off, recoupment, non-collection or not being processed
due to unpaid and/or accrued credit card processor fee balances, to the extent
of the lesser of the balance of such Credit Card Accounts Receivable or unpaid
credit card processor fees;

     

    (l)           which
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;

     

    (m)           which
the Joint Collateral Agents in their Permitted Discretion determine may not be
paid by reason of the applicable credit card processor’s or credit card issuer’s
inability to pay or which the Joint Collateral Agents in their Permitted
Discretion otherwise determine is unacceptable for any reason
whatsoever;

     

    (n)           which
represents a deposit or partial payment in connection with the purchase of
Inventory of such Borrower;

     

    (o)           which
is not subject to a Credit Card Notification Agreement; or

     

    (p)           which
does not meet such other usual and customary eligibility criteria for Credit
Card Accounts Receivable as the Joint Collateral Agents, in their Permitted
Discretion, may determine from time to time in their Permitted
Discretion.

     

    In the event that a Financial Officer
has knowledge that any credit card issuer or processor with respect to Eligible
Credit Card Accounts Receivable ceases to comply with the requirements of clause
(f), such Borrower or the Borrower Representative 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 Credit Card Accounts Receivable, the face
amount of a Credit Card Accounts Receivable may, in the Joint Collateral Agents’
permitted discretion, 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 Borrower to
reduce the amount of such Credit Card Accounts Receivable.

     

     

    
      
         

      

      
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    “Eligible Domestic Licensee
Receivables” means, at any time, that portion of Eligible Licensee
Receivables owed by any Licensee that is organized under the applicable laws of
the U.S., any State of the U.S., Canada or any Province of Canada.

     

    “Eligible Foreign
Accounts” means, at any time, the Accounts of a U.S. Borrower which the
Joint Collateral Agents determine, in their Permitted Discretion, are eligible
as the basis for the (i) extension of Revolving Loans and Swingline Loans and
(ii) the issuance of Letters of Credit.  Without limiting the Joint
Collateral Agents’ discretion provided herein, Eligible Foreign Accounts shall
not include any Account:

     

    (a)           which
does not satisfy all of the criteria set forth in paragraphs (a) through (k),
(o) through (r) and (t) through (x) of the definition of “Eligible
Accounts”;

     

    (b)           which
is owed by an Account Debtor which is either located in, or organized under the
laws of, any country (other than the U.S., any State of the U.S., Canada or any
Province of Canada) that is not acceptable to the Joint Collateral Agents in
their Permitted Discretion (it being agreed that, for purposes of this paragraph
(b), as of the Effective Date the United Kingdom, France, Ireland, the
Netherlands, Norway, Spain, Germany and Switzerland are acceptable to the Joint
Collateral Agents; it being further agreed that the Joint Collateral Agents, in
their Permitted Discretion, shall have the right to remove any such countries or
add additional countries that are acceptable to them);

     

    (c)           which
is owed in any currency that is not acceptable to the Joint Collateral Agents in
their Permitted Discretion (dollars and Canadian Dollars being acceptable for
purposes of this paragraph (c));

     

    (d)           which
is owed by the government (or any department, agency, public corporation, or
instrumentality thereof) of any country, other than the U.S. and Canada, unless
such Account is backed by a Letter of Credit acceptable to the Administrative
Agent which is in the possession of the Administrative Agent 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;

     

    (e)           which
does not comply in all material respects with all applicable laws and
regulations, whether Federal, state or local; or

     

    (f)           which
the Joint Collateral Agents, in their Permitted Discretion, determine may not be
paid by reason of the Account Debtor’s inability to pay or which the Joint
Collateral Agents in their Permitted Discretion otherwise determine is
unacceptable for any reason whatsoever.

     

    In the
event that a Financial Officer has knowledge that any Account Debtor with
respect to an Eligible Foreign Account ceases to comply with the requirements of
paragraphs (j) or (k) of the definition of “Eligible Accounts” (as incorporated
pursuant to paragraph (a)) or paragraph (b), such U.S. Borrower or the Borrower
Representative 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 Foreign
Account, the face amount of an Account may, in the Joint Collateral Agents’
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 such U.S. Borrower 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 such U.S. Borrower to reduce the amount of such Account.

     

     

    
      
         

      

      
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    “Eligible Foreign Licensee
Receivables” means, at any time, that portion of Eligible Licensee
Receivables owed by any Licensee that is organized under the laws of any country
(other than the U.S., any State of the U.S., Canada or any Province of Canada)
which the Joint Collateral Agents determine, in their Permitted Discretion, are
acceptable as the basis for (i) extensions of Revolving Loans and Swingline
Loans and (ii) the issuance of Letters of Credit.

     

    “Eligible GRI
Accounts” means, at any time, the Accounts of a U.S. Borrower in which
the Account Debtor is GRI or any of its subsidiaries and the Joint Collateral
Agents determine, in their Permitted Discretion, are acceptable as the basis for
(i) extensions of Revolving Loans and Swingline Loans and (ii) the issuance of
Letters of Credit.  Without limiting the Joint Collateral Agents’
discretion provided herein, Eligible GRI Accounts shall not include any
Account:

     

    (a)           which
does not satisfy all of the criteria set forth in paragraphs (a) through(c), (e)
through (k), (p) through (x) of the definition of “Eligible
Accounts”;

     

    (b)           which
is owed in any currency that is not acceptable to the Joint Collateral Agents in
their Permitted Discretion (U.S. and Canadian Dollars being acceptable for
purposes of this paragraph (b));

     

    (c)           which
does not comply in all material respects of all applicable laws and regulations,
whether Federal, state or local;

     

    (d)           which
is an Account of a subsidiary of GRI unless the Joint Collateral Agents have
approved such Account in their sole and absolute discretion; or

     

    (e)           which
the Joint Collateral Agents, in their Permitted Discretion, determine may not be
paid by reason of the Account Debtor’s inability to pay or which the Joint
Collateral Agents in their Permitted Discretion otherwise determine is
unacceptable for any reason whatsoever.

     

    In the event that a Financial Officer
has knowledge that GRI ceases to comply with the requirements of paragraphs (j)
or (k) of the definition of “Eligible Accounts” (as incorporated pursuant to
paragraph (a)), such U.S. Borrower or the Borrower Representative 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 GRI Account, the face amount of an Account
may, in the Joint Collateral Agents’ 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 such U.S. Borrower may be obligated to
rebate to GRI 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 such U.S. Borrower to reduce the amount of such
Account.

     

     

    
      
         

      

      
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    Notwithstanding the foregoing, none of
the Accounts of GRI shall constitute Eligible GRI Accounts at any time that GRI
is a Subsidiary.

     

    “Eligible GRI Licensee
Receivables” means, at any time, that portion of the Eligible Licensee
Receivables owed by GRI or any of its subsidiaries that the Joint Collateral
Agents determine, in their Permitted Discretion, are acceptable.

     

    “Eligible Inventory”
means, at any time, the Inventory of a Borrower which the Joint Collateral
Agents determine, in their Permitted Discretion, are eligible as the basis for
the (i) extension of Revolving Loans and Swingline Loans and (ii) the issuance
of Letters of Credit.  Without limiting the Joint Collateral Agents’
discretion provided 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 (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be);

     

    (b)           which
is shipped by a Borrower on F.O.B. destination terms; provided
that up to $2,000,000 at any one time of
Inventory that is shipped on such terms may be included as Eligible
Inventory;

     

    (c)           which
is subject to any Lien other than (i) a Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be)  and (ii) a Permitted Encumbrance which does not have
priority over the Lien in favor of the Administrative Agent (for the benefit of
the Lender Parties or the Canadian Lender Parties, as the case may
be);

     

    (d)           which
is, in the Joint Collateral Agents’ Permitted Discretion, slow moving, obsolete,
unmerchantable, 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;

     

    (e)           with
respect to which any (i) covenant has been breached or (ii) representation or
warranty is not true and correct in all material respects, in each case
contained in this Agreement, the U.S. Security Agreement or the Canadian
Security Agreement; provided that each
such representation and warranty shall be true and correct in all respects to
the extent it is already qualified by a materiality standard;

     

    (f)           in
which any Person other than such Borrower 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;

     

     

    
      
         

      

      
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    (g)           which
is not finished goods or which constitutes work-in-process, raw materials, spare
or replacement parts, subassemblies, packaging and shipping material,
manufacturing supplies, samples, prototypes, displays or display items,
bill-and-hold goods, goods that are returned or marked for return (other than
Wholesale Inventory that otherwise satisfies the requirements for being Eligible
Inventory and subject to the imposition of Reserves with respect thereto (as
determined by the Joint Collateral Agents in their Permitted Discretion)),
repossessed goods, damaged goods, goods held on consignment, or goods which are
not of a type held for sale in the ordinary course of the Borrowers’
business;

     

    (h)           which
is not located in
the U.S. or Canada (only with respect to the Inventory owned by the Canadian
Borrower) or is in transit with a common carrier from vendors and suppliers;
provided
that, up to the lesser of (x) $200,000,000 and (y) 33% of the
total Revolving Commitment of Inventory in transit from vendors and suppliers
may be included as eligible pursuant to this paragraph (h) so long as (i)
the Administrative Agent shall have received (1) access, during normal business
hours and at other times reasonably requested by the Administrative Agent, to a
true and correct copy of the bill of lading and other shipping documents for
such Inventory, (2) evidence of satisfactory casualty insurance naming the
Administrative Agent as loss payee and otherwise covering such risks as the
Administrative Agent may reasonably request, and (3) if the bill of lading is
(A) non-negotiable and the inventory is in transit within the United States or
in transit to the United States, a duly executed Collateral Access Agreement
from the applicable customs broker for such Inventory, or (B) negotiable,
confirmation that the bill is issued in the name of a Borrower and consigned to
the order of the Administrative Agent, and an acceptable agreement has been
executed with such Borrower’s customs broker, in which the customs broker agrees
that it holds the negotiable bill as agent for the Administrative Agent and has
granted the Administrative Agent access to the Inventory, (ii) the common
carrier is not an Affiliate of the applicable vendor or supplier and (iii) the
customs broker is not an Affiliate of any Borrower;

     

    (i)           which
is located in any (a) warehouse, cross-docking facility, distribution center,
regional distribution center or depot or (b) any retail store located in a
jurisdiction providing for a common law or statutory landlord’s lien on the
personal property of tenants, which lien would be prior or superior to that of
the Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be), in each case leased by the applicable
Borrower unless (i) the lessor has delivered to the Administrative Agent a
Collateral Access Agreement or (ii) a Rent Reserve has been established by the
Joint Collateral Agents in their Permitted Discretion (provided that in the
case of any location described in clause (a) above, (x) unless located in a
jurisdiction providing for a common law or statutory landlord’s lien on the
personal property of tenants, such Rent Reserve may be reduced if a Collateral
Access Agreement has subsequently been received by the Administrative Agent) and
(y) unless located in a jurisdiction providing for a common law or statutory
landlord’s lien on the personal property of tenants, no Rent Reserve shall be
established prior to the sixty-first day following the Effective
Date;

     

     

    
      
         

      

      
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    (j)           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 (other
than bills of lading to the extent permitted pursuant to paragraph (h) above),
unless (i) such warehouseman or bailee has delivered to the Administrative Agent
a Collateral Access Agreement and such other documentation as the Administrative
Agent may require in its Permitted Discretion or (ii) an appropriate Reserve has
been established by the Joint Collateral Agents in their Permitted Discretion
(which Rent Reserve may be reduced if a Collateral Access Agreement has
subsequently been received by the Administrative Agent);

     

    (k)           which
is at a third party location or outside processor, or is in-transit to or from
said third party location or outside processor (other than Inventory permitted
to be included under paragraph (h) above);

     

    (l)           which
is a discontinued product or component thereof unless and to the extent that the
salability thereof is not adversely impacted;

     

    (m)           which
is the subject of a consignment by such Borrower as consignor; provided that up to
$25,000,000 of Inventory that is consigned to a third Person shall be Eligible
Inventory if (i) it satisfies the other requirements for being Eligible
Inventory, (ii) each applicable consignee has delivered to the
Administrative Agent a Collateral Access Agreement and such other documentation
as the Administrative Agent may require and (iii) such consigned Inventory
is, in the reasonable determination of the Joint Collateral Agents, identifiable
and traceable.

     

    (n)           which
contains or bears any intellectual property rights licensed to such Borrower
unless the Administrative Agent is satisfied that it may sell or otherwise
dispose of such Inventory without (i) infringing the rights of such licensor,
(ii) violating any contract with such licensor, or (iii) 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 such Borrower
(unless such Inventory is reflected in a report to the Administrative Agent as
“in transit” Inventory);

     

    (p)           which
does not conform in all material respects to all standards imposed by any
Governmental Authority;

     

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

     

    (r)           which
the Joint Collateral Agents, in their Permitted Discretion, otherwise determine
is unacceptable for any reason whatsoever including, without limitation, to
address potential rights of vendors with respect to in transit
Inventory;

     

     

    
      
         

      

      
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    provided that in
determining the value of the Eligible Inventory, such value shall be reduced by,
without duplication, any amounts representing (a) Vendor Rebates; (b) costs
included in Inventory relating to advertising; (c) the shrink reserve; (d) the
unreconciled discrepancy between the general inventory ledger and the perpetual
Inventory ledger, to the extent the general Inventory ledger reflects less
Inventory than the perpetual inventory ledger; and (e) a reserve for Inventory
which is designated or demanded to be returned to or retained by the applicable
vendor or which is recognized as damaged or off quality by the applicable
Borrower.

     

    In the event that a Financial Officer
has knowledge that Inventory at any location having a fair market value of
$7,500,000 or more which was previously Eligible Inventory ceases to be Eligible
Inventory hereunder, such Borrower or the Borrower Representative shall notify
the Joint Collateral Agents thereof on and at the time of submission to the
Administrative Agent of the next Borrowing Base Certificate.

     

    “Eligible Licensee
Receivables” means, at any time, the Licensee Receivables payable by a
Licensee which the Joint Collateral Agents determine, in their Permitted
Discretion, are eligible as the basis for the (i) extension of Revolving Loans
and Swingline Loans and (ii) the issuance of Letters of
Credit.  Without limiting the Joint Collateral Agents’ discretion
provided herein, Eligible Licensee Receivables shall not include any Licensee
Receivable:

     

    (a)           which
does not represent (i) a fixed contractual minimum amount irrevocably
payable  not less than quarterly under the applicable licensing
agreement or (ii) a contractual amount based on the net sales of the Licensee
that is payable at such times and on such terms and conditions as is acceptable
to the Administrative Agent in all respects;

     

    (b)           which
is not subject to a first priority perfected security interest in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be);

     

    (c)           which
is subject to any Lien other than (i) a Lien in favor of the Administrative
Agent (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be) and (ii) any Permitted Encumbrances which do not have priority
over the Lien in favor of the Administrative Agent (for the benefit of the
Lender Parties or the Canadian Lender Parties, as the case may be);

     

    (d)           which
(i) is unpaid more than 60 days after the original due date or (ii) has been
written off the books of the Borrower or otherwise designated as
uncollectible;

     

    (e)           which
is owing by a Licensee for which more than 50% of the Licensee Receivables owing
from such Licensee and its Affiliates are ineligible hereunder (other than as a
result of the operation of paragraph (f) below);

     

    (f)           which
is owing by a Licensee to the extent the aggregate amount of Licensee
Receivables owing from such Licensee and its Affiliates to all the Borrowers
exceeds 20% of the aggregate amount of Eligible Licensee Receivables of all the
Borrowers;

     

     

    
      
         

      

      
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    (g)           with
respect to which any (i) covenant has been breached or
(ii)  representation or warranty is not true in all material respects,
in each case to the extent contained in this Agreement, the U.S. Security
Agreement or the Canadian Security Agreement; provided that each
such representation and warranty shall be true and correct in all respects to
the extent it is already qualified by a materiality standard;

     

    (h)           which
does not arise from the licensing of intellectual property of the Borrowers in
the ordinary course of business;

     

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

     

    (j)           which
is owed by any Licensee which has (i) applied for, suffered, or consented to the
appointment of any receiver, interim receiver custodian, trustee, monitor,
administrator, sequestrator or liquidator of its assets, (ii) has had possession
of all or a material part of its property taken by any receiver, interim
receiver custodian, trustee, monitor, administrator, sequestrator 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 Licensee which has sold all or substantially all of its
assets;

     

    (l)           which
is denominated in or owed in any currency other than U.S. or Canadian dollars
(unless a currency swap or similar hedge approved by the Administrative Agent
has been entered into with respect to such Licensee Receivable the effect of
which is to cause payment to be denominated in dollars) or payable in a
jurisdiction other than the U.S. or Canada;

     

    (m)           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 Licensee
Receivable is backed by a Letter of Credit acceptable to the Administrative
Agent which is in the possession of the Administrative Agent, (ii) the
government of the U.S., or any department, agency, public corporation, or
instrumentality thereof, unless the  Assignment of Claims Act has been
complied with to the Administrative Agent’s satisfaction or (iii) the federal
government of Canada unless the Financial Administration Act (Canada), as
amended, has been complied with to the Administrative Agent’s satisfaction 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;

     

    (n)           which
is owed by any Affiliate, employee, officer, director, agent or stockholder of
any Loan Party; provided that the
Licensee Receivables for which GRI is a Licensee shall be excepted from this
paragraph;

     

     

    
      
         

      

      
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    (o)           which
is owed by a Licensee or any Affiliate of a Licensee 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 a Licensee, in each case to the extent
thereof;

     

    (p)           which
is owed by a Licensee or any Affiliate of a Licensee that is a supplier to any
Loan Party to the extent of any amounts that may be set-off by such supplier
against the Licensee Receivable of such Loan Party;

     

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

     

    (r)           which
is owed by a Licensee located in the States of New Jersey, Minnesota, Indiana,
West Virginia or any other State which requires filing of a “Notice of Business
Activities Report” or other similar report in order to permit the Borrower to
which such Licensee Receivable is owed to seek judicial enforcement in such
jurisdiction of payment of such Licensee Receivable, unless such Borrower has
qualified to do business in New Jersey, Minnesota, Indiana, West Virginia or
such other States, has filed a Notice of Business Activities Report or similar
report with the appropriate Governmental Authority in each State and the
foregoing is duly effective, or is exempt from such filing
requirement;

     

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

     

    (t)           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  (to the extent applicable) the Federal Consumer Credit
Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board;

     

    (u)           which
is with respect to trademarks of a Borrower for which any claim has been
asserted or made that challenges the enforceability of the applicable trademark
pursuant to which such Licensee Receivable relates;

     

    (v)           which
did not arise under a licensing agreement that (i) cannot be canceled by the
Licensee during its stated term (other than as a result of the failure of the
applicable Borrower to comply with the terms thereof), (ii) is assignable by the
applicable Borrower and (iii) has at least six months remaining on the term of
such agreement;

     

    (w)           which
did not arise from a completed and bona fide transaction, except to the extent
that the applicable licensing agreement provides for the payment of fixed
amounts regardless of any performance or non-performance
thereunder;

     

     

    
      
         

      

      
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    (x)           which
does not constitute an “account” or “chattel paper” within the meaning of the
UCC or the PPSA of the state or province in which the applicable Borrower is
located;

     

    (y)           which,
to the knowledge of the Borrowers, is not in full force and effect or does not
constitute a legal, valid and binding obligation of the Licensee enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors’ rights generally and by general equity principles;
or

     

    (z)           which
the Joint Collateral Agents, in their Permitted Discretion, determine may not be
paid by reason of the Licensee’s inability to pay or which the Joint Collateral
Agents in their Permitted Discretion otherwise determine is unacceptable for any
reason whatsoever.

     

    In the event that a Financial Officer
has knowledge that any Licensee with respect to an Eligible Licensee Receivable
ceases to comply with the requirements of paragraphs (f), (j) or (k), such
Borrower or the Borrower Representative 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
Licensee Receivable, the face amount of a Licensee Receivable may, in the Joint
Collateral Agents’ 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 such Borrower may be obligated to rebate to Licensee 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 Licensee Receivable but
not yet applied by such Borrower to reduce the amount of such Licensee
Receivable.

     

    “Eligible Retail
Inventory” means Eligible Inventory that is Retail
Inventory.

     

    “Eligible Wholesale
Inventory” means Eligible Inventory that is Wholesale
Inventory.

     

    “Energie Knitwear”
means Energie Knitwear, Inc., a Delaware corporation.

     

    “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 remediation, fines, penalties or
indemnities), of any Borrower or any Subsidiary directly or indirectly resulting
from or based upon (a) any 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 or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

     

     

    
      
         

      

      
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    “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.

     

    “Equivalent Amount”
means, on any date, the amount of dollars into which an amount of Canadian
Dollars may be converted or the amount of Canadian Dollars into which an amount
of dollars may be converted, in each case, at the Canadian Administrative
Agent’s spot buying rate in Toronto as at approximately 12:00 noon (Toronto
time) on such date.

     

    “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 a
Borrower, is treated as a single employer under Section 414(b), (c), (m) or (o)
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 Pension Plan (other than an
event for which the 30-day notice period is waived); (b) the failure by any
Pension Plan to satisfy any minimum funding standard (as defined in Section 412
of the Code or Section 302 of ERISA) applicable to such Pension Plan, whether or
not waived; (c) the filing pursuant to Section 412(c) of the Code or Section
302(c) of ERISA of an application for a waiver of the minimum funding standard
with respect to any Pension Plan; (d) the incurrence by any Borrower or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Pension Plan; (e) the taking of any steps by any Borrower
or any ERISA Affiliate to terminate any Pension Plan or the receipt by any
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Pension Plan or Pension Plans
or to appoint a trustee to administer any Pension Plan; (f) the incurrence by
any Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan;
(g) the receipt by any Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from any Borrower or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, in endangered or critical
status, within the meaning of Section 305 of ERISA; (h) the adoption of an
amendment to any Pension Plan that, pursuant to Section 401(a)(29) of the Code,
would result in the loss of tax-exempt status of the trust of which such Pension
Plan is a part if any Borrower or any of its ERISA Affiliates fails to timely
provide security to such Pension Plan in accordance with the provisions of said
Section; or (i) a contribution failure has occurred with respect to any Pension
Plan sufficient to give rise to a lien under Section 303(k) of
ERISA.

     

    “Euro” means the
single currency of the Participating Member States as constituted by the Treaty
on European Union and as referred to in the legislative measures of the
Participating Member States for the introduction of, change over to or operation
of the Euro in one or more member states.

     

     

    
      
         

      

      
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    “Eurodollar”, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing 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 Taxes”
means, with respect to the Administrative Agent, any Lender, any Issuing Bank or
any other recipient of any payment to be made by or on account of any obligation
of any Borrower under any Loan Document, (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 such recipient is located and (c) any U.S. federal
withholding tax that is imposed on amounts payable to such recipient (other than
an assignee pursuant to a request by a Borrower under Section 2.19(b)) at the
time such recipient becomes a party to this Agreement (or designates a new
lending office) or is attributable to such recipient’s failure to comply with
Section 2.17(f), except to the extent that such recipient (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 Borrowers with respect to
such withholding tax pursuant to Section 2.17(a).

     

    “Existing Debt
Securities” means, individually and collectively as the context may
require, the 4.250% Senior Notes of the Company due 2009, the 5.125% Senior
Notes of the Company due 2014 and the 6.125% Senior Notes of the Company due
2034.

     

    “Existing Debt Securities
Reserve” means with respect to the Existing Debt Securities, as of
any date during any Dominion Period, the sum of (a) an amount equal to all
remaining principal payments due in respect thereof through and including the
Maturity Date plus (b) an amount equal to the
interest to be paid thereon on the next interest payment date following
such date which, in each case, shall, at the request of the Borrowers, be
released if and to the extent each such amount is paid in full in
cash.

     

    “Existing Letters of
Credit” means the letters of credit referred to on Schedule 2.06(1)
hereto, which letters of credit have been issued by an Issuing Bank or a
Lender.

     

    “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.

     

     

    
      
         

      

      
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    “Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or
controller of a Borrower.

     

    “First-Tier Foreign
DRE” means any Foreign DRE (other than Jones Canada LP and Nine West
Melbourne Pty Ltd., an Australian corporation) that is owned directly, or
indirectly through one or more Foreign DREs, by a U.S. Borrower or a Domestic
Subsidiary; provided that if Nine
West Melbourne Pty Ltd. is not dissolved in the entirety on or prior to the
sixtieth day following the Effective Date (or such later date that may be
approved by the Administrative Agent in its discretion), it shall be a
First-Tier Foreign DRE as of such date.

     

    “First-Tier Foreign
Subsidiary” means any Foreign Subsidiary (other than a Foreign DRE and
Asia Expert Limited, a Hong Kong corporation), owned directly by one or more of
the U.S. Borrowers, the Domestic Subsidiaries, or the First-Tier Foreign DREs;
provided that
if Asia Expert Limited is not dissolved in the entirety on or prior to the
sixtieth day following the Effective Date (or such later date that may be
approved by the Administrative Agent in its discretion), it shall be a
First-Tier Foreign Subsidiary as of such date.

     

    “Fixed Charges” means,
with reference to any period, without duplication, cash Interest Expense
(including, without limitation, any interest portion of Capital Lease Obligation
payments), plus
Rentals, plus
prepayments and scheduled principal payments on Indebtedness made during such
period, plus
cash taxes paid (net of cash refunds), plus
dividends, distributions or redemptions of Equity Interests paid in cash, plus
Capital Lease Obligation payments, plus
normal cash contributions to any Pension Plan (which shall exclude 401(k) and
other defined contribution plans), all calculated for the Company and its
Subsidiaries on a consolidated basis; provided, however, that Fixed
Charges shall not include any amounts paid on the Existing Debt Securities that
are maturing in November 2009.

     

    “Fixed Charge Coverage
Ratio” means the ratio, as determined at the end of any Test Period, of
(a) EBITDAR minus
the unfinanced portion of Capital Expenditures to (b) Fixed Charges, all
calculated for the Company and its Subsidiaries on a consolidated basis in
accordance with GAAP.

     

    “Foreign DRE” means a
Foreign Subsidiary that for U.S. federal income tax purposes is classified as a
partnership or that is “disregarded as an entity separate from its owner”
(within the meaning of Treas. Reg. § 301.7701-3), but not any such Foreign
Subsidiary whose assets consist solely of stock of a “controlled foreign
corporation” (within the meaning of Section 957(a) of the Code).

     

    “Foreign Subsidiary”
means each Subsidiary of a Borrower that is not a Domestic
Subsidiary.

     

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

     

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

     

    “Governmental
Authority” means the government of the United States, Canada, any other
nation or any political subdivision thereof, whether state, provincial 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.

     

     

    
      
         

      

      
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    “GRI” means GRI Group
Limited, a British Virgin Islands company.

     

    “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 any Indebtedness or other obligation of any
other Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation 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 such Indebtedness or other obligation
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 such Indebtedness or other obligation or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; 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.

     

    “High Season” means
all times other than Low Season.

     

    “Indebtedness” of any
Person means, without duplication, (a) all obligations of such Person for
borrowed money (including, without limitation, the Existing Debt Securities),
(b) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (c) all obligations of such Person under conditional sale
or other title retention agreements relating to property acquired by such
Person, (d) 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, deferred compensation and any purchase price
adjustment, earnout or deferred payments of a similar nature), (e) 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; provided that if
recourse for the payment of such Indebtedness is limited exclusively to such
property and such Person has absolutely no personal liability with respect
thereto, the amount of such Indebtedness shall equal the lesser of (A) the fair
market value of such property and (B) the amount of Indebtedness so secured, (f)
all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, (i) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances, (j) obligations under any liquidated earn-out
and (k) 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.  Notwithstanding the foregoing, Indebtedness shall not
include (x) unsecured trade payables that are paid to banks financing vendor
receivables in the ordinary course of business of the Borrowers to the extent
any such trade payables are deemed to be indebtedness solely as a result of
requirements under GAAP and (y) operating leases as defined under GAAP as of the
Effective Date to the extent that such leases are deemed to be Indebtedness
solely as a result of any change in the requirements under GAAP after the
Effective Date.

     

     

    
      
         

      

      
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    “Indemnified Taxes”
means Taxes (including Other Taxes) other than Excluded Taxes.

     

    “Indenture” means the
Indenture, dated as of November 22, 2004, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
Section 6.11, among the Company, Jones Holdings, Jones Apparel USA, Nine
West Footwear and Jones Retail, as issuers, and U.S. Bank as successor in
interest to SunTrust Bank, as trustee.

     

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

     

    “Interest Election
Request” means a request by the Borrower Representative 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 that
attributable to Capital Lease Obligations) of the Company and its Subsidiaries
for such period with respect to all outstanding Indebtedness of the Company 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 Company and its Subsidiaries for such period in
accordance with GAAP.

     

    “Interest Payment
Date” means (a) with respect to any ABR Loan and Canadian Prime Rate Loan
(other than a Swingline Loan), the first day of each calendar month 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 Loan with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months’ duration after the first day of such Interest Period
and the Maturity Date.

     

     

    
      
         

      

      
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    “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 months thereafter, as the Borrower
Representative 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 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 U.S. Security Agreement.

     

    “Investment” by any
Person in any other Person means (i) any direct or indirect loan, advance or
other extension of credit or capital contribution to or for the account of such
other Person (by means of any transfer of cash or other property to any Person
or any payment for property or services for the account or use of any Person, or
otherwise), (ii) any direct or indirect purchase or other acquisition of any
Equity Interests, bond, note, debenture or other debt or equity security or
evidence of Indebtedness, or any other ownership interest (including, any
option, warrant or any other right to acquire any of the foregoing), issued by
such other Person, whether or not such acquisition is from such or any other
Person, (iii) any direct or indirect payment by such Person on a Guarantee of
any obligation of or for the account of such other Person or any direct or
indirect issuance by such Person of such a Guarantee (provided, however, that for
purposes of Section 6.04, payments under Guarantees not exceeding the amount of
the Investment attributable to the issuance of such Guarantee will not be deemed
to result in an increase in the amount of such Investment) or (iv) any other
investment of cash or other property by such Person in or for the account of
such other Person.  Any repurchase by any Borrower of its own Equity
Interests or Indebtedness shall not constitute an Investment for purposes of
this Agreement.  The amount of any Investment shall be the original
principal or capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial condition of such
other Person) and shall, if made by the transfer or exchange of property other
than cash, be deemed to have been made in an original principal or capital
amount equal to the fair market value of such property at the time of such
transfer or exchange.

     

    “Investment Basket”
has the meaning assigned to such term in Section 6.04(c).

     

    “IP Secured Financing”
means a transaction or series of substantially contemporaneous transactions
pursuant to which one or more of the Borrowers incur Indebtedness, on terms
reasonably satisfactory to the Administrative Agent, in an aggregate principal
amount of not less than $150,000,000 that is secured exclusively by the
Borrowers’ registered intellectual property; provided that (a)
substantially concurrently with the incurrence of such Indebtedness (i) the
Administrative Agent has (A) been granted a second priority perfected security
interest in such registered intellectual property and (B) entered into an
intercreditor agreement with the issuer of such Indebtedness, in each case on
terms that are in form and substance satisfactory to the Administrative Agent,
(ii) the Administrative Agent has been granted, on terms satisfactory to it, a
royalty-free license with respect to such intellectual property to the extent
any such intellectual property is used in connection with or affixed to any of
the Collateral and (iii) all of the Net Proceeds of such Indebtedness have been
applied to prepay the Revolving Loans then outstanding as provided in Section
2.11(e); and (b) no Default or Event of Default has occurred and is continuing
immediately prior to or after giving effect to the incurrence of such
Indebtedness.

     

     

    
      
         

      

      
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    “IRS” means the United
States Internal Revenue Service.

     

    “Issuing Banks” means,
individually and collectively as the context may require, (a) in the case of
each Letter of Credit, other than the Existing Letters of Credit, Chase,
Wachovia Bank, National Association and any other Lender proposed by the
Borrower Representative that is reasonably acceptable to the Administrative
Agent, each in its capacity as an issuer of Letters of Credit hereunder, and its
successors and assigns in such capacity as provided in Section 2.06(j); and (b)
in the case of each Existing Letter of Credit, the issuer thereof under the
Prior Credit Agreement, and its successors and assigns in such capacity as
provided in Section 2.06(j).  Each Issuing Bank referred to in clause
(a) of this definition, may, in its sole  discretion, arrange for one
or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in
which case the term “Issuing Bank” shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.

     

    “ITA” means the Income
Tax Act (Canada), as amended.

     

    “Joinder Agreement”
has the meaning assigned to such term in Section 5.14(a).

     

    “Joint Bookrunners”
means, individually and collectively as the context may require, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc., Banc of America Securities LLC,
Wachovia Capital Markets LLC, SunTrust Robinson Humphrey, Inc. and General
Electric Capital Corporation, in their respective capacities as joint
bookrunners hereunder, and each of their successors and assigns in such
capacity.

     

    “Joint Collateral
Agents” means, individually and collectively as the context may require,
Chase and General Electric Capital Corporation, in their respective capacities
as joint collateral agents hereunder, and each of their successors and assigns
in such capacity; provided that if one
or more of the Joint Collateral Agents shall resign as provided in Section 8.02,
reference to the Joint Collateral Agents shall refer to the Sole Remaining
Collateral Agent or the Sole Successor Collateral Agent, as the case may
be.

     

    “Joint Lead Arrangers”
means, individually and collectively as the context may require, J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., in their capacity as joint
lead arrangers, and each of their successors and assigns in such
capacity.

     

    “Jones Apparel USA”
means Jones Apparel Group USA, Inc., a Delaware corporation.

     

    “Jones Canada GP”
means Jones Canada, Inc., an Ontario corporation.

     

     

    
      
         

      

      
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    “Jones Canada LP”
means Jones Apparel Group Canada ULC, a Nova Scotia unlimited liability
company.

     

    “Jones Holdings” means
Jones Apparel Group Holdings, Inc., a Delaware corporation.

     

    “Jones Investment”
means Jones Investment Co. Inc., a Delaware corporation.

     

    “Jones Jeanswear”
means Jones Jeanswear Group, Inc., a New York corporation.

     

    “Jones Retail” means
Jones Retail Corporation, a New Jersey corporation.

     

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

     

    “LC Disbursement”
means a payment made by an Issuing Bank pursuant to a Letter of Credit,
including in respect of a time draft presented thereunder; provided that, with
respect to any component of any such amount in an Alternative Currency under a
U.S. Letter of Credit, such amount shall be the Dollar Amount
thereof.  The date of an LC Disbursement shall be the date of payment
by the applicable Issuing Bank under a Letter of Credit or a time draft
presented thereunder, as the case may be.

     

    “LC Exposure” means,
at any time, the sum of the U.S. LC Exposure and the Canadian LC
Exposure.

     

    “L.E.I.” means L.E.I.
Group, Inc., a Delaware corporation.

     

    “Lender Parties”
means, individually and collectively as the context may require, the Agents, the
Lenders and the Issuing Banks.

     

    “Lenders” means,
individually and collectively as the context may require, the Canadian Lenders
and the U.S. Lenders.  Unless the context otherwise requires, the term
“Lenders” includes the Swingline Lender.

     

    “Letter of Credit”
means any Commercial Letter of Credit or Standby Letter of Credit issued
pursuant to this Agreement.  Without limiting the foregoing, (a)
Letters of Credit shall include any time draft presented under a Letter of
Credit and (b) the Existing Letters of Credit shall be deemed Letters of Credit
issued under 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
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits having 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 Business Days prior to the
commencement of such Interest Period.

     

     

    
      
         

      

      
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    “Licensee” means any
Person (other than a natural person) that licenses trademarks of one or more of
the Borrowers.

     

    “Licensee Receivable”
means any receivables due to any Borrower from a Licensee that arise as a result
of such Licensee manufacturing, selling or distributing goods utilizing or
incorporating trademarks of such Borrower.

     

    “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, individually and collectively as the context may require, this Agreement,
any promissory notes issued pursuant to this Agreement, any Letters of Credit
applications, the Collateral Documents, the Loan Guaranty, the Canadian
Guarantee and each additional guaranty entered into by a Canadian Loan Party
pursuant to Section 5.14(c), the Post-Closing Deliverables Agreement and all
other agreements, instruments, documents and certificates identified in Section
4.01 executed and delivered to, or in favor of, the Administrative Agent, the
Canadian Administrative Agent or any Lenders 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 or partner of any
Loan Party, and delivered to the Administrative Agent, the Canadian
Administrative Agent or any Lender 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 this Agreement or such Loan
Document as the same may be in effect at any and all times such reference
becomes operative.  For the avoidance of doubt, the Open Account
Agreements, the Swap Agreements and the agreements pursuant to which Banking
Services are provided shall not constitute Loan Documents.

     

    “Loan Guarantor” means
(a) with respect to the U.S. Obligations, each Loan Party (other than the
Canadian Loan Parties) and any other Person that becomes a U.S. Loan Guarantor
pursuant to Section 5.14(a); and (b) with respect to the Canadian Obligations,
each Loan Party (other than the Canadian Borrower) and any other Person that
becomes a Loan Guarantor pursuant to Section 5.14 (a) and (c).

     

    “Loan Guaranty” means
Article X of
this Agreement.

     

     

    
      
         

      

      
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    “Loan Parties” means,
individually and collectively as the context may require, the U.S. Loan Parties
and the Canadian Loan Parties.

     

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

     

    “Lock Box Agreement”
means, individually and collectively as the context may require, each “Lock Box
Agreement” referred to in the U.S. Security Agreement.

     

    “Low Season” means,
for any period of determination of the Borrowing Base with respect to Wholesale
Inventory, the periods (a) (i) commencing March 1 of each year and ending May 30
of such year and (ii) commencing October 1 of each year and ending December 31
of such year, and (b) such other periods that have been approved by the
Administrative Agent and are identified as the “low season” in the most recent
appraisal delivered from the time pursuant to this Agreement.

     

    “Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
property, operations, prospects or condition, financial or otherwise, of the
Company and its 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, the Administrative Agent’s Liens (for the benefit
of the Lender Parties or the Canadian Lender Parties, as the case may be) on the
Collateral or the priority of such Liens or (d) the rights of or benefits
available to the Administrative Agent, any other Agent, the Issuing Banks or the
Lenders under the Loan Documents.

     

    “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 Company and its Subsidiaries in an aggregate principal amount
exceeding $50,000,000.  For purposes of determining Material
Indebtedness, the “obligations” of any 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) that such Borrower or such Subsidiary would be
required to pay if such Swap Agreement were terminated at such
time.

     

    “Maturity Date” means
May 13, 2012 or any earlier date on which the Revolving Commitments are reduced
to zero or otherwise terminated pursuant to the terms hereof.

     

    “Maximum Liability”
has the meaning assigned to such term in Section 10.08.

     

    “Maximum Utilization
Period” means any period (a) commencing, on any date when the aggregate
principal amount of Revolving Loans is greater than or equal to 33.3% of the
total Revolving Commitment, and (b) ending on the date immediately after the
aggregate principal amount of Revolving Loans is less than 33.3% of the total
Revolving Commitment.

     

    “Minimum Availability
Period” means (including by reference to the Levels described below), any
period (a) commencing when Availability is on any date less than:

     

     

    
      
         

      

      
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    Level
1:                      an
amount equal to 15% (or if the IP Secured Financing has been consummated, 17.5%)
of the total Revolving Commitments then in effect;

     

    Level
2:                      an
amount equal to 20% of the total Revolving Commitments then in effect, but more
than Level 1;

     

    and (b)
ending after Availability is greater than 25% of the total Revolving Commitments
then in effect for a period of 60 consecutive days (such period being referred
to herein as a “Level 1 Minimum Availability Period” or a “Level 2 Minimum
Availability Period”, as applicable). For the avoidance of doubt, (x) at any
time that Availability is equal to or greater than the amounts set forth in
Level 2 above, Availability shall also be deemed to be greater than Level 1 and
(y) a Level 1 Minimum Availability Period includes a Level 2 Minimum
Availability Period.

     

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

     

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

     

    “Net Income” means,
for any period, the consolidated net income
(or loss) of the Company 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 the Company or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a Subsidiary) in which the Company or any of
its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Company or such Subsidiary in the form of
dividends or similar distributions, (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.

     

    “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 by an appraiser acceptable to the Joint Collateral Agents,
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 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).

     

     

    
      
         

      

      
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    “Nine West
Development” means Nine West Development Corporation, a Delaware
corporation.

     

    “Nine West Footwear”
means Nine West Footwear Corporation, a Delaware corporation.

     

    “Non BA Lender” means
a Canadian Lender that cannot or does not as a matter of policy accept bankers’
acceptances.

     

    “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 10.09.

     

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

     

    “Obligations” means,
individually and collectively as the context may require, the U.S. Obligations
and the Canadian Obligations.

     

    “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).

     

    “Open Account Agent”
means, individually and collectively as the context may require, (a) the
Citibank Open Account Agent and (b) any other Lender or Affiliate thereof that
is acting as agent from time to time pursuant to any Other Open Account
Agreement.

     

    “Open Account Aggregate
Cap” means the sum of (a) the Citibank Open Account Cap and (b) the Open
Account Other Cap.

     

    “Open Account
Agreement” means, individually and collectively as the context may
require, (a) the Citibank Open Account Agreement and (b) each Other Open Account
Agreement.

     

    “Open Account Bank”
means, individually and collectively as the context may require, (a) the
Citibank Open Account Banks and (b) any Lender or Affiliate thereof that may
become a party to any Other Open Account Agreement.

     

    “Open Account Excess
Obligations” means, individually and collectively as the context may
require, (a) the Citibank Open Account Obligations that are in excess of the
Citibank Open Account Cap and (b) the Open Account Obligations with respect to
any Other Open Account Agreement that are in excess of the applicable Open
Account Other Cap with respect to each such Other Open Account
Agreement.

     

     

    
      
         

      

      
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    “Open Account
Obligations” means, individually and collectively as the context may
require, (a) the Citibank Open Account Obligations and (b) the obligations of
the other Open Account Obligors that are parties to the Other Open Account
Agreements to pay and reimburse each applicable Open Account Agent and Open
Account Bank that are parties thereto for any advances, overadvances or
financings provided to any vendor of one or more of such Open Account Obligors,
together with fees, interest and expenses accruing thereon or that are otherwise
payable with respect thereto.

     

    “Open Account
Obligors” means each Loan Party that is a party to an Open Account
Agreement.

     

    “Open Account Other
Cap” means, with respect to all the Other Open Account Agreements,
initially zero, and thereafter, at any time any such other Open Account
Agreement is in effect or any Open Account Obligations with respect thereto are
outstanding, an aggregate amount not to exceed $15,000,000 in the aggregate at
any time; provided, that the
Open Account Other Cap with respect to each such Other Open Account Agreement
shall be equal to the aggregate amount that is authorized to be outstanding
pursuant to the terms of each such other Open Account Agreement (which amount
shall be specified in a written notice of the applicable Open Account Agent and
the Company that is delivered to the Administrative Agent prior to the
effectiveness of each applicable Open Account Agreement), the foregoing to be
subject to the approval of the Administrative Agent (such approval to not be
unreasonably withheld or delayed).

     

    “Original Currency”
has the meaning assigned to such term in Section 9.18.

     

    “Other Open Account
Agreement” means each open account funding agreement, other than the
Citibank Open Account Agreement, entered into by any Open Account Agent and Open
Account Bank with the Company and the other Open Account Obligors, as each such
open account funding agreement may be amended, modified, restated or replaced
from time to time in accordance with Section 6.11.

     

    “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.

     

    “Participant” has the
meaning assigned to such term in Section 9.04(c).

     

    “Participant Register”
has the meaning assigned to such term in Section 9.04(c).

     

    “Participating Member
States” means each State so described in any legislative measures of the
European Council for the introduction of, change over to or operation of a
single or unified European Community, and includes, without limitation, each
member State of the European Community that adopts or has adopted the Euro as
its lawful currency in accordance with the aforementioned legislative
measures.

     

     

    
      
         

      

      
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    “Patriot Act” has the
meaning assigned to such term in Section 3.19(a).

     

    “Paying Guarantor” has
the meaning assigned to such term in Section 10.09.

     

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

     

    “Pension Event” means
(a) the whole or partial withdrawal of a Canadian Loan Party from a Canadian
Pension Plan during a plan year; or (b) the filing of a notice of interest to
terminate in whole or in part a Canadian Pension Plan or the treatment of a
Canadian Pension Plan amendment as a termination or partial termination; or (c)
the institution of proceedings by any Governmental Authority to terminate in
whole or in part or have a trustee appointed to administer a Canadian Pension
Plan; or (d) any other event or condition which might constitute grounds for the
termination of, winding up or partial termination of winding up or the
appointment of trustee to administer, any Canadian Pension Plan.

     

    “Pension 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 any 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.

     

    “Permitted
Acquisition” means any acquisition by any Loan Party, whether by
purchase, merger, amalgamation or otherwise, of all or substantially all of the
assets of, or of the voting Equity Interests of, or a business line or unit or a
division of, any Person or the subsidiaries of such Person; provided
that:

     

    (a)           such
acquisition shall be consensual;

     

    (b)           such
Person is in the same or similar line of business as the Company and its
Subsidiaries, or a component thereof;

     

    (c)           such
acquisition shall be consummated in accordance with all Requirements of Law,
except where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect;

     

    (d)           in
the case of the acquisition of Equity Interests, (i) all of the Equity Interests
(except for any such securities in the nature of directors’ qualifying shares)
acquired or otherwise issued by such Person (or, in the case of an acquisition
of a group of companies, the parent company of such group) or any newly formed
Subsidiary of any Borrower in connection with such acquisition shall be directly
and beneficially owned 100% by such Loan Party, except with respect to
Investments permitted by Section 6.04(c)(ii) in Subsidiaries that are not Loan
Parties, and (ii) such newly acquired Subsidiary shall be a Loan Party and the
Company and its Subsidiaries shall have complied with Section 5.14 with respect
thereto; and

     

     

    
      
         

      

      
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    (e)           in
the case of any acquisition or series of related acquisitions in excess of
$50,000,000 (whether paid in cash, deferred payments, securities, the assumption
of debt (including to the extent that any continuing debt would be newly
reflected on a consolidated balance sheet of the Company) or otherwise), the
Company shall furnish to the Administrative Agent at least five Business Days
prior to such proposed acquisition a certificate from a Financial Officer
evidencing compliance with Section 6.04(l), together with such detailed
information relating thereto as the Administrative Agent may reasonably request
to demonstrate such compliance;

     

    provided further, that it is
understood that to the extent the assets acquired are to be included in any
Borrowing Base, due diligence (including, without limitation, field exams and
appraisals) in respect of such acquired assets satisfactory to the
Administrative Agent, in its Permitted Discretion, shall be completed prior to
the inclusion of such assets in the Borrowing Base.

     

    “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 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 laws, unemployment, general liability and other insurance and other
social security laws or retirement benefits or similar laws or
regulations;

     

    (d)           Liens
granted and deposits and other investments made 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)           Liens
incurred to secure appeal bonds and judgment and attachment liens in respect of
judgments that do not constitute an Event of Default under paragraph (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 any
Borrower or any Subsidiary; and

     

     

    
      
         

      

      
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    (g)           Liens
in favor of a credit card processor arising in the ordinary course of business
under any processor agreement;

     

    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;

     

    (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 (i) certificates of deposit and time deposits, in each case maturing within
365 days and (ii) banker’s acceptances, in each case 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 paragraph (a) above and entered into with a financial
institution satisfying the criteria described in paragraph (c) above;
and

     

    (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.

     

    “Permitted Lien” means
any Lien permitted under Section 6.02.

     

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

     

    “Post-Closing Deliverables
Agreement” means that certain Post-Closing Deliverables Agreement, dated
as of the date hereof, between the Loan Parties and the Administrative Agent, as
the same may be amended, restated or otherwise modified from time to
time.

     

    “Pounds Sterling”
means the lawful currency of the United Kingdom of Great Britain and Northern
Ireland.

     

     

    
      
         

      

      
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    “PPSA” means the
Personal Property Security Act (Ontario), including the regulations thereto,
provided that
if perfection or the effect of perfection or non-perfection or the priority of
any Lien created hereunder or under any other Loan Document on the Collateral is
governed by the personal property security legislation or other applicable
legislation with respect to personal property security in effect in a
jurisdiction in Canada other than the Province of Ontario, “PPSA” means the
Personal Property Security Act or such other applicable legislation in effect
from time to time in such other jurisdiction in Canada for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.

     

    “Prepayment Event”
means:

     

    (a)           any
sale, transfer or other disposition (including pursuant to a sale and leaseback
transaction) of any property or asset of any Loan Party, other than dispositions
described in Section 6.05(a), (b), (c) (to the extent that the transaction is
solely among the Loan Parties), (d) or (j); 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
$10,000,000, in the case of  each individual event, and $25,000,000 in
the aggregate, in the case of a series of related events; or

     

    (c)           the
issuance by the Company of any Equity Interests, other than Equity Interests
issued pursuant to an employee stock option plan or similar plan, or pursuant to
a merger permitted by Section 6.03; or

     

    (d)           the
incurrence by any Loan Party of any Indebtedness, other than Indebtedness
permitted under Section 6.01 (other than paragraph (i) thereof) or permitted by
the Required Lenders.

     

    “Prime Rate” means (a)
for the purpose of Loans made available to the U.S. Borrowers, 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 or any successor
executive office, and (b) for the purpose of dollar-denominated Loans made
available to the Canadian Borrower, the rate of interest per annum publicly
announced from time to time by the Canadian Administrative Agent at its Toronto
office as its U.S. base rate for dollar-denominated commercial loans; each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.

     

    “Priority Payable
Reserve” means reserves for amounts secured by any Liens, choate or
inchoate, which rank or are capable of ranking in priority to the Administrative
Agent’s or any other Canadian Lender Parties’ Liens and/or for amounts which may
represent costs relating to the enforcement of the Administrative Agent’s Liens
including, without limitation, in the Permitted Discretion of the Canadian
Administrative Agent, any such amounts due and not paid for wages, vacation pay,
amounts due and not paid under any legislation relating to workers’ compensation
or to employment insurance, all amounts deducted or withheld and not paid and
remitted when due under the ITA, amounts currently or past due and not paid for
realty, municipal or similar taxes (to the extent impacting personal or moveable
property) and all amounts currently or past due and not contributed, remitted or
paid to or under any Canadian Pension Plan or under the Canada Pension Plan, the
Pension Benefits Act (Ontario) or any similar legislation.

     

     

    
      
         

      

      
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    “Prior Credit
Agreement” means the Amended and Restated Five-Year Credit Agreement
dated as of May 16, 2005, as amended and restated as of January 5, 2009, among
the Company, Jones Apparel USA, Jones Holdings, Nine West Footwear, Jones
Retail, the lenders parties thereto and Wachovia Bank, National Association, as
administrative agent.

     

    “Proceeds of Crime
Act” means the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada), as amended from time to time, and including all
regulations thereunder.

     

    “Pro Forma Basis”
means, with respect to any test hereunder in connection with any event, that
such test shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) such event as if it happened on the first day
of such period or (ii) the incurrence of any Indebtedness by the Company or any
Subsidiary and any incurrence, repayment, issuance or redemption of other
Indebtedness of the Company or any Subsidiary occurring at any time subsequent
to the last day of the Test Period and on or prior to the date of determination,
as if such incurrence, repayment, issuance or redemption, as the case may be,
occurred on the first day of the Test Period.

     

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

     

    “Protective Advance”
means, individually and collectively as the context may require, the U.S.
Protective Advances and the Canadian Protective Advances.

     

    “Register” has the
meaning assigned to such term 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.

     

    “Rentals” means, with
reference to any period, the aggregate amounts payable by the Company and its
Subsidiaries under any operating leases (net of sublease income), calculated on
a consolidated basis for the Company and its Subsidiaries for such period in
accordance with GAAP.

     

    “Rent Reserve” means
with respect to (a) any warehouse, cross-docking facility, distribution center,
regional distribution center or depot that is not located in a jurisdiction
providing for a common law or statutory landlord’s Lien on the personal property
of tenants, which Lien would be prior or superior to that of the Administrative
Agent (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be) and with respect to which no Collateral Access Agreement is in
effect; or (b) any store, warehouse, cross-docking facility, distribution
center, regional distribution center, depot or other location that is located in
a jurisdiction providing for a common law or statutory landlord’s Lien on the
personal property of tenants, which Lien would be prior or superior to that of
the Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be), a reserve equal to two months’ rent at such
store, warehouse, cross-docking facility, distribution center, regional
distribution center, depot or other location.

     

     

    
      
         

      

      
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    “Report” means reports
prepared by the Joint Collateral Agents or another Person showing the results of
appraisals, field examinations or audits pertaining to the Borrowers’ assets
from information furnished by or on behalf of the Borrowers, after the Joint
Collateral Agents have exercised their rights of inspection pursuant to this
Agreement, which Reports shall be distributed to the Lenders by the
Administrative Agent.

     

    “Required Lenders”
means, at any time, Lenders having Aggregate Credit Exposure and unused
Revolving Commitments representing at least 51% of the sum of the Aggregate
Credit Exposure and unused Revolving Commitments at such time.

     

    “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 Joint Collateral Agents deem necessary, in their
Permitted Discretion, to maintain (including, without limitation, reserves for
accrued and unpaid interest on the Secured Obligations, Banking Services
Reserves, Customer Credit Liability Reserves, Rent Reserves, Priority Payable
Reserves, Existing Debt Securities Reserves, reserves for dilution of Accounts,
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 (including with respect to
the declaration by any Loan Party that is a public company of its intention to
pay dividends pursuant to Section 6.08(a)(iv) but not yet paid), reserves for
uninsured losses of any Loan Party, reserves for uninsured, underinsured,
un-indemnified or under-indemnified liabilities or potential liabilities with
respect to any litigation and reserves for taxes, fees, assessments, and other
governmental charges) 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 the Company 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 the Company or any option, warrant or other right to acquire any
such Equity Interests in the Company.

     

    “Retail Inventory”
means Inventory to be sold by the Borrowers through the Borrowers’ retail
distribution channels.

     

    “Revolver Termination
Date” has the meaning assigned to such term in Section
9.03(c).

     

    “Revolving Commitment”
means, with respect to each Lender, individually and collectively as the context
may require, the U.S. Commitment and the Canadian Commitment of such
Lender.  The initial aggregate amount of the Lenders’ Revolving
Commitments is $650,000,000.

     

     

    
      
         

      

      
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    “Revolving Commitment
Schedule” means the Schedule attached hereto identified as
such.

     

    “Revolving Exposure”
means, individually and collectively as the context may require, the U.S.
Revolving Exposure and the Canadian Revolving Exposure.

     

    “Revolving Lender”
means, as of any date of determination, a Lender with a Revolving Commitment or,
if the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

     

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

     

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

     

    “Second Currency” has
the meaning assigned to such term in Section 9.18.

     

    “Secured Obligations”
means, individually and collectively as the context may require, the U.S.
Secured Obligations and the Canadian Secured Obligations.

     

    “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).

     

    “Sole Remaining Collateral
Agent” has the meaning assigned to such term in Section
8.02.

     

    “Sole Successor Collateral
Agent”  has the meaning assigned to such term in Section
8.02.

     

    “Specified Customers”
means, individually and collectively as the context may require, JC Penney,
Costco, Wal-Mart Stores, Inc./Sams Club, Sears, Zellers, TJ MAXX/MARMAXX, BJs
Wholesale Club, Burlington Coat Factory, Ross, Fred Myer and Beall’s
Outlet.

     

    “Standby Letter of
Credit” means any Letter of Credit other than a Commercial Letter of
Credit.

     

    “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 Borrowers at
such time.  The Standby LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total Standby LC Exposure at such
time.

     

     

    
      
         

      

      
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    “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 or other Governmental Authority to which the Administrative Agent
is subject with respect to the Adjusted LIBO Rate, for Eurodollar 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.  Eurodollar Loans shall be deemed to constitute
Eurodollar 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 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 Obligations to the written
satisfaction of the Administrative Agent.

     

    “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; provided that such
term shall not include any joint venture, corporation, partnership or similar
arrangement the accounts of which would be consolidated with those of the
Company in the Company’s consolidated financial statements in accordance with
GAAP but of which not more than 50% of the equity or the ordinary voting power
(or in the case of a partnership, not more than 50% of the general partnership
interests) are, as of such date, owned controlled or held by the Company or any
of its consolidated Subsidiaries.

     

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

     

    “Supermajority  Lenders”
means, at any time, Lenders having Aggregate Credit Exposure and unused
Revolving Commitments representing at least 75% of the sum of the total
Aggregate Credit Exposure and unused Revolving Commitments at such
time.

     

    “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 the Borrowers or the Subsidiaries shall be a Swap
Agreement.

     

     

    
      
         

      

      
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    “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, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Swap
Agreement transaction.

     

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

     

    “Swingline Lender”
means, individually and collectively as the context may require, the U.S.
Swingline Lender and the Canadian Swingline Lender.

     

    “Swingline Loan”
means, individually and collectively as the context may require, each U.S.
Swingline Loan and each Canadian Swingline Loan.

     

    “Syndication Agent”
means Citibank, N.A., in its capacity as Syndication Agent, and its successors
and assigns in such capacity.

     

    “TARGET Day” means any
day on which (i) TARGET2 is open for settlement of payments in Euro and (ii)
banks are open for dealings in deposits in Euro in the London interbank
market.

     

    “TARGET2” means the
Trans-European Automated Real-time Gross Settlement Express Transfer payment
system which utilizes a single shared platform and which was launched on
November 19, 2007.

     

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

     

    “Test Period” means
(a) from the date hereof until December 31, 2009, the most recent period of four
fiscal quarters, and (b) at all times thereafter, 12 consecutive full fiscal
months immediately preceding each date (taken as one accounting period) in
respect of which the Company has delivered the financial statements referred to
in paragraph (c) of Section 5.01.

     

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

     

    “Treaty on European
Union” means the Treaty of Rome of March 25, 1957, as amended by the
Single European Act 1986 and the Maastricht Treaty (signed February 7, 1992), as
amended from time to time.

     

     

    
      
         

      

      
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    “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, the Alternate Base Rate or the Canadian Prime
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.

     

    “United States” or
“U.S.” means
the United States of America.

     

    “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.

     

    “U.S. Availability”
means (a) the lesser of (i) the U.S. Commitment and (ii) the U.S. Borrowing Base
minus
(b) (i) the total U.S. Revolving Exposure and (ii) the Canadian U.S. Borrowing
Base Utilization.

     

    “U.S. Borrowers”
means, individually and collectively as the context may require, the Company,
Jones Apparel USA, Jones Holdings, Jones Retail, Nine West Footwear, Energie
Knitwear, Jones Investment, Jones Jeanswear, L.E.I., Nine West Development and
Victoria.

     

    “U.S. Borrowing Base”
means, at any time (without duplication),

     

    the sum
of

     

    (a)           (i)
the product of (A) 85% multiplied by (B) the Eligible Accounts of the U.S.
Borrowers at such time plus
(ii) the product of (A) 90% multiplied by (B) the Eligible Credit Card Accounts
Receivable of the U.S. Borrowers at such time,

     

    plus

     

    (b)           the
product of (i) 80% multiplied by (ii) the Eligible Domestic Licensee Receivables
of the U.S. Borrowers at such time; provided that the
availability represented by Eligible Domestic Licensee Receivables of the U.S.
Borrowers included in the Borrowing Base shall not at any time exceed
$10,000,000,

     

    plus

     

    (c)           the
product of (i) 35% multiplied by (ii) the Eligible Foreign Licensee Receivables
of the U.S. Borrowers at such time; provided that the
availability represented by Eligible Foreign Licensee Receivables of the U.S.
Borrowers included in the Borrowing Base shall not at any time exceed
$5,000,000,

     

    plus

     

     

    
      
         

      

      
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    (d)           the
product of (i) 35% multiplied by (ii) the Eligible Foreign Accounts of the U.S.
Borrowers at such time; provided that the
availability represented by Eligible Foreign Accounts of the U.S. Borrowers
included in the Borrowing Base shall not at any time exceed
$5,000,000,

     

    plus

     

    (e)           subject
to the last sentence of this definition, the product of (i) 35% multiplied by
(ii) the sum of (A) the Eligible GRI Accounts of the U.S. Borrowers and (B) the
Eligible GRI Licensee Receivables of the U.S. Borrowers at such time; provided that the
availability represented by Eligible GRI Accounts of the U.S. Borrowers included
in the Borrowing Base shall not at any time exceed $15,000,000,

     

    plus

     

    (f)           the
lesser of (i) the product of 85% multiplied by the Net Orderly Liquidation Value
percentage in respect of Retail Inventory of the U.S. Borrowers identified in
the most recent inventory appraisal ordered by the Joint Collateral Agents
multiplied by the Eligible Retail Inventory of the U.S. Borrowers, valued at the
lower of cost (determined in accordance with the historical practices of the
Borrowers prior to the Effective Date) or market value, at such time and (ii)
the product of 75% multiplied by the Eligible Retail Inventory of the U.S.
Borrowers, valued at the lower of cost (determined in accordance with the
historical practices of the Borrowers prior to the Effective Date) or market
value, at such time,

     

    plus

     

    (g)           the
lesser of (i) the product of 85% multiplied by the High Season or Low Season, as
applicable, Net Orderly Liquidation Value percentage in respect of Wholesale
Inventory of the U.S. Borrowers identified in the most recent inventory
appraisal ordered by the Joint Collateral Agents multiplied by the Eligible
Wholesale Inventory of the U.S. Borrowers, valued at the lower of cost
(determined in accordance with the historical practices of the Borrowers prior
to the Effective Date) or market value, at such time and (ii) the product of 75%
multiplied by the Eligible Wholesale Inventory of the U.S. Borrowers, valued at
the lower of cost (determined in accordance with the historical practices of the
Borrowers prior to the Effective Date) or market value, at such
time,

     

    minus

     

    (h)           without
duplication, Reserves established by the Joint Collateral Agents in their
Permitted Discretion.

     

    The Joint Collateral Agents may, in
their Permitted Discretion, reduce the advance rates set forth above (and
subsequently increase the advance rates up to the levels set forth above)
including, for reasons relating to potential rights of vendors with respect to
in transit Inventory, adjust Reserves or reduce one or more of the other
elements used in computing the U.S. Borrowing Base (and subsequently increase
such elements up to the levels set forth above).  Any changes after
the Effective Date in how the Borrowers value their Inventory in accordance with
their historical practices prior to the Effective Date shall be subject to the
approval of the Joint Collateral Agents.

     

     

    
      
         

      

      
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    Notwithstanding the foregoing, the
Eligible GRI Accounts and Eligible GRI Licensee Receivables shall not constitute
a part of the U.S. Borrowing Base unless the Joint Collateral Agents, in the
exercise of their Permitted Discretion, have approved of the same.

     

    “U.S. Commitment”
means, with respect to each U.S. Lender, the commitment, if any, of such U.S.
Lender to make U.S. Revolving Loans and to acquire participations in U.S.
Letters of Credit and U.S. Swingline Loans hereunder, expressed as an amount
representing the maximum possible aggregate amount of such U.S. Lender’s U.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
U.S. Lender pursuant to Section 9.04.  The initial amount of each U.S.
Lender’s U.S. Commitment is set forth on the Revolving Commitment
Schedule, or in the Assignment and Assumption pursuant to which such U.S.
Lender shall have assumed its U.S. Commitment, as applicable.  The
U.S. Commitment is a sub-facility of the Revolving Commitment and is not in
addition to the Revolving Commitment.

     

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

     

    “U.S. Lender Parties”
means, individually and collectively as the context may require, the
Administrative Agent, the U.S. Lenders, the Issuing Banks issuing U.S. Letters
of Credit and the other Agents.

     

    “U.S. Lenders” means
the Persons listed on the Revolving Commitment Schedule as having a U.S.
Commitment and any other Person that shall acquire a U.S. Commitment pursuant to
an Assignment and Assumption, other than any such Person that ceases to be such
a Person hereto pursuant to an Assignment and Assumption.

     

    “U.S. Letter of
Credit” means any Letter of Credit or similar instrument (including a
bank guarantee) acceptable to the applicable Issuing Bank issued for the purpose
of providing credit support for the U.S. Borrowers.

     

    “U.S. Loan Guarantor”
means each Loan Party (other than the Canadian Loan Parties) and any other
Person that becomes a U.S. Loan Guarantor pursuant to Section
5.14(a).

     

    “U.S. Loan Parties”
means the U.S. Borrowers, the U.S. Borrowers’ Domestic Subsidiaries and the
First-Tier Foreign DREs (other than those Persons in which Investments are made
pursuant to Sections 6.04(c)(ii) and (iii)) and any other Person who becomes a
party to this Agreement in its capacity as a U.S. Loan Party pursuant to a
Joinder Agreement and their successors and assigns; provided that neither
Rachel Roy IP Company LLC nor GRI shall be a U.S. Loan Party unless 100% of the
Equity Interests of each of them is owned by a U.S. Loan Party.

     

     

    
      
         

      

      
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    “U.S. Loans” means,
individually and collectively as the context may require, the U.S. Revolving
Loans, the U.S. Swingline Loans and the U.S. Protective Advances.

     

    “U.S. Obligations”
means, with respect to the U.S. Loan Parties, all unpaid principal of and
accrued and unpaid interest on the U.S. Loans, all U.S. LC Exposure, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the U.S. Loan Parties to the Lenders or to any Lender, the
Administrative Agent, any Issuing Bank with respect to a U.S. Letter of Credit
or any indemnified party arising under the Loan Documents.

     

    “U.S. Person” means a
“United States person” within the meaning of Section 7701(a)(30) of the
Code.

     

    “U.S. Protective
Advance” has the meaning assigned to such term in Section
2.04(a).

     

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

     

    “U.S. Revolving Loan”
means a Revolving Loan made to the U.S. Borrowers.

     

    “U.S. Secured
Obligations” means all U.S. Obligations,
together with all (a) Banking Services Obligations of the U.S. Loan Parties; (b)
Swap Obligations of the U.S. Loan Parties owing to one or more U.S. Lenders or
their respective Affiliates; provided
that (i) at or prior to the time that any transaction relating to
such Swap Obligation is executed, the U.S. Lender or Affiliate of a U.S. Lender
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 U.S. Secured Obligation entitled to the benefits of the
Collateral Documents in favor of the U.S. Lender Parties; and (c) the Open
Account Obligations of Open Account Obligors that are U.S. Loan
Parties.

     

    “U.S. Security
Agreement” means that certain Pledge and Security Agreement, dated as of
the date hereof, between the Loan Parties (other than Jones Canada GP and Jones
Canada LP) and the Administrative Agent, for the benefit of the Lender Parties
and the Canadian Lender Parties, as the case may be, and any other pledge or
security agreement entered into, after the Effective Date by any other U.S. 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.

     

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

     

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

     

    “Vendor Rebates” means
the credits earned from vendors for volume purchases that reduce net inventory
costs for the Borrowers.

     

     

    
      
         

      

      
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    “Victoria” means
Victoria + Co Ltd., a Rhode Island corporation.

     

    “Weekly Reporting
Period” means any period during (a) which any Default under
paragraph (a) of Article VII or any Event of Default has occurred and
is continuing, (b) that constitutes a Level 2 Minimum Availability Period or (c)
that constitutes a Maximum Utilization Period.

     

    “Wholesale Inventory”
means Inventory to be sold by the Borrowers through the Borrowers’ wholesale
distribution channels.

     

    “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.

     

    “Withholding Agent”
means any Loan Party and the Administrative Agent.

     

                          SECTION 1.02.      Classification of Loans and
Borrowings.  For purposes of this Agreement, Loans and
Borrowings may be classified and referred to by Type (e.g., a “Eurodollar
Loan” or a “Eurodollar 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, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person’s successors and assigns, (c) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement 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.  A Default or Event of Default shall be
deemed to exist at all times during the period commencing on the date that such
Default or Event of Default occurs to the date on which such Default or Event of
Default is waived by the Administrative Agent pursuant to this Agreement or, in
the case of a Default, is cured within any period of cure expressly provided for
in this Agreement; and an Event of Default shall “continue” or be “continuing”
until such Event of Default has been waived by the Administrative
Agent.

     

    For purposes of any Collateral located
in the Province of Quebec or charged by any deed of hypothec (or any other Loan
Document) and for all other purposes pursuant to which the interpretation or
construction of a Loan Document may be subject to the laws of the Province of
Quebec or a court or tribunal exercising jurisdiction in the Province of Quebec,
(a) “personal property” shall be deemed to include “movable property”, (b) “real
property” shall be deemed to include “immovable property”, (c) “tangible
property” shall be deemed to include “corporeal property”, (d) “intangible
property” shall be deemed to include “incorporeal property”, (e) “security
interest” and “mortgage” shall be deemed to include a “hypothec”, (f) all
references to filing, registering or recording under the UCC or the PPSA shall
be deemed to include publication under the Civil Code of Québec, (g) all
references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to third parties, (h) any “right
of offset”, “right of setoff” or similar expression shall be deemed to include a
“right of compensation”, (i) “goods” shall be deemed to include “corporeal
movable property” other than chattel paper, documents of title, instruments,
money and securities, and (j) an “agent” shall be deemed to include a
“mandatary”.

     

     

    
      
         

      

      
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                          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
Representative notifies the Administrative Agent that the Borrowers request 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 Representative 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.

     

                          SECTION 1.05.      Currency
Translations.  Without limiting the other terms of this
Agreement the calculations and determinations under this Agreement of any amount
in any currency other than dollars shall be deemed to refer to dollars or the
Dollar Amount (as determined by the Administrative Agent) or the Equivalent
Amount (as determined by the Canadian Administrative Agent), as the case may be,
and all certificates delivered under this Agreement, shall express such
calculations or determinations in dollars or the Dollar Amount or the Equivalent
Amount thereof, as the case may be.

     

    ARTICLE
II

     

    The
Credits

     

                          SECTION 2.01.      Revolving
Commitments.  Subject to the terms and conditions set forth
herein, (a) each U.S. Lender agrees to make U.S. Revolving Loans from time
to time during the Availability Period to the U.S. Borrowers, and (b) each
Canadian Lender agrees to make Canadian Revolving Loans (including by way of BA
Drawings in accordance with Section 2.21) from time to time during the
Availability Period to the Canadian Borrower, if, in each case after giving
effect thereto:

     

    (i)           the
U.S. Revolving Exposure or Canadian Revolving Exposure of any Lender would not
exceed such Lender’s U.S. Commitment or Canadian Commitment, as the case may
be;

     

     

    
      
         

      

      
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    (ii)           the
total U.S. Revolving Exposure of all the U.S. Lenders would not exceed (A) the
lesser of (x) the total U.S. Commitments or (y) the U.S. Borrowing Base minus
(B) the Canadian U.S. Borrowing Base Utilization;

     

    (iii)           the
total Canadian Revolving Exposure of all the Canadian Lenders would not exceed
the lesser of (A) the Canadian Sublimit or (B) (x) the Canadian Borrowing Base
plus
(y) the U.S. Availability; and

     

    (iv)           the
sum of (A) (x) the total Revolving Exposures of all the Lenders and (y) the Open
Account Aggregate Cap would not exceed the lesser of (B)(x) the total Revolving
Commitments or (y) the Aggregate Borrowing Base;

     

    subject
to the Administrative Agent’s or Canadian Administrative Agent’s authority, as
applicable, in their sole discretion, to make Protective Advances pursuant to
the terms of Section 2.04.  Within the foregoing limits and subject to
the terms and conditions set forth herein, each Borrower may borrow, prepay and
reborrow its 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 Type made by the
Lenders ratably in accordance with their respective Revolving
Commitments.  Any Protective Advance and any Swingline Loan shall be
made in accordance with the procedures set forth in Section 2.04 and
2.05.

     

    (b)           Subject to Section 2.14
and Section 2.21, (i) each Borrowing of U.S. Revolving Loans shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower Representative 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; (ii) each Borrowing of Canadian Revolving Loans denominated in
Canadian Dollars shall be comprised entirely of Canadian Prime Rate Loans or,
pursuant to Section 2.21, BA Drawings as the Borrower Representative may request
in accordance herewith; and (iii) each Borrowing of Canadian Revolving Loans
denominated in dollars shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower Representative may request in accordance
herewith.  Each U.S. Swingline Loan and  Canadian Swingline
Loan denominated in dollars shall be an ABR Loan, and each Canadian Swingline
Loan denominated in Canadian Dollars shall be a Canadian Prime Rate
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 Borrowers to repay such Loan in accordance with the terms of this
Agreement.

     

    (c)           At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000.  ABR Borrowings and Canadian
Prime Rate Borrowings may be in any amount. Each Swingline Loan shall be in an
amount that is an integral multiple of $1,000,000 and not less than
$5,000,000.  Borrowings of more than one Type may be outstanding at
the same time; provided that there shall not
at any time be more than a total of six Eurodollar Borrowings
outstanding.

     

     

    
      
         

      

      
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    (d)           At
the commencement of each Contract Period for any BA Drawing of Canadian
Revolving Loans, such Borrowing shall be in an aggregate face amount that is an
integral multiple of Cdn.$1,000,000 and not less than Cdn.$5,000,000; provided that there
shall not at any time be more than a total of five BA Drawings
outstanding.

     

    (e)           Notwithstanding
any other provision of this Agreement, neither the Borrower Representative nor
any Borrower shall be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period or Contract Period requested with respect
thereto would end after the Maturity Date.

     

                          SECTION 2.03.      Requests for Revolving
Borrowings.  To request a Borrowing, the Borrower
Representative shall notify the applicable Administrative Agent of such request
either in writing (delivered by hand or facsimile) substantially in the form
attached hereto as Exhibit G and signed
by the Borrower Representative or by telephone (a) with respect to U.S.
Loans (i) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., Chicago time, three Business Days before the date of the
proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than
2:00 p.m., Chicago time, on the date of the proposed Borrowing, and
(b) with respect to Canadian Loans, (i) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, Toronto time three Business Days before
the date of the proposed Borrowing, (ii) in the case of a BA Drawing, not
later than 3:00 p.m., Toronto time, three Business Days before the date of the
proposed Borrowing, and (iii) in the case of a Canadian Prime Rate
Borrowing or an ABR Borrowing, not later than 1:00 p.m., Toronto time, one
Business Day before the date of the proposed Borrowing, provided that any
such notice of an ABR Borrowing to finance the reimbursement of an LC
Disbursement (in the case of any U.S. Letter of Credit) as contemplated by
Section 2.06(e), may be given not later than 2:00 p.m., Chicago 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 or the Canadian Administrative Agent, as
applicable, of a written Borrowing Request in a form approved by the
Administrative Agent or the Canadian Administrative Agent, as applicable, and
signed by the Borrower Representative. Each such telephonic and written
Borrowing Request shall specify the following information in compliance with
Section 2.01:

     

    (i)           the
name of the applicable Borrower;

     

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

     

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

     

    (iv)         whether
such Borrowing is to be an ABR Borrowing, a Canadian Prime Rate Borrowing, a BA
Drawing or a Eurodollar Borrowing;

     

    (v)          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”; and

     

     

    
      
         

      

      
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    (vi)         in
the case of a BA Drawing, the initial Contract Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Contract
Period”.

     

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

     

                          SECTION 2.04.      Protective
Advances.  (a) Subject to the limitations set forth below, the
Administrative Agent or the Canadian Administrative Agent, as applicable, is
authorized by the Borrowers and the Lenders, from time to time in the
Administrative Agent’s or the Canadian Administrative Agent’s, as the case may
be, sole discretion (but, in either such case, neither of them shall have
absolutely any obligation to), to make (i) in the case of the Administrative
Agent, Loans to the U.S. Borrowers on behalf of the U.S. Lenders (each such
Loan, a “U.S.
Protective Advance”), or (ii) in the case of the Canadian Administrative
Agent, Loans to the Canadian Borrower in Canadian Dollars or dollars on behalf
of the Canadian Lenders (each such Loan, a “Canadian Protective
Advance”), which the Administrative Agent or Canadian Administrative
Agent, as applicable, in its Permitted Discretion, deems necessary or desirable
(A) to preserve or protect the Collateral, or any portion thereof, (B) to
enhance the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations, or (C) to pay any other amount chargeable to or required to
be paid by the applicable 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;
provided, that the aggregate amount of Protective
Advances outstanding at any time shall not at any time exceed $30,000,000; provided further, that (1) the
aggregate amount of outstanding Protective Advances in favor of the U.S.
Borrowers plus
the aggregate U.S. Revolving Exposure shall not exceed the U.S. Commitment, (2)
the aggregate amount of outstanding Protective Advances in favor of the Canadian
Borrower plus
the aggregate Canadian Revolving Exposure shall not exceed the Canadian
Commitment and (3) the aggregate amount of all outstanding Protective Advances
plus
the sum of the aggregate Revolving Exposures of all the Lenders and the Open
Account Aggregate Cap shall not exceed the aggregate Revolving Commitments.
Protective Advances may be made even if the conditions precedent set forth in
Section 4.02 have not been satisfied.  The (i) U.S. Protective
Advances shall be secured by the Liens in favor of the Administrative Agent (for
the benefit of the Lender Parties) and (ii) the Canadian Protective Advance
shall be secured by the Liens in favor of the Administrative Agent (for the
benefit of the Canadian Lender Parties) in and to the Collateral of the U.S.
Loan Parties (in the case of the U.S. Protective Advances) or the Collateral (in
the case of the Canadian Protective Advances) and shall constitute U.S.
Obligations (in the case of U.S. Protective Advances) and Canadian Obligations
(in the case of Canadian Protective Advances). All U.S. Protective Advances and
Canadian Protective Advances denominated in dollars shall be ABR Borrowings, and
all Canadian Protective Advances denominated in Canadian Dollars shall be
Canadian Prime Rate Borrowings.  The Administrative Agent’s or
Canadian Administrative Agent’s, as the case may be, authorization to make
Protective Advances may be revoked at any time by the Required
Lenders.  Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent’s or the Canadian
Administrative Agent’s (as applicable) 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, Canadian or
Administrative Agent, as applicable, may request the Revolving Lenders to make a
Revolving Loan, in the currency in which the applicable Protective Advance was
denominated, to repay a Protective Advance.  At any other time the
Administrative Agent or Canadian Administrative Agent (as applicable) may
require the Lenders to fund, in the currency in which the applicable Protective
Advance was denominated, their risk participations described in Section
2.04(b).

     

     

    
      
         

      

      
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    (b)           Upon
the making of a Protective Advance (whether before or after the occurrence of a
Default) by the Administrative Agent or the Canadian Administrative Agent, as
applicable, each U.S. Lender or Canadian Lender, as applicable, shall be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Administrative Agent or the Canadian
Administrative Agent, as applicable, without recourse or warranty, an undivided
interest and participation in such U.S. Protective Advance or Canadian
Protective Advance, as applicable, 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 or the Canadian Administrative Agent, as
applicable, 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 or the Canadian Administrative
Agent, as applicable, in respect of such Protective Advance.

     

                          SECTION 2.05.      Swingline
Loans.  (a) The Administrative Agent, the U.S. Swingline Lender
and the U.S. Lenders agree that in order to facilitate the administration of
this Agreement and the other Loan Documents, promptly after the Borrower
Representative requests an ABR Borrowing, the U.S. 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 U.S. Lenders and in the amount requested, same day
funds to the U.S. Borrowers, on the applicable Borrowing date to the Funding
Account(s) (each such Loan made solely by the U.S. Swingline Lender pursuant to
this Section 2.05(a) is referred to in this Agreement as a “U.S. Swingline
Loan”), with settlement among them as to the U.S. Swingline Loans to take
place on a periodic basis as set forth in Section 2.05(d).  Each U.S.
Swingline Loan shall be subject to all the terms and conditions applicable to
other ABR Loans funded by the U.S. Lenders, except that all payments thereon
shall be payable to the U.S. Swingline Lender solely for its own account. The
aggregate amount of U.S. Swingline Loans outstanding at any time shall not
exceed $60,000,000.  The U.S. Swingline Lender shall not make any U.S.
Swingline Loan if the requested U.S. Swingline Loan exceeds U.S. Availability
(before giving effect to such U.S. Swingline Loan).  All U.S.
Swingline Loans shall be ABR Borrowings.

     

    (b)           The
Canadian Administrative Agent, the Canadian Swingline Lender and the Canadian
Lenders agree that in order to facilitate the administration of this Agreement
and the other Loan Documents, promptly after the Borrower Representative
requests an ABR Borrowing, the Canadian Swingline Lender may elect to have the
terms of this Section 2.05(b) apply to such Borrowing Request by advancing, on
behalf of the Canadian Lenders and in the amount requested, same day funds to
the Canadian Borrower, on the applicable Borrowing date to the Funding
Account(s) (each such Loan made solely by the Canadian Swingline Lender pursuant
to this Section 2.05(b) is referred to in this Agreement as a “Canadian 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
Canadian Swingline Loan shall be subject to all the terms and conditions
applicable to other ABR Loans funded by the Canadian Lenders, except that all
payments thereon shall be payable to the Canadian Swingline Lender solely for
its own account.  The aggregate amount of Canadian Swingline Loans
outstanding at any time shall not exceed $2,500,000 (or the Equivalent Amount
thereof).  The Canadian Swingline Lender shall not make any Canadian
Swingline Loan if the requested Canadian Swingline Loan exceeds Canadian
Availability (before giving effect to such Canadian Swingline
Loan).  All Canadian Swingline Loans shall be Canadian Prime Rate
Borrowings.

     

     

    
      
         

      

      
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    (c)           Upon
the making of a Swingline Loan (whether before or after the occurrence of a
Default and regardless of whether a Settlement has been requested with respect
to such Swingline Loan), each U.S. Lender or Canadian Lender, as applicable,
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the applicable Swingline Lender,
the Administrative Agent or the Canadian Administrative Agent, as the case may
be, without recourse or warranty, an undivided interest and participation in the
applicable Swingline Loan in proportion to its Applicable Percentage of the
Revolving Commitments.  The applicable Swingline Lender may, at any
time, require the applicable Lenders to fund, in the currency in which the
applicable Swingline Loan was denominated, their participations. From and after
the date, if any, on which any Lender is required to fund its participation in
any Swingline Loan purchased hereunder, the Administrative Agent or the Canadian
Administrative Agent, as applicable, 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 such Administrative Agent in respect
of such Loan.

     

    (d)           Each
of the Administrative Agent and the Canadian Administrative Agent, on behalf of
the U.S. Swingline Lender or the Canadian Swingline Lender, as applicable, shall
request settlement (a “Settlement”) with the
U.S. Lenders or Canadian Lenders, as applicable, on at least a weekly basis or
on any more frequent date that the Administrative Agent or the Canadian
Administrative Agent, as the case may be, elects, by notifying the applicable
Lenders of such requested Settlement by facsimile, telephone or e-mail no later
than 12:00 noon Chicago time (i) on the date of such requested Settlement (the
“Settlement
Date”), with regard to U.S. Swingline Loans, and (ii) two Business Days
prior to the Settlement Date, with regard to Canadian Swingline Loans (or on the
date of such requested Settlement, if a Default or an Event of Default has
occurred and is continuing).  Each U.S. Lender or Canadian Lender, as
applicable (other than the Swingline Lenders, in the case of the Swingline
Loans) shall transfer, in the currency in which the applicable Loan was
denominated, 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 or the Canadian
Administrative Agent, as applicable, to an account of the Administrative Agent
or Canadian Administrative Agent, as applicable, as it may designate, not later
than 2:00 p.m., Chicago 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 or the Canadian Administrative Agent, as
applicable, shall be applied against the amounts of the applicable Swingline
Lender’s Swingline Loans and, together with such Swingline Lender’s Applicable
Percentage of such Swingline Loan, shall constitute Revolving Loans of such
applicable Lenders (and shall no longer constitute Swingline
Loans).  If any such amount referred to in this paragraph (d) is not
transferred to the applicable Agent by any applicable Lender on such Settlement
Date, the applicable Swingline Lender shall be entitled to recover such amount
on demand from such Lender together with interest thereon as specified in
Section 2.07.

     

     

    
      
         

      

      
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                          SECTION 2.06.      Letters of
Credit.  (a) General.  Subject
to the terms and conditions set forth herein, the Borrower Representative may
request the issuance of Letters of Credit denominated in dollars, an Alternative
Currency (in the case of Commercial Letters of Credit that are U.S. Letters of
Credit) and Canadian Dollars (in the case of Canadian Letters of Credit) for its
own account or for the account of another Borrower, in a form reasonably
acceptable to the Administrative Agent or the Canadian Administrative Agent, as
applicable, and the applicable 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
Borrowers to, or entered into by the Borrowers with, an Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall
control.

     

    (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 Representative shall hand deliver or
facsimile (or transmit by electronic communication, if arrangements for doing so
have been approved by the applicable Issuing Bank) to the applicable Issuing
Bank and the Administrative Agent (in the case of U.S. Letters of Credit) and
the Canadian Administrative Agent (in the case of Canadian Letters of Credit)
with a copy to the Administrative Agent, in each case prior to 9:00 a.m.,
Chicago time at least three Business Days prior to 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 currency in which such Letter of Credit will be
denominated (which may be in dollars or Canadian Dollars (in the case of
Canadian Letters of Credit), or, in the case of a Commercial Letter of Credit
that is issued pursuant to the U.S. Commitment, an Alternative Currency), 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 applicable Issuing Bank, the applicable
Borrower also shall submit a letter of credit application on such 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 Borrowers shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the
aggregate LC Exposure shall not exceed $450,000,000, (ii) the Standby LC
Exposure shall not exceed $50,000,000, (iii) the Commercial LC Exposure shall
not exceed $400,000,000, (iv) the LC Exposure on account of Commercial Letters
of Credit denominated in an Alternative Currency that are issued pursuant to the
U.S. Commitment shall not exceed $100,000,000, (v) the Canadian LC Exposure
shall not exceed $5,000,000, (vi) the total U.S. Revolving Exposure of all the
U.S. Lenders would not exceed the lesser of (A) (x) the total U.S. Commitments
or (y) the U.S. Borrowing Base minus
(B) the Canadian U.S. Borrowing Base Utilization, (vii) the total Canadian
Revolving Exposure of all the Canadian Lenders would not exceed the lesser of
(A) the Canadian Sublimit or (B) (x) the Canadian Borrowing Base plus (y) the U.S.
Availability and (viii) the sum of (A) (x) the total Revolving Exposures of all
the Lenders and (y) Open Account Aggregate Cap shall not exceed the lesser of
(B) (i) the total Revolving Commitments and (ii) the Aggregate Borrowing Base
then in effect.

     

     

    
      
         

      

      
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    (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 Business Days prior to the Maturity Date (it being understood that any
Letter of Credit that provides for time drafts to be submitted thereunder shall
have an expiry date which is in advance of such five Business Days prior to the
Maturity Date by the number of days contemplated for such time
drafts).

     

    (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 any
Issuing Bank or the Revolving Lenders, the applicable Issuing Bank hereby grants
to each  U.S. Lender, with respect to a U.S. Letter of Credit, and
each Canadian Lender, with respect to a Canadian Letter of Credit, and each U.S.
Lender and Canadian Lender, as applicable, hereby acquires from the applicable
Issuing Bank, a participation in each such Letter of Credit equal to such
Lender’s Applicable Percentage of the aggregate Dollar Amount (in the case of
each U.S. Letter of Credit) or Equivalent Amount (in the case of each Canadian
Letter of Credit) available to be drawn under such Letter of
Credit.  In consideration and in furtherance of the foregoing, (i)
with respect to each U.S. Letter of Credit, each U.S. Lender hereby absolutely
and unconditionally agrees to pay in dollars to the Administrative Agent, and
(ii) with respect to any Canadian Letters of Credit, each Canadian Lender hereby
absolutely and unconditionally promises to pay, in the same currency in which
such Canadian Letter of Credit is issued, the Canadian Administrative Agent, in
each case for the account of the applicable Issuing Bank, such Lender’s
Applicable Percentage of each LC Disbursement, made by such Issuing Bank and not
reimbursed by the applicable Borrower on the date due as provided in paragraph
(e) of this Section, or of any reimbursement payment required to be refunded to
such Borrowers for any reason.  Each Revolving Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Revolving Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

     

     

    
      
         

      

      
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    (e)           Reimbursement.  If
any Issuing Bank shall make any LC Disbursement in respect of a Letter of
Credit, the applicable Borrower shall reimburse such LC Disbursement by paying
to (i) the Administrative Agent (in the case of any U.S. Letter of Credit) in
dollars and (ii) the Canadian Administrative Agent (in the case of any Canadian
Letters of Credit) in the same currency as the applicable LC Disbursement an
amount equal to such LC Disbursement not later than 2:00 p.m., Chicago time, on
the Business Day that the Borrower Representative receives notice of such LC
Disbursement, if such notice is received prior to 9:00 a.m., Chicago time, on
such Business Day (or, if the Borrower Representative receives notice of such LC
Disbursement after 9:00 a.m., Chicago time, on any Business Day, by 2:00 p.m.,
Chicago time, on the next following Business Day); provided, that the
Borrowers may, 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 Borrowing (in the case of U.S. Letters of Credit), a Canadian Prime Rate
Borrowing (in the case of Canadian Letters of Credit) or a Swingline Loan in an
equivalent amount and, to the extent so financed (in the event that such LC
Disbursement was made in an Alternative Currency, such Borrowing Request shall
be for an amount equal to the Dollar Amount of the amount of such LC
Disbursement, and in the event such LC Disbursement was made with respect to a
Canadian Letter of Credit, such Borrowing Request shall be in the same currency
as such LC Disbursement), the Borrowers’ obligation to make such payment shall
be discharged and replaced by the resulting ABR Borrowing or Swingline Loan (or
the applicable portion thereof).  If the Borrowers fail to make such
payment when due, the Administrative Agent or the Canadian Administrative Agent,
as applicable, shall notify each U.S. Lender or Canadian Lender of the
applicable LC Disbursement, the payment then due from the applicable Borrower in
respect thereof and such Lender’s Applicable Percentage
thereof.  Promptly following receipt of such notice, each applicable
Lender shall pay to (x) the Administrative Agent dollars (in the case of the
U.S. Letter of Credit) or (y) the Canadian Administrative Agent (in the case of
Canadian Letters of Credit) in the same currency as the applicable LC
Disbursement, an amount equal to its Applicable Percentage of the payment then
due from the applicable 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 Revolving Lenders), and Administrative Agent and
the Canadian Administrative Agent, as the case may be, shall promptly pay to the
applicable Issuing Bank the amounts so received by it from the Revolving
Lenders.  Promptly following receipt by the Administrative Agent or
the Canadian Administrative Agent, as the case may be, of any payment from the
Borrowers pursuant to this paragraph, each of them shall distribute such payment
to the applicable Issuing Bank or, to the extent that Revolving Lenders have
made payments pursuant to this paragraph to reimburse the applicable Issuing
Bank, then each of them shall distribute such payment to such Revolving Lenders
and the applicable Issuing Bank as their interests may appear.  Any
payment made by a Revolving Lender pursuant to this paragraph to reimburse the
applicable Issuing Bank for any LC Disbursement (other than the funding of ABR
Loans (in the case of U.S. Letters of Credit), a Canadian Prime Rate Loan (in
the case of Canadian Letters of Credit) or a Swingline Loan as contemplated
above) shall not constitute a Loan (but shall be Secured Obligations) and shall
not relieve the Borrowers of their obligation to reimburse such LC
Disbursement.

     

     

    
      
         

      

      
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    (f)           Exchange Indemnification and
Increased Costs. The Borrowers shall, upon demand from any Issuing Bank
or any Revolving Lender, pay to such Issuing Bank or such Revolving Lender, the
amount of (i) any loss or cost or increased cost incurred by such Issuing Bank
or such Revolving Lender, (ii) any reduction in any amount payable to or in the
effective return on the capital to such Issuing Bank or such Revolving Lender,
(iii) any currency exchange loss, in each case with respect to clauses (i), (ii)
and (iii), that such Issuing Bank or such Revolving Lender sustains as a result
of the Borrowers’ repayment in dollars of any Commercial Letter of Credit that
is a U.S. Letter of Credit that was denominated in an Alternative Currency or
(iv) any interest or any other return, including principal, foregone by such
Issuing Bank as a result of the introduction of, change over to or operation of
the Euro in any member state participating in the Euro. A certificate of the
applicable Issuing Bank setting forth in reasonable detail the basis for
determining such additional amount or amounts necessary to compensate such
Issuing Bank shall be conclusively presumed to be correct save for manifest
error.

     

    (g)           Obligations
Absolute.  The Borrowers’ joint and several 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 untrue or
inaccurate in any respect, (iii) payment by an 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 Borrowers’ obligations
hereunder.  Neither the Administrative Agent nor the Canadian
Administrative Agent, the Revolving Lenders nor any 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
applicable Issuing Bank; provided
that the foregoing shall not be construed to excuse the applicable
Issuing Bank from liability to the Borrowers to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrowers to the extent permitted by applicable law) suffered by
any Borrower that are caused by the applicable Issuing Bank’s failure to
exercise the standard of care hereunder to be applicable 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 wilful misconduct on the part of an
Issuing Bank (as finally determined by a court of competent jurisdiction), such
Issuing Bank shall be deemed to have exercised such standard of 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 applicable 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.

     

    (h)           Disbursement
Procedures.  The applicable Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit.  The
applicable Issuing Bank shall promptly notify the Administrative Agent or the
Canadian Administrative Agent, as applicable, and the applicable Borrower by
telephone (confirmed by facsimile) of such demand for payment and whether such
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 Borrowers of their obligation to reimburse the
applicable Issuing Bank and the applicable Revolving Lenders with respect to any
such LC Disbursement.

     

     

    
      
         

      

      
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    (i)           Interim
Interest.  If any Issuing Bank shall make any LC Disbursement,
then, unless the Borrowers 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 Borrowers reimburse such LC Disbursement, (i)
(x) in the case of LC Disbursements made in dollars, at the rate per annum then
applicable to ABR Loans, and (y) in the case of an LC Disbursement made in
Canadian Dollars, at the rate per annum then applicable to Canadian Prime Rate Loans, and (ii)
in the case of LC Disbursements made in respect of any Commercial Letters of
Credit that are U.S. Letters of Credit in an Alternative Currency, at the
overnight London interbank offered rate for the relevant Alternative Currency
determined by the Administrative Agent in good faith plus
the rate per annum then applicable to Eurodollar Borrowings; provided
that, if the Borrowers fail to reimburse such LC Disbursement when
due pursuant to paragraph (e) of this Section, then Section 2.13(e) shall
apply.  Interest accrued pursuant to this paragraph shall be
for the account of the applicable Issuing Bank, except that interest accrued on
and after the date of payment by any Revolving Lender pursuant to paragraph (e)
of this Section to reimburse the Issuing Bank shall be for the account of such
Revolving Lender to the extent of such payment.

     

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

     

    (k)           Cash
Collateralization.  Subject to Section 2.18(b), if any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
Representative receives notice from the Administrative Agent, the Canadian
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral pursuant to this paragraph or if any of the other provisions hereof
require cash collateralization (or, on the Business Day on or immediately
following the maturity of the Loans if the Loans have been accelerated, without
any further notice), (i) the U.S. Borrowers shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lender Parties (the “LC
Collateral Account”), the Dollar Amount in cash equal to 103% of the U.S.
LC Exposure as of such date plus
accrued and unpaid interest thereon and (ii) the Canadian Borrower shall deposit
in an account with the Administrative Agent, in the name of the Administrative
Agent and for the benefit of the Canadian Lender Parties (the “Canadian
LC Collateral Account”), the Equivalent Amount in cash equal to 103% of
the Canadian 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 any Borrower described in paragraph (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, in the case of deposits in the LC Collateral Account, and
the Canadian Secured Obligations, in the case of deposits in the Canadian LC
Collateral Account.  The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
accounts; and (x) the U.S. Borrowers hereby grant the Administrative Agent (for
the benefit of the Lender Parties) a security interest in the LC Collateral
Account and (y) the Canadian Borrower hereby grants the Administrative Agent
(for the benefit of the Canadian Lender Parties) a security interest in the
Canadian LC Collateral Account.  Other than any interest earned on the
investment of such deposits, which investments shall be in the form of Permitted
Investments made at the option and sole discretion of the Administrative Agent
(in accordance with its usual and customary practices for investments of this
type), and at the Borrowers’ risk and reasonable 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 applicable 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 U.S. Borrowers or the Canadian Borrower, as applicable, for the LC Exposure
at such time or, if the maturity of the Loans has been accelerated (but subject
to the consent of Required Lenders), be applied, in the case of moneys in the LC
Collateral Account, to satisfy other Secured Obligations or, in the case of
moneys in the Canadian LC Collateral Account, to satisfy other Canadian Secured
Obligations.  If the Borrowers are 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
Borrowers within three Business Days after all such Events of Default have been
cured or waived.

     

     

    
      
         

      

      
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    (l)           Existing Letters of
Credit.  On the Effective Date, each Existing Letter of Credit
shall, automatically and without further action, be deemed to be a Letter of
Credit that has been issued hereunder as of the Effective Date for all purposes
hereunder and under the other Loan Documents.  Without limiting the
foregoing (i) each such Existing Letter of Credit shall be included in the
calculation of LC Exposure, (ii) all liabilities of the Borrowers and the other
Loan Parties with respect to such Existing Letters of Credit shall constitute
Obligations and (iii) each Lender shall have reimbursement obligations with
respect to such Existing Letters of Credit as provided in this Section
2.06.  Any Existing Letter of Credit that is renewed or
extended shall be issued by an Issuing Bank referred to in clause (a) of the
definition thereof.

     

    (m)           LC Exposure
Reporting. Each Issuing Bank shall, not later than 10:00 a.m., New York
time, on each Business Day, notify the Administrative Agent in reasonable detail
as to the amount of the LC Exposure with respect to the Letters of Credit issued
by such Issuing Bank.

     

     

    
      
         

      

      
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                          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 3:00 p.m., Chicago time, to the account of the Administrative
Agent or the Canadian Administrative Agent, as applicable; provided, that
Swingline Loans shall be made as provided in Section 2.05.  Each of
the Administrative Agent and the Canadian Administrative Agent, as applicable,
will make such Loans available to the Borrower Representative by promptly
crediting the amounts so received, in like funds, to the Funding Account(s);
provided that ABR Loans made to
finance (i) the reimbursement of an LC Disbursement as provided in Section
2.06(e) shall be remitted by the Administrative Agent or the Canadian
Administrative Agent, as applicable, to the applicable Issuing Bank and (ii) a
Protective Advance shall be retained by the Administrative Agent or the Canadian
Administrative Agent, as applicable, and disbursed in its
discretion.  U.S. Loans and participations in U.S. Swingline Loans and
U.S. Letters of Credit will be funded by each U.S. Lender pro rata in accordance
with its Applicable Percentage of the U.S. Commitments.  Canadian
Loans and participations in Canadian Swingline Loans and Canadian Letters of
Credit will be funded by each Canadian Lender pro rata in accordance with its
Applicable Percentage of the Canadian Commitments.

     

    (b)           Unless
the Administrative Agent or the Canadian Administrative Agent, as applicable,
shall have received notice from a Lender prior to the proposed date of any
Borrowing (or, in the case of any ABR Borrowing or Canadian Prime Rate
Borrowing, prior to the time of such proposed Borrowing) that such Lender will
not make available to the Administrative Agent or the Canadian Administrative
Agent, as applicable, such Lender’s share of such Borrowing, the Administrative
Agent or the Canadian Administrative Agent, as applicable, may assume that such
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the applicable 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 or the Canadian Administrative Agent, as applicable,
then the applicable Lender and the Borrowers severally agree to pay to the
Administrative Agent or the Canadian Administrative Agent, as applicable,
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the applicable
Borrower to but excluding the date of payment to the Administrative Agent or the
Canadian Administrative Agent, as applicable, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent or the Canadian Administrative Agent, as applicable, in
accordance with banking industry rules on interbank compensation, or (ii) in the
case of the Borrowers, the interest rate applicable to ABR Loans (in the case of
dollar denominated amounts), Canadian Prime Rate Loans (in the case of Canadian
Dollar denominated amounts).  If such Lender pays such amount to the
Administrative Agent or the Canadian Administrative Agent, as applicable, 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, (i) in the case of a
Eurodollar Revolving Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request and (ii) in the case of BA Drawings, shall
have an initial Contract Period as specified in such Borrowing
Request.  Thereafter, the Borrower Representative may elect to convert
such Borrowing to a Borrowing of a different Type, to convert BA Drawings to
Canadian Prime Rate Loans, to convert Canadian Prime Rate Loans (other than
Swingline Loans) into BA Drawings 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 Representative may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably (in accordance with
the principal amount of the U.S. Loans or Canadian Loans, as the case may be)
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 or
Protective Advances, which may not be converted or continued.

     

     

    
      
         

      

      
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    (b)           To
make an election pursuant to this Section, the Borrower Representative shall
notify the (i) Administrative Agent, with respect to each U.S. Revolving Loan,
and (ii) the Canadian Administrative Agent (with a copy to the Administrative
Agent) with respect to any Canadian Revolving Loan, of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrowers were requesting a Revolving Borrowing of the Type
resulting from such election to be made on the effective date of such election,
subject to paragraph (f) below in the case of BA Drawings.  Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or facsimile to the Administrative Agent or the
Canadian Administrative Agent, (with a copy to the Administrative Agent) as
applicable, of a written Interest Election Request in a form approved by the
Administrative Agent or the Canadian Administrative Agent, as applicable, and
signed by the Borrower Representative.

     

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

     

    (i)           the
Borrower and 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, a Eurodollar Borrowing or
Canadian Prime Rate 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 Borrowers shall be deemed to have selected
an Interest Period of one month’s duration.

     

    (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.

     

     

    
      
         

      

      
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    (e)           If
the Borrower Representative fails to deliver a timely Interest Election Request
with respect to a Eurodollar 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 (i) an ABR
Borrowing, in the case of a Eurodollar Borrowing of either U.S. Revolving Loans
or Canadian Revolving Loans denominated in dollars, and (ii) a Canadian Prime
Rate Borrowing, in the case of any BA Drawing.  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 Representative, 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) no outstanding Canadian Prime Rate
Loans may be converted to BA Drawings, and (iii) unless repaid, (A) each
Eurodollar Borrowing of U.S. Revolving Loans or of Canadian Revolving Loans
denominated in dollars shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto and (B) each BA Drawing shall be converted
to, or repaid with the proceeds of, a Canadian Prime Rate Borrowing at the end
of the Contract Period applicable thereto.

     

    (f)           At
or before 12:00 noon (Toronto time) three Business Days before the last day of
the Contract Period of any BA Drawing, the Borrower Representative shall give to
the Canadian Administrative Agent its written Interest Election Request in
respect of such BA Drawing which shall specify either that the Canadian Borrower
intends to repay the maturing B/As on such date or to continue to issue B/As on
such date to provide for the payment of the maturing B/As. If the Borrower
Representative fails to deliver such timely notice with respect to a BA Drawing
prior to the end of the Contract Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Contract Period such
Borrowing shall be converted to Canadian Prime Rate Loans.  Upon the
conversion to or continuation of any Borrowing or portion thereof as a BA
Drawing, the Discount Proceeds that would otherwise be payable to the Canadian
Borrower by each Canadian Lender pursuant to Section 2.21(d) in respect of such
new BA Drawing shall be applied against the principal amount of such Borrowing
(in the case of a conversion) or the reimbursement obligation owed to such
Lender in respect of such maturing B/As (in the case of a continuation)
(collectively, the “maturing amounts”) and the Canadian Borrower shall pay to
such Canadian Lender an amount equal to the excess of the maturing amounts over
such Discount Proceeds

     

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

     

    (b)           The
Borrowers may at any time terminate the Revolving Commitments upon (i) the
payment in full in cash of all outstanding U.S. Loans, in the case of the U.S.
Commitment, and Canadian Loans, in the case of the Canadian Commitment, together
with accrued and unpaid interest thereon and on any U.S. Letters of Credit, in
the case of the U.S. Commitment, and Canadian Letters of Credit, in the case of
the Canadian Commitment, as applicable, (ii) the cancellation and return of all
outstanding U.S. Letters of Credit, in the case of the U.S. Commitment, and
Canadian Letters of Credit, in the case of the Canadian Commitment, (or
alternatively, (A) with respect to each such U.S. Letter of Credit, the deposit
in the LC Collateral Account of cash equal to 103% of the U.S. LC Exposure or
with respect to each such Canadian Letter of Credit, the deposit in the Canadian
LC Collateral Account of cash equal to 103% Canadian LC Exposure, as applicable,
as of such date in accordance with Section 2.06(k), (B) with the consent of the
Administrative Agent and the Canadian Administrative Agent, as applicable, and
each applicable Issuing Bank, a back-up standby letter of credit equal to 103%
of the U.S. LC Exposure or Canadian LC Exposure, as applicable, as of such date
or (C) the inclusion of such Letters of Credit in a credit facility that
refinances the Obligations outstanding under this Agreement), (iii) the payment
in full in cash of the accrued and unpaid fees, and (iv) the payment in full in
cash of all reimbursable expenses and other U.S. Obligations or Canadian
Obligations, as applicable, together with accrued and unpaid interest
thereon.

     

     

    
      
         

      

      
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    (c)           The Borrowers may from
time to time reduce the U.S. Commitment and the Canadian Sublimit; provided
that (i) each reduction shall be in an amount that is an integral
multiple of $5,000,000 (or, if less, the aggregate remaining U.S. Commitment or
Canadian Sublimit), (ii) the Borrower Representative shall allocate each such
reduction, in whole or in part, to the U.S. Commitment or the Canadian Sublimit,
(iii) each reduction in the U.S. Commitment to an amount less than the then
effective Canadian Sublimit shall result in a dollar-for-dollar reduction in the
Canadian Sublimit and (iv) the Borrowers shall not reduce the Revolving
Commitments if, after giving effect to any concurrent prepayment of the
Revolving Loans in accordance with Section 2.10, (A) the sum of (1) the
total Revolving Exposures of all the Lenders, plus
the Open Account Aggregate Cap would exceed the lesser of (B) (1) the total
Revolving Commitments and (2) the Aggregate Borrowing Base.

     

                                  
(d)           The Borrower
Representative shall notify (i) the Administrative Agent of any election to
terminate or reduce the U.S. Commitments and (ii) the Canadian Administrative
Agent (with a copy to the Administrative Agent) of any election to terminate or
reduce the Canadian Commitments, in each case under paragraph (b) or (c) of this
Section at least five 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 or the Canadian Administrative Agent, as applicable, shall advise the U.S.
Lenders or the Canadian Lenders, as applicable, of the contents
thereof.  Each notice delivered by the Borrower Representative
pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Revolving Commitments
delivered by the Borrower Representative 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 Representative (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
Revolving Commitments shall be permanent.  Each reduction of the
Revolving Commitments shall be made ratably among the Lenders in accordance with
their respective Revolving Commitments.

     

                                  
(e)           The
Borrowers shall have the right to increase the Revolving Commitment by obtaining
additional U.S. 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
$10,000,000, (ii) the Borrower Representative, on behalf of the Borrowers, may
make a maximum of five such requests, (iii) the Administrative Agent has
approved the identity of any such new Lender, such approval not to be
unreasonably withheld, (iv) any such new Lender assumes all of the rights and
obligations of a “Lender” hereunder, (v) any such additional Revolving
Commitments shall be on the same terms as the other Revolving Commitments and
(vi) the procedure described in Section 2.09(f) have been
satisfied.

     

     

    
      
         

      

      
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    (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 Borrowers and the Lender(s) being
added or increasing their U.S. Commitment, subject only to the approval of all
Lenders if any such increase would cause the Revolving Commitment to exceed
$700,000,000.  As a condition precedent to such an increase, (1) the
Borrower Representative shall deliver to the Administrative Agent a certificate
of each Loan Party (in sufficient copies for each Lender) signed by an
authorized officer of such Loan Party (i) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such increase,
and (ii) in the case of the Borrowers, certifying that, before and after giving
effect to such increase, (A) the representations and warranties contained in
Article III and the other Loan Documents are true and correct in all material
respects, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
in all material respects as of such earlier date, and (B) no Default exists; and
(2) the Indenture shall have been amended in accordance with the terms thereof
to provide that the incremental Indebtedness incurred pursuant to this Section
2.09 (in addition to all the other Indebtedness outstanding pursuant to this
Agreement) is excepted from the requirements of Section 4.04 of the
Indenture.

     

    (g)           Within
a reasonable time after the effective date of any increase, the Administrative
Agent shall, and is hereby authorized and directed to, revise the Revolving Commitment
Schedule to reflect such increase and shall distribute such revised Revolving Commitment
Schedule to each of the Lenders and the Borrowers, whereupon such revised
Revolving Commitment
Schedule shall replace the old Revolving Commitment
Schedule 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; provided that if an
Event of Default occurs after the date of any such increase but prior to the
reallocation of the Eurodollar Loans such Loans shall, subject to Section 2.16,
be reallocated among the Lenders pro rata in accordance
with their Revolving Commitments.

     

                          SECTION 2.10.       Repayment and Amortization
of Loans and B/As; Evidence of Debt.  (a) The Borrowers hereby
unconditionally promise to pay (i) to the Administrative Agent or the Canadian
Administrative Agent, as applicable, for the account of each U.S. Lender and
Canadian Lender, as the case may be, the then unpaid principal amount of each
Revolving Loan on the Maturity Date, (ii) to the Canadian Administrative Agent
for the account of each applicable Canadian Lender, the then unpaid principal
amount of any BA Drawing in accordance with Section 2.21 and (iii) the then
unpaid amount of each Protective Advance on the earlier of the Maturity Date and
demand by the Administrative Agent (with respect to the U.S. Protective
Advances) or the Canadian Administrative Agent (with respect to the Canadian
Protective Advances).

     

    (b)           On
each Business Day during a Dominion Period, (i) the Administrative Agent shall
apply all funds credited to the Collection Deposit Account as of the previous
Business Day (whether or not immediately available) first to prepay any
Protective Advances that may be outstanding, second to prepay the Swingline
Loans, and third, pro rata, to prepay the Revolving Loans (without a
corresponding reduction in the Revolving Commitments) and to deposit in the LC
Collateral Account  and the Canadian LC Collateral Account, as the
case may be, cash in an amount equal to 103% of the U.S. LC Exposure and the
Canadian LC Exposure at such time and (ii) the Canadian Administrative Agent
shall apply all funds credited to the Canadian Collection Deposit Account as of
the previous Business Day (whether or not immediately available) first to prepay
any Canadian Protective Advances that may be outstanding, second to prepay the
Canadian Swingline Loans, and third, pro rata, to prepay the Canadian Revolving
Loans (without a corresponding reduction in the Canadian Commitments) and to
deposit in the Canadian LC Collateral Account cash in an amount equal to 103% of
the Canadian LC Exposure at such time.  All amounts applied pursuant
to clause (i) above shall be applied pro rata as among the U.S. Lenders and all
amounts applied pursuant to clause (ii) above shall be applied pro rata as among
the Canadian Lenders.

     

     

    
      
         

      

      
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    (c)           Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrowers to such Lender resulting
from each Loan made 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 and the Canadian Administrative Agent, as the case may be,
shall maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the 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 Borrowers to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent or the Canadian 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
or the Canadian Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrowers 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 Borrowers 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 and
B/As.  (a) The Borrowers 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, except that the
Borrowers shall not prepay any BA Drawings except on the last day of the
Contract Period applicable thereto (subject to any mandatory prepayment
requirements hereunder).

     

     

    
      
         

      

      
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    (b)           In
the event and on such occasion that (i) the sum of (A) the total Revolving
Exposure of all the Lenders and (B) the Open Account Aggregate Cap exceeds the
lesser of (x) the total Revolving Commitments or (y) the Aggregate Borrowing
Base, (ii) the total U.S. Revolving Exposure of all the U.S. Lenders exceeds (A)
the lesser of (x) the total U.S. Commitments or (y) the U.S. Borrowing Base
minus
(B) the Canadian U.S. Borrowing Base Utilization or (iii) the total Canadian
Revolving Exposure of all the Canadian Lenders exceeds the lesser of (A) the
Canadian Sublimit or (B) (x) the Canadian Borrowing Base plus
(y) the U.S. Availability, the Borrowers shall promptly prepay (or in the case
of the LC Exposure, cash collateralize) the Revolving Loans, LC Exposure and/or
Swingline Loans in an aggregate amount equal to such excess.

     

    (c)           If
the Administrative Agent determines that the outstanding principal Dollar Amount
of all outstanding Commercial Letters of Credit issued that are U.S. Letters of
Credit denominated in an Alternative Currency exceeds the lesser of (A)
$450,000,000 less the sum of the outstanding principal amount of the LC Exposure
denominated in dollars and (B) $100,000,000, then not later than one Business
Day after notice of the amount of such excess from the Administrative Agent to
the Borrower Representative, the U.S. Borrowers shall deposit in the LC
Collateral Account cash in an amount equal to such excess (to be held as cash
collateral in accordance with Section 2.06(k)).

     

    (d)           During
a Dominion Period, 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 Borrowers shall, immediately after such Net Proceeds are received by any
Loan Party, prepay the Obligations as set forth in Section 2.11(f) below in an
aggregate amount equal to 100% of such Net Proceeds to the extent that such
Obligations are then outstanding; provided
that, in the case of any event described in paragraph (a) or (b)
of the definition of the term “Prepayment Event”, if the Borrower Representative
shall deliver to the Administrative Agent a certificate of a Financial Officer
to the effect that the Loan Parties intend to apply the Net Proceeds from such
event (or a portion thereof specified in such certificate), within 180 days
after receipt of such Net Proceeds, to acquire (or replace or rebuild) real
property, equipment or other tangible assets (excluding inventory) to be used in
the business of the Loan Parties, and certifying that no Default has occurred
and is continuing, then if the Net Proceeds specified in such certificate are to
be applied by (A) the Borrowers, then such Net Proceeds shall be applied by the
Administrative Agent to reduce the outstanding principal balance of the
Revolving Loans (without a permanent reduction of the Revolving Commitment) and
upon such application, the Administrative Agent shall establish a Reserve
against the Borrowing Base in an amount equal to the amount of such proceeds so
applied and (B) any Loan Party that is not a Borrower, then such Net Proceeds
shall be deposited in a cash collateral account and in either case, thereafter,
such funds shall be made available to the applicable Loan Party as
follows:

     

    (1)           the
Borrower Representative shall request a Revolving Loan (specifying that the
request is to use Net Proceeds pursuant to this Section) or the applicable Loan
Party shall request a release from the cash collateral account be made in the
amount needed;

     

     

    
      
         

      

      
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    (2)           so
long as the conditions set forth in Section 4.02 have been met, the Revolving
Lenders shall make such Revolving Loan or the Administrative Agent shall release
funds from the cash collateral account; and

     

    (3)           in
the case of Net Proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Loan;

     

    provided
that to the extent of any such
Net Proceeds therefrom that have not been so applied by the end of such 180 day
period, at which time a prepayment shall be required in an amount equal to such
Net Proceeds that have not been so applied; provided
further
that the Borrowers shall not be permitted to make elections to use Net Proceeds
to acquire (or replace or rebuild) equipment or other tangible assets
(excluding inventory) with respect to Net Proceeds in any fiscal year in an
aggregate amount in excess of $50,000,000.

     

    (e)           In
the event that the IP Secured Financing is consummated, the Net Proceeds that
are received by or on behalf of any Loan Party shall, as provided in the
definition of “IP Secured Financing” be applied to prepay the Obligations as set
forth in Section 2.11(f) below in an aggregate amount equal to 100% of such Net
Proceeds to the extent that such Obligations are then outstanding.

     

    (f)           All
such amounts pursuant to Sections 2.11(d) and (e) shall be applied, first to prepay any
Protective Advances that may be outstanding, pro rata,  and second to prepay the
Revolving Loans (including Swingline Loans) without a corresponding reduction in
the Revolving Commitment and, except in the case of amounts due pursuant to
paragraph (e) above, to cash collateralize outstanding LC
Exposure.  If the precise amount of insurance or condemnation proceeds
allocable to Inventory as compared to equipment, fixtures and real property is
not otherwise determined, the allocation and application of those proceeds shall
be determined by the Administrative Agent, in its Permitted
Discretion.  Notwithstanding the foregoing, any such application of
proceeds from Collateral securing solely the Canadian Obligations shall be made
solely in respect of the Canadian Obligations.

     

    (g)           The Borrower
Representative shall notify the Administrative Agent  and the Canadian
Administrative Agent (and, in the case of prepayment of a Swingline Loan, the
applicable Swingline Lender) by telephone (confirmed by facsimile) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing,
not later than 10:00 a.m., Chicago time, three Business Days before the date of
prepayment, or (ii) in the case of prepayment of an ABR Borrowing or a Canadian
Prime Rate Borrowing, not later than 10:00 a.m., Chicago time, on 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 Revolving 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.

     

     

    
      
         

      

      
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                          SECTION 2.12.      Fees.  (a)
The U.S. Borrowers agree to pay to the Administrative Agent for the account of
each Lender a commitment  fee, which shall accrue at a rate equal to
(i), if the average daily unused portion of the Revolving Commitment is greater
than 50% of the total Revolving Commitment during the period in respect of which
the payment is being made, 1.00%, per annum, and (ii), if the average daily
unused portion of the total Revolving Commitment is less than or equal to 50% of
the total Revolving Commitment during the period in respect of which the payment
is being made, 0.75%, per annum, in each case on the average daily amount of the
Available Revolving Commitment of such Lender during the period from and
including the Effective Date to but excluding the date on which the Lenders’
Revolving Commitments terminate.  Accrued commitment fees shall be
payable in arrears on the first day of each calendar month and on the date on
which the Revolving 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 (including the first day but excluding the last day).

     

    (b)           The
(i) U.S. Borrowers agree to pay to the Administrative Agent for the account of
each U.S. Lender a participation fee with respect to its participations in U.S.
Letters of Credit and (ii) Canadian Borrower agrees to pay to the Canadian
Administrative Agent for the account of each Canadian Lender a participation fee
with respect to its participations in Canadian Letters of Credit, which, in each
case, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurodollar Loans (or, in the case of Commercial
Letters of Credit that do not provide for the presentation of a time draft, 50%
of such Applicable Rate) on the average daily amount of such Lender’s applicable
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 Revolving Commitment
terminates and the date on which such Revolving Lender ceases to have any LC
Exposure. In addition, each Borrower agrees to pay  to the applicable
Issuing Bank with respect to each Standby Letter of Credit issued for the
account of such Borrower a fronting fee, which shall accrue at the rate of 0.1%
per annum on the average daily amount of the Standby 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 Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the applicable Issuing Bank’s standard fees 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 January, April, July and October 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 Revolving Commitments terminate
and any such fees accruing after the date on which the Revolving Commitments
terminate shall be payable on demand.  Any other fees payable to an
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand.  All participation fees and fronting fees payable pursuant to
this paragraph (b) shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).

     

     

    
      
         

      

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

     

    (d)           All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent or the Canadian Administrative Agent, as
applicable, (or to the applicable 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 shall bear interest at the Alternate Base Rate plus
the Applicable Rate for Revolving Loans plus
2%.

     

    (d)           The
Loans comprising each Canadian Prime Rate Borrowing shall bear interest at the
Canadian Prime Rate plus
the Applicable Rate.

     

    (e)           Notwithstanding
the foregoing, during the occurrence and continuance of any Event of Default
under paragraph (a) of Article VII, the Administrative Agent or the Required
Lenders may, at their option, by notice to the Borrower Representative (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 affected
thereby” for reductions in interest rates), declare that (i) all Loans that are
subject to such Event of Default 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 amounts outstanding
hereunder that are subject to such Event of Default, (x) if such amount is
denominated in dollars, such amount shall accrue at 2% plus
the rate applicable to such fee or other obligation as provided hereunder (or,
if no such interest rate is specified, at a rate of interest equal to 2% plus
the rate otherwise applicable to ABR Loans) and (y) if such amount is
denominated in Canadian Dollars, such amount shall accrue at 2% plus
the rate applicable to Canadian Prime Rate Loans as provided in paragraph (d) of
this Section.

     

    (f)           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 Revolving 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 Loan or Canadian Prime
Rate 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.  Accrued interest shall be payable (i) to the
Administrative Agent, for the account of each U.S. Lender, ratably with respect
to interest on any U.S. Revolving Loan or U.S. Swingline Loan, (ii) to the
Administrative Agent, with respect to interest on any U.S. Protective Advance,
(iii) to the Canadian Administrative Agent, for the account of each Canadian
Lender, ratably with respect to interest on a Canadian Revolving Loan or a
Canadian Swingline Loan, and (iv) to the Canadian Administrative Agent, with
respect to interest on any Canadian Protective Advance denominated in Canadian
Dollars.

     

     

    
      
         

      

      
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    (g)           All
interest hereunder shall be computed on the basis of a year of 360 days, except
that the Acceptance Fee and the 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 (including
the first day but excluding the last day).  The applicable Alternate
Base Rate, Canadian Prime Rate, Discount Rate, Adjusted LIBO Rate or LIBO Rate
shall be determined by the Administrative Agent or the Canadian Administrative
Agent, as applicable, and such determination shall be conclusive absent manifest
error.

     

    (h)           For
purposes of the Interest Act (Canada) and disclosure thereunder, whenever any
interest or any fee to be paid hereunder or under any other Loan Document is to
be calculated on the basis of a 360-day year or any other period of time less
than a calendar year, the yearly rate of interest or fees to which the rate used
in such calculation is equivalent, is the rate so used multiplied by the actual
number of days in the applicable calendar year and divided by 360 or such other
period of time.

     

                          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;

     

    then the
Administrative Agent shall give notice thereof to the Borrower Representative
and the Lenders by telephone or facsimile as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower Representative 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) any such request for a continuation of
a Eurodollar Borrowing of (A) U.S. Revolving Loans or Canadian Revolving Loans
denominated in dollars shall be deemed to be a request to convert such Borrowing
to an ABR Borrowing, and (B) Canadian Revolving Loans denominated in Canadian
Dollars shall be deemed to be a request to convert such Borrowing to a Canadian
Prime Rate Borrowing.

     

     

    
      
         

      

      
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                          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
(other than any Taxes) 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 Issuing Bank; or

     

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

     

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

     

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

     

    (c)           A
certificate of a Lender or Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or 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 Representative and shall be conclusive absent manifest
error.  The Borrowers shall pay such Lender or Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

     

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

     

     

    
      
         

      

      
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                          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 Representative pursuant to Section 2.19, then, in any
such event, the Borrowers 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 (including the Applicable 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 Representative and shall be
conclusive absent manifest error.  The Borrowers shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.

     

                          SECTION 2.17.      Taxes.  (a)
Each payment by any Loan Party under any Loan Document shall be made without
deduction or withholding for any Taxes, unless such deduction or withholding is
required by applicable law.  If any Withholding Agent determines, in
its sole discretion exercised in good faith, that it is so required to deduct or
withhold Taxes, then such Withholding Agent may so deduct or withhold and shall
timely pay the full amount of withheld Taxes to the relevant Governmental
Authority in accordance with applicable law.  If such Taxes are
Indemnified Taxes, then the amount to be paid by the Loan Parties shall be
increased as necessary so that, net of such withholding (including any deduction
or withholding applicable to additional amounts payable under this Section), the
applicable recipient of such payment receives the amount it would have received
had no such deduction or withholding been made.

     

    (b)           The
Loan Parties shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

     

     

    
      
         

      

      
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    (c)           The
Loan Parties shall jointly and severally indemnify the Administrative Agent, the
Canadian Administrative Agent, each Lender and each Issuing Bank, within 10 days
after written demand therefor, for the full amount of any Indemnified Taxes paid
by the Administrative Agent, the Canadian Administrative Agent, such Lender or
such Issuing Bank, as the case may be, on or with respect to any payment by or
on account of any obligation of the Loan Parties under any Loan Document
(including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under this Section) and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified 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 Representative by a Lender or an Issuing Bank, or by the Administrative
Agent or the Canadian Administrative Agent on its own behalf or on behalf of any
Lender Party, shall be conclusive absent manifest error.

     

    (d)           Each
Lender and Issuing Bank shall indemnify each Loan Party and the Administrative
Agent, within 10 days after written demand therefor, for the full amount of any
Taxes described in clause (c) of the definition of “Excluded Taxes” that are
imposed on amounts paid to such Lender or Issuing Bank by such Loan Party or the
Administrative Agent on or with respect to any payment by or on account of any
obligation of any Loan Party under any Loan Document and any reasonable expenses
arising therefrom or with respect thereto, whether or not such 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 applicable Lender or Issuing Bank by the Loan Party
or the Administrative Agent shall be conclusive absent manifest
error.  The Loan Party or the Administrative Agent, as applicable,
shall notify the applicable Lender or Issuing Bank of the incurrence or
assertion of such liability within a reasonable time after the incurrence or
assertion.  Each Lender and Issuing Bank hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender or 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 by a Loan Party to a
Governmental Authority, such Loan Party or the Borrower Representative shall
deliver to the Administrative Agent or the Canadian Administrative Agent, as
applicable, 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 or the Canadian Administrative Agent, as
applicable.

     

    (f)           (i)
Any Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which any Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under any
Loan Document shall deliver to the Borrower Representative and the
Administrative Agent or the Canadian Administrative Agent, as applicable, at the
time or times prescribed by applicable law or reasonably requested in writing by
the Borrower Representative or the Administrative Agent or the Canadian
Administrative Agent, as applicable, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower Representative or the Administrative Agent or the Canadian
Administrative Agent, as applicable, as will permit such payments to be made
without withholding or at a reduced rate.  In addition, any Lender
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower Representative or the Administrative Agent
or the Canadian Administrative Agent, as applicable, as will enable the Borrower
Representative or the Administrative Agent or the Canadian Administrative Agent,
as applicable, to determine whether or not such Lender is subject to backup
withholding or information reporting requirements.  Upon the
reasonable request of the Borrower Representative or the Administrative Agent or
the Canadian Administrative Agent, as applicable, any Lender shall update any
form or certification previously delivered pursuant to this
Section.  If any such form or certification expires or becomes
obsolete or inaccurate in any respect with respect to a Lender, such Lender
shall promptly (and in any event within 10 days after such expiration,
obsolescence or inaccuracy) notify the Borrower Representative and the
Administrative Agent or the Canadian Administrative Agent, as applicable, in
writing of such expiration, obsolescence or inaccuracy; provided that in no
event shall a Lender be liable to the Borrower, the Administrative Agent or the
Canadian Administrative Agent, as applicable, or any other Person for failing to
provide the notification referenced in this sentence.

     

     

    
      
         

      

      
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    (ii)           Without
limiting the generality of the foregoing, if any Borrower is a U.S. Person, any
Lender with respect to such Borrower shall, if it is legally eligible to do so,
deliver to the Borrower Representative and the Administrative Agent (in such
number of copies reasonably requested by the Borrower Representative and the
Administrative Agent) on or prior to the date on which such Lender becomes a
party hereto, duly completed and executed copies of whichever of the following
is applicable:

     

    
      
        
          	
                   
      

                	
                  (A)

                	
                  

                    in
      the case of a Lender that is a U.S. Person, IRS Form
      W-9;

                  

                

        

         

      

    

    
      	
               
      

            	
              (B)

            	
              in
      the case of a Lender (other than a U.S. Person) claiming the benefits of
      an income tax treaty to which the United States is a party (1) with
      respect to payments of interest under any Loan Document, IRS Form W-8BEN
      establishing an exemption from, or reduction of, U.S. federal withholding
      Tax pursuant to the “interest” article of such tax treaty and (2) with
      respect to all other payments under any Loan Document, IRS Form W-8BEN
      establishing an exemption from U.S. federal withholding Tax pursuant to
      the “business profits” or “other income” article of such tax
      treaty;

            

    

     

    
      	
               
      

            	
              (C)

            	
              in
      the case of a Lender (other than a U.S. Person) for whom payments under
      any Loan Document constitute income that is effectively connected with
      such Lender’s conduct of a trade or business in the United States, IRS
      Form W-8ECI;

            

    

     

    
      	
               
      

            	
              (D)

            	
              in
      the case of a Lender (other than a U.S. Person) claiming the benefits of
      the exemption for portfolio interest under Section 881(c) of the Code both
      (1) IRS Form W-8BEN and (2) a certificate substantially in the form of
      Exhibit F (a “U.S. Tax Compliance
      Certificate”) to the effect that such Lender is not (a) a “bank”
      within the meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent
      shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of
      the Code, (c) a “controlled foreign corporation” described in Section
      881(c)(3)(C) of the Code and (d) conducting a trade or business in the
      United States with which the relevant interest payments are effectively
      connected;

            

    

     

     

    
      
         

      

      
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              (E)

            	
              in
      the case of a Lender (other than a U.S. Person) that either is not the
      beneficial owner of payments made under any Loan Document or is a
      partnership (1) an IRS Form W-8IMY on behalf of itself and (2) the
      relevant forms prescribed in clauses (A), (B), (C), (D) and (F) of this
      paragraph (f)(ii) that would be required of each such beneficial owner or
      partner of such partnership if such beneficial owner or partner were a
      Lender; or

            

    

     

    
      	
               
      

            	
              (F)

            	
              any
      other form prescribed by law as a basis for claiming exemption from, or a
      reduction of, U.S. federal withholding Tax together with such
      supplementary documentation necessary to enable the Borrower
      Representative or the Administrative Agent to determine the amount of Tax
      (if any) required by law to be
withheld.

            

    

     

    (g)           If
any recipient of any payment to be made by or on account of any obligation of a
Loan Party under any Loan Document determines, in its sole discretion exercised
in good faith, that it has received a refund of any Taxes as to which it has
been indemnified pursuant to this Section 2.17 (including additional amounts
paid by any Loan Party pursuant to this Section 2.17), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of
indemnity payments made under this Section 2.17 with respect to the Taxes giving
rise to such refund), net of all out-of-pocket expenses (including any Taxes) of
each such Person and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).  Such
indemnifying party, upon the request of any such Person, shall repay to such
Person the amount paid to such indemnifying party pursuant to the previous
sentence (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event any such Person is required to repay such refund to such
Governmental Authority.  Notwithstanding anything to the contrary in
this paragraph, in no event will any such Person be required to pay any amount
to any Loan Party pursuant to this paragraph if such payment would place any
such Person in a less favorable position (on a net after-Tax basis) than any
such Person would have been in if the indemnification payments or additional
amounts giving rise to such refund had never been paid.  This
paragraph shall not be construed to require any such Person to make available
its Tax returns (or any other information relating to its Taxes that it deems
confidential) to any Loan Party or any other Person.

     

                          SECTION 2.18.      Payments Generally;
Allocation of Proceeds; Sharing of Set-offs.  (a) The Borrowers
shall make each payment required to be made by them 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 2:00 p.m.,
Chicago time, on the date when due, in immediately available funds, without set
off or counterclaim.  All payments hereunder shall be made in dollars
except that all payments in respect of Loans (and interest thereon) and LC
Exposures to be made to the Canadian Lenders or the Canadian Administrative
Agent shall be made in the same currency in which such Loan was made or Letter
of Credit issued.  All such payments shall be made and allocated, in
the case of the U.S. Loans, for the account of the U.S. Lenders, and in the case
of the Canadian Loans, for the account of its Canadian Lenders, in each case pro
rata in accordance with the respective unpaid principal amounts of the U.S.
Loans and the U.S. LC Exposure or the Canadian Loans and the Canadian LC
Exposure, as the case may be, made to the applicable Borrower held by
them.  Any amounts received after such time on any date may, in the
discretion of the Administrative Agent or the Canadian Administrative Agent, as
applicable, 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 (i) with respect to payments of Canadian
Loans, LC Disbursements of any Issuing Bank in respect of Canadian Letters of
Credit, fronting fees payable to any Issuing Bank in respect of Canadian Letters
of Credit, the Canadian Administrative Agent at its offices at 200 Bay Street,
Royal Bank Plaza, Floor 18, Toronto M57 2J2 Canada, and (ii) payments to be made
directly to an Issuing Bank or Swingline Lender as expressly provided herein and
except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be
made directly to the Persons entitled thereto.  Each of the
Administrative Agent and the Canadian Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient, in like funds, 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.

     

     

    
      
         

      

      
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    (b)           Any
proceeds of Collateral received by the Administrative Agent or the Canadian
Administrative Agent after an Event of Default has occurred and is continuing
and the Administrative Agent or the Canadian Administrative Agent so elects or
the Required Lenders so direct shall be applied ratably (based in respect of
each of the following separate categories, computed independently of the other
categories, on each Lender Party’s interest in the aggregate specific type of
outstanding Secured Obligations described within (and only within) each specific
category of Secured Obligations listed respectively below) first, to pay any
fees, indemnities or expense reimbursements, including amounts then due to the
Administrative Agent, the Canadian Administrative Agent and each Issuing Bank
from the Borrowers (other than in connection with Banking Services, Swap
Obligations or Open Account Obligations), second, to pay any
fees or expense reimbursements then due to the Lenders from the Borrowers (other
than in connection with Banking Services, Swap Obligations or Open Account
Obligations), third, to pay
interest due in respect of the Protective Advances, fourth, to pay the
principal of the Protective Advances, fifth, to pay
interest then due and payable on the Loans (other than the Protective Advances),
sixth, to
prepay principal on the Loans (other than the Protective Advances) and LC
Disbursements, seventh, to deposit
in the U.S. LC Collateral Account and the Canadian L.C. Collateral Account cash
(as provided in Section 2.06(k)) collateral equal to 103% of the sum of the U.S.
LC Exposure and Canadian LC Exposure, as the case may be, to be held as cash
collateral for such Obligations and such Canadian Obligations, as the case may
be, eighth, to
pay (i) the Citibank Open Account Obligations in an aggregate amount up to the
Citibank Open Account Cap and (ii) the other Open Account Obligations in an
aggregate amount up to the applicable Open Account Other Cap with respect to
each Other Open Account Agreement related thereto, ninth, to payment of
any amounts owing with respect to Banking Services and Swap Obligations, tenth, to the payment
of any other Secured Obligation due to any Lender Party by the Borrowers and
eleventh, to
pay the Open Account Excess Obligations.  Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by the Borrower
Representative, or unless an Event of Default is in existence, none of the
Administrative Agent, the Canadian Administrative Agent nor any Lender shall
apply any payment which it receives to any Eurodollar Loan, 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 or Canadian Prime Rate Loans and, in any such event, the Borrowers shall
pay the break funding payment required in accordance with Section
2.16.  Each of the Administrative Agent, the Canadian Administrative
Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply all such proceeds and payments to any portion of the Secured
Obligations.  Notwithstanding the foregoing, any such application of
proceeds from Collateral securing solely the Canadian Obligations shall be made
solely in respect of Canadian Obligations.

     

     

    
      
         

      

      
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    (c)           At
the election of the Administrative Agent or the Canadian Administrative Agent,
as the case may be, all payments of principal, interest, LC Disbursements, Open
Account Obligations, 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
Representative pursuant to Section 2.03 or a deemed request as provided in this
Section or (following substantially contemporaneous notice to the Borrower
Representative, except that delivery of such notice shall not be required during
the continuance of any Event of Default and the Administrative Agent shall have
no liability, in any event, for failing to deliver such notice) may be deducted
from any deposit account of any Borrower maintained with the Administrative
Agent or the Canadian Administrative Agent.  Each Borrower hereby
irrevocably authorizes (i) the Administrative Agent or the Canadian
Administrative Agent, as applicable, to make a Borrowing for the purpose of
paying each payment referred to in the preceding sentence and agrees that all
such amounts charged shall constitute Loans (including Swingline Loans, 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 or the Canadian
Administrative Agent, as applicable (following substantially contemporaneous
notice to the Borrower Representative, except that delivery of such notice shall
not be required during the continuance of any Event of Default and the
Administrative Agent shall have no liability, in any event, for failing to
deliver such notice) to charge any deposit account of any Borrower maintained
with the Administrative Agent or the Canadian Administrative Agent, as
applicable, 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 Borrowers 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.  Each 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 such Borrower rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of such
Borrower in the amount of such participation.

     

     

    
      
         

      

      
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    (e)           Unless
the Administrative Agent shall have received notice from the Borrower
Representative prior to the date on which any payment is due to the
Administrative Agent or the Canadian Administrative Agent, as applicable, for
the account of the Lenders or an Issuing Bank hereunder that the Borrowers will
not make such payment, the Administrative Agent or the Canadian Administrative
Agent, if applicable, may assume that the Borrowers have made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders, the Open Account Banks or the Issuing Banks, as the
case may be, the amount due.  In such event, if the Borrowers have not
in fact made such payment, then each of the Lenders, the Open Account Banks or
the Issuing Banks, as the case may be, severally agrees to repay to the
Administrative Agent or the Canadian Administrative Agent, as applicable,
forthwith on demand the amount so distributed to such Lender,  Open
Account Bank or such 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 or the Canadian Administrative Agent, if
applicable, at the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent or the Canadian Administrative Agent, as
applicable, 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), 2.21(d) or 9.03(c), then the
Administrative Agent and, if applicable, the Canadian Administrative Agent, may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.

     

                          SECTION 2.19.      Mitigation Obligations;
Replacement of Lenders.  (a) If any Lender or Issuing Bank
requests compensation under Section 2.15, or if the Borrowers are required to
pay any additional amount to any Lender Issuing Bank or any Governmental
Authority for the account of any Lender or Issuing Bank pursuant to Section
2.17, then such Lender or Issuing Bank shall use reasonable efforts to designate
a different lending office for funding or booking its Loans or Letters of Credit
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender or Issuing
Bank, 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 or Issuing Bank to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender or Issuing
Bank.  The Borrowers hereby agree to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment;

     

     

    
      
         

      

      
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    (b)           If
any Lender or Issuing Bank requests compensation under Section 2.15, or if the
Borrowers are required to pay any additional amount to any Lender, Issuing Bank
or any Governmental Authority for the account of any Lender or Issuing Bank
pursuant to Section 2.17, or if any Lender becomes a Defaulting Lender, then the
Borrowers may, at their sole expense and effort, upon notice to such Lender or
Issuing Bank and the Administrative Agent, require such Lender or Issuing Bank
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 Borrowers shall have received the prior written
consent of the Administrative Agent and the Issuing Banks (other than any
Issuing Bank required to assign and delegate its interests, rights and
obligations pursuant to this paragraph (b)), which consent shall not
unreasonably be withheld, (ii) such Lender or Issuing Bank 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 Borrowers (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.  No
Lender or Issuing Bank shall be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or Issuing
Bank or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.

     

                          SECTION 2.20.      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, the
Canadian 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, the Canadian Administrative Agent or
such Lender.  The provisions of this Section 2.20 shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds.  The provisions of this Section 2.20 shall survive the
termination of this Agreement.

     

                          SECTION 2.21.      Bankers’
Acceptances.  (a) The Canadian Borrower may issue Bankers’
Acceptances denominated in Canadian Dollars for acceptance and purchase by the
Canadian Lenders in accordance with the provisions of Section 2.01, Section 2.03
and this Section 2.21.

     

    (b)           Each
Bankers’ Acceptance shall have a Contract Period of approximately 30, 60 or 90
days.  No Contract Period shall extend beyond the Maturity
Date.  If such Contract Period would otherwise end on a day that is
not a Business Day, such Contract Period shall end on the next preceding day
that is a Business Day.

     

     

    
      
         

      

      
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    (c)           On
each Borrowing date on which Bankers’ Acceptances are to be accepted, the
Canadian Administrative Agent shall advise the Canadian Borrower as to the
Canadian Administrative Agent’s determination of the applicable Discount Rate
for the Bankers’ Acceptances which any of the Canadian Lenders have agreed to
purchase.

     

    (d)           Each
Canadian Lender agrees to purchase a Bankers’ Acceptance accepted by
it.  The Canadian Borrower shall sell, and such Canadian Lender shall
purchase, the Bankers’ Acceptance at the applicable Discount
Rate.  Such Canadian Lender shall provide to the Canadian Funding
Office the Discount Proceeds less the Acceptance Fee payable by the Canadian
Borrower with respect to such Bankers’ Acceptance.  Such proceeds will
then be made available to the Canadian Borrower by the Canadian Administrative
Agent crediting an account as directed by the Canadian Borrower with the
aggregate of the amounts made available to the Canadian Administrative Agent by
such Canadian Lenders and in like funds as received by the Canadian
Administrative Agent.

     

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

     

    (f)           To
facilitate borrowings under the Canadian Commitments by way of B/As, the
Canadian Borrower hereby appoints each Canadian Lender as its attorney to sign
and endorse on its behalf, in handwriting or by facsimile or mechanical
signature as and when deemed necessary by such Canadian Lender, blank forms of
B/As.  In this respect, it is each Canadian Lender’s responsibility to
maintain an adequate supply of blank forms of B/As for acceptance under this
Agreement.  The Canadian Borrower recognizes and agrees that all B/As
required to be accepted and purchased by any Canadian Lender and which are
signed and/or endorsed on its behalf by a Canadian Lender shall bind the
Canadian Borrower as fully and effectually as if signed in the handwriting of
and duly issued by the proper signing officers of the Canadian
Borrower.  Each Canadian Lender is hereby authorized to issue such
B/As endorsed in blank in such face amounts as may be determined by such
Canadian Lender; provided that the
aggregate amount thereof is equal to the aggregate amount of B/As required to be
accepted and purchased by such Canadian Lender. No Canadian Lender shall be
liable for any damage, loss or other claim arising by reason of any loss or
improper use of any such instrument except the gross negligence or willful
misconduct of such Canadian Lender or its officers, employees, agents or
representatives.  On request by the Canadian Borrower, a Canadian
Lender shall cancel all forms of B/As which have been pre-signed or pre-endorsed
by or on behalf of the Canadian Borrower and which are held by such Canadian
Lender and have not yet been issued in accordance herewith.  Each
Canadian Lender shall maintain a record with respect to B/As held by it in blank
hereunder, voided by it for any reason, accepted and purchased by it hereunder,
and cancelled at their respective maturities. Each Canadian Lender agrees to
provide such records to the Canadian Borrower at the Canadian Borrower’s expense
upon request.

     

    (g)           Drafts
drawn by the Canadian Borrower to be accepted as Bankers’ Acceptances shall be
signed by a duly authorized officer or officers of the Canadian Borrower or the
Borrower Representative or by their respective attorneys, including attorneys
appointed pursuant to Section 2.21(f) above. Notwithstanding that any Person
whose signature appears on any Bankers’ Acceptance may no longer be an
authorized signatory for the Canadian Borrower or Borrower Representative, as
applicable, at the time of issuance of a Bankers’ Acceptance, that signature
shall nevertheless be valid and sufficient for all purposes as if the authority
had remained in force at the time of issuance and any Bankers’ Acceptance so
signed shall be binding on the Canadian Borrower.

     

     

    
      
         

      

      
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    (h)           The
Canadian Administrative Agent, promptly following receipt of a notice of
Borrowing, continuation or conversion by way of Bankers’ Acceptances, shall
advise the applicable Canadian Lenders of the notice and shall advise each such
Canadian Lender of the face amount of Bankers’ Acceptances to be accepted by it
and the applicable Contract Period (which shall be identical for all Canadian
Lenders). The aggregate face amount of Bankers’ Acceptances to be accepted by a
Canadian Lender shall be determined by the Administrative Agent by reference to
such Canadian Lender’s Applicable Percentage of the issue of Bankers’
Acceptances, except that, if the face amount of a Bankers’ Acceptance which
would otherwise be accepted by a Canadian Lender would not be Cdn.$100,000, or a
whole multiple thereof, the face amount shall be increased or reduced by the
Canadian Administrative Agent in its sole discretion to Cdn.$100,000, or the
nearest whole multiple of that amount, as appropriate.

     

    (i)           The
Canadian Borrower waives presentment for payment and any other defense to
payment of any amounts due to a Canadian Lender in respect of a Bankers’
Acceptance accepted and purchased by it pursuant to this Agreement which might
exist solely by reason of the Bankers’ Acceptance being held, at the maturity
thereof, by such Canadian Lender in its own right and the Canadian Borrower
agrees not to claim any days of grace if such Canadian Lender as holder sues the
Canadian Borrower on the Bankers’ Acceptance for payment of the amount payable
by the Canadian Borrower thereunder.  On the specified maturity date
of a B/A, or the date of any prepayment thereof in accordance with this
Agreement, if earlier, the Canadian Borrower shall pay to such Canadian Lender
that has accepted such B/A the full face amount of such B/A (or shall make
provision for payment by way of conversion or continuation in accordance with
Section 2.08) in full and absolute satisfaction of its obligations with respect
to such B/A, and after such payment, the Canadian Borrower shall have no further
liability in respect of such B/A (except to the extent that any such payment is
rescinded or reclaimed by operation of law or otherwise) and such Canadian
Lender shall be entitled to all benefits of, and will make and otherwise be
responsible for all payments due to the redeeming holder or any third parties
under, such B/A.

     

    (j)           Whenever
the Canadian Borrower requests a borrowing by way of Bankers’ Acceptances, each
Non BA Lender shall, in lieu of accepting and purchasing any B/As, make a Loan
(a “BA Equivalent
Loan”) to the Canadian Borrower in the amount and for the same term as
each Draft which such Lender would otherwise have been required to accept and
purchase hereunder. Each such Lender will provide to the Canadian Administrative
Agent the amount of Discount Proceeds of such BA Equivalent Loan for the account
of the Canadian Borrower in the same manner as such Lender would have provided
the Discount Proceeds in respect of the Draft which such Lender would otherwise
have been required to accept and purchase hereunder. Each such BA Equivalent
Loan will bear interest at the same rate that would result if such Lender had
accepted (and been paid an acceptance fee) and purchased (on a discounted basis)
a B/A for the relevant Contract Period (it being the intention of the parties
that each such BA Equivalent Loan shall have the same economic consequences for
the relevant Lenders and the Canadian Borrower as the B/A that such BA
Equivalent Loan replaces). All such interest shall be paid in advance on the
date such BA Equivalent Loan is made, and will be deducted from the principal
amount of such BA Equivalent Loan in the same manner in which the discounted
portion of a B/A would be deducted from the face amount of the B/A. Subject to
the repayment requirements of this Agreement, on the last day of the relevant
Contract Period for such BA Equivalent Loan, the Canadian Borrower shall be
entitled to convert each such BA Equivalent Loan into another type of Loan, or
to roll over each such BA Equivalent Loan into another BA Equivalent Loan, all
in accordance with the applicable provisions of this Agreement. Each Non BA
Lender may, at its discretion, request in writing to the Canadian Administrative
Agent and the Canadian Borrower that BA Equivalent Loans made by it shall be
evidenced by Discount Notes.

     

     

    
      
         

      

      
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    (k)           For
greater certainty, all provisions of this Agreement that are applicable to B/As
shall also be applicable, mutatis mutandis, to BA Equivalent Loans, and
notwithstanding any other provision of this Agreement, all references to
principal amounts or any repayment or prepayment of any Loans that are
applicable to B/As or BA Drawings shall be deemed to refer to the full face
amount thereof in the case of B/As and to the principal amount of any portion
thereof consisting of BA Equivalent Loans. As set out in the definition of
“Bankers’ Acceptances”, that term includes Discount Notes and all terms of this
Agreement applicable to Bankers’ Acceptances (including the provisions of
Section 2.21(f) relating to their execution by the Canadian Lenders under power
of attorney) shall apply equally to Discount Notes evidencing BA Equivalent
Loans with such changes as may in the context be necessary. For greater
certainty:

     

    (i)           the
term of a Discount Note shall be the same as the Contract Period for Bankers’
Acceptances accepted and purchased on the same Borrowing date in respect of the
same borrowing;

     

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

     

    (iii)           the
Discount Rate applicable to a Discount Note shall be the Discount Rate
applicable to Bankers’ Acceptances accepted by a Canadian Lender that is not a
Schedule I Lender in accordance with the definition of “Discount Rate” on the
same Borrowing date or date of continuation or conversion, as the case may be,
in respect of the same borrowing for the relevant Contract Period.

     

    (l)           Depository
Bills and Notes Act.  At the option of the Canadian Borrower and any
Canadian Lender, Bankers’ Acceptances under this Agreement to be accepted by
such Canadian Lender may be issued in the form of depository bills for deposit
with The Canadian Depository for Securities Limited pursuant to the Depository
Bills and Notes Act (Canada). All depository bills so issued shall be governed
by the provisions of this Section 2.21.

     

    (m)           Upon
acceptance of a Bankers’ Acceptance by a Canadian Lender, the Canadian Borrower
shall pay to the Canadian Administrative Agent on behalf of such Canadian Lender
a fee (the “Acceptance
Fee”) calculated on the face amount of the Bankers’ Acceptance at a rate
per annum equal to the Applicable Rate on the basis of the number of days in the
Contract Period for such Bankers’ Acceptance. Any adjustment to the Acceptance
Fee (including any adjustment as necessary to reflect the operation of Section
2.13(e)) shall be computed based on the number of days remaining in the Contract
Period of such Bankers’ Acceptances from and including the effective date of any
change in the Applicable Rate. Any increase in such Acceptance Fee shall be paid
by the Canadian Borrower to the Canadian Administrative Agent on behalf of the
Canadian Lenders on the last day of the Contract Period of the relevant Bankers’
Acceptance. Any decrease in such Acceptance Fee shall be paid by each Canadian
Lender to the Canadian Borrower, through the Canadian Administrative Agent, on
the last day of the Contract Period of the relevant Bankers’
Acceptance.

     

     

    
      
         

      

      
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                          SECTION 2.22.      Circumstances Making
Bankers’ Acceptances Unavailable.  (a) If prior to the
commencement of any Contract Period, (i) the Canadian Administrative Agent
determines in good faith, which determination shall be conclusive and binding on
the Canadian Borrower, and notifies the Canadian Borrower that, by reason of
circumstances affecting the money market, there is no readily available market
for Bankers’ Acceptances, or (ii) the Canadian Administrative Agent determines
(which determination shall be conclusive absent manifest error) that adequate
and reasonable means do not exist for ascertaining the Discount Rate or CDOR
Rate, as applicable, for such Contract Period; or (iii) the Canadian
Administrative Agent is advised by one or more Canadian Lenders that the
Discount Rate or CDOR Rate, as applicable, for such Contract Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their portion of such BA Drawings included in such Borrowing for
such Contract Period then:

     

    (i)           the
right of the Canadian Borrower to request a borrowing by way of BA Drawing shall
be suspended until the Canadian Administrative Agent determines that the
circumstances causing such suspension no longer exist and the Canadian
Administrative Agent so notifies the Canadian Borrower; and

     

    (ii)           any
notice relating to a borrowing by way of BA Drawing which is outstanding at such
time shall be deemed to be a notice requesting a borrowing by way of Canadian
Prime Rate Loans (all as if it were a notice given pursuant to Section
2.03).

     

    (b)           The
Administrative Agent shall promptly notify the Canadian Borrower and the
Canadian Lenders of the suspension in accordance with Section 2.22(a) of the
Canadian Borrower’s right to request a borrowing by way of BA Drawing and of the
termination of such suspension.

     

                          SECTION 2.23.      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 Revolving Commitment of
such Defaulting Lender pursuant to Section 2.12(a);

     

    (b)           the
Revolving Commitment and the Credit 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;

     

     

    
      
         

      

      
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    (c)           if
any Swingline Exposure or LC Exposure exist 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’
Credit Exposures plus
the Open Account Aggregate Cap plus
such Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the
total of all non-Defaulting Lenders’ Revolving Commitments and (y) the
conditions set forth in Section 4.02 are satisfied at such time;
and

     

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

     

    (iii)           if
the Borrowers cash collateralize any portion of such Defaulting Lender’s LC
Exposure pursuant to this Section 2.23(c), the Borrowers shall not be required
to pay any fees to such Defaulting Lender pursuant to Section 2.12(b), as the
case may be, with respect to such Defaulting Lender’s LC Exposure, as the case
may be, during the period such Defaulting Lender’s LC Exposure is cash
collateralized;

     

    (iv)           if
the LC Exposure of the non-Defaulting Lenders are reallocated pursuant to this
Section 2.23(c), then the fees payable to the Lenders pursuant to Sections
2.12(a) and (b), as the case may be, shall be adjusted in accordance with such
non-Defaulting Lenders’ Applicable Percentages; or

     

    (v)           if
any Defaulting Lender’s LC Exposure is not cash collateralized, prepaid or
reallocated pursuant to this Section 2.23(c), then, without prejudice to any
rights or remedies of the applicable Issuing Bank or any Lender hereunder, all
facility fees that otherwise would have been payable to such Defaulting Lender
(solely with respect to the portion of such Defaulting Lender’s Revolving
Commitment that was utilized by such LC Exposure) and letter of credit fees
payable under Section 2.12(b) with respect to such Defaulting Lender’s LC
Exposure shall be payable to the applicable Issuing Bank until such Defaulting
Lender’s LC Exposure is cash collateralized;

     

     

    
      
         

      

      
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    (d)           so
long as any Lender is a Defaulting Lender, no Issuing Bank shall be required to
issue, extend, create, incur, amend or increase any Letter of Credit unless it
is satisfied that the related exposure will be 100% covered by the Revolving
Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrowers in accordance with Section 2.23(c), and participating
interests in any such newly issued, extended or created Letter of Credit or
newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a
manner consistent with Section 2.23(c)(i) (and Defaulting Lenders shall not
participate therein); and

     

    (e)           any
amount payable to such Defaulting Lender hereunder (whether on account of
principal, interest, fees or otherwise and including any amount that would
otherwise be payable to such Defaulting Lender pursuant to Section 2.18(d) but
excluding Section 2.19(b)) shall, in lieu of being distributed to such
Defaulting Lender, be retained by the Administrative Agent in a segregated
account and, subject to any applicable requirements of law, be applied at such
time or times as may be determined by the Administrative Agent (i) first, to the payment
of any amounts owing by such Defaulting Lender to the Administrative Agent
hereunder, (ii) second, pro rata, to
the payment of any amounts owing by such Defaulting Lender to the applicable
Issuing Bank or the Swingline Lender hereunder, (iii) third, if so
determined by the Administrative Agent or requested by an Issuing Bank or the
Swingline Lender, to be held in such account as cash collateral for future
funding obligations of the Defaulting Lender of any participating interest in
any Swingline Loan or any Letter of Credit, (iv) fourth, to the
funding of any Loan in respect of which such Defaulting Lender has failed to
fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent, (v) fifth, if so
determined by the Administrative Agent and the Borrower Representative, held in
such account as cash collateral for future funding obligations of the Defaulting
Lender of any Loans under this Agreement, (vi) sixth, to the payment
of any amounts owing to the Lenders,  the Issuing Banks or the
Swingline Lender as a result of any judgment of a court of competent
jurisdiction obtained by any Lender, any Issuing Bank or the Swingline Lender
against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement, (vii) seventh, to the
payment of any amounts owing to the Borrowers as a result of any judgment of a
court of competent jurisdiction obtained by the Borrowers against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its
obligations under this Agreement, and (viii) eighth, to such
Defaulting Lender or as otherwise directed by a court of competent
jurisdiction; provided
that if such payment is (x) a prepayment of the
principal amount of any Loans or reimbursement obligations in respect of LC
Disbursements for which a Defaulting Lender has funded its participation
obligations and (y) made at a time when the conditions set forth in Section 4.02
are satisfied, such payment shall be applied solely to prepay the Loans of, and
reimbursement obligations owed to, all non-Defaulting Lenders pro rata prior to
being applied to the prepayment of any Loans, or reimbursement obligations owed
to, any Defaulting Lender.

     

    In the event that the Administrative
Agent (or, in the case of any Canadian Lender, the Canadian Administrative
Agent), the Borrowers, the Issuing Banks 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
Revolving 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 shall determine may be necessary in order for such Lender to hold
such Loans in accordance with its Applicable Percentage.

     

     

    
      
         

      

      
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                          SECTION 2.24.       Excess Resulting From
Exchange Rate Change.

     

                          (a)           With
respect to the Canadian Commitment, at any time following one or more
fluctuations in the exchange rate of the Canadian Dollar against the dollar, (i)
the aggregate outstanding principal amount of Canadian Loans of the Canadian
Borrower exceeds the lesser of the Canadian Borrowing Base or the Canadian
Sublimit or any other limitations hereunder based on dollars or (ii) the
aggregate outstanding principal balance of Canadian Loans exceeds any other
limit based on dollars set forth herein for such Canadian Obligations, the
Canadian Borrower shall (A) if such excess is in an aggregate amount that is
greater than or equal to $1,000,000, within two Business Days of notice from the
Canadian Administrative Agent, (B) if such excess is an aggregate amount that is
less than $1,000,000 and such excess continues to exist in an aggregate amount
less than $1,000,000 for at least five Business Days, within two Business Days
of notice from the Canadian Administrative Agent or (C) if any Event of Default
has occurred and is continuing, immediately (x) make the necessary payments or
repayments to reduce such Canadian Obligations to an amount necessary to
eliminate such excess or (y) maintain or cause to be maintained with the
Administrative Agent (for the benefit of the Canadian Lender Parties) deposits
as continuing collateral security for the Canadian Obligations in an amount
equal to or greater than the amount of such excess, such deposits to be
maintained in such form and upon such terms as are acceptable to the Canadian
Administrative Agent.  Without in any way limiting the foregoing
provisions, the Canadian Administrative Agent shall, weekly or more frequently
in the sole discretion of the Canadian Administrative Agent, make the necessary
exchange rate calculations to determine whether any such excess exists on such
date and advise the Borrowers if such excess exists.

     

    (b)           If
one or more of the U.S. Borrowers provide cash collateral to secure obligations
related to U.S. Letters of Credit that are denominated in an Alternative
Currency (including, without limitation, pursuant to Section 2.06(k), 2.10(b) or
2.18(b)) and, as a result of fluctuations in the applicable exchange rate
between dollars and the applicable Alternative Currency, the Dollar Amount of
cash collateral held by the Administrative Agent is less than the specified
amount of cash collateral so required to be maintained by the U.S. Borrowers,
the U.S. Borrowers shall, promptly following a request therefor by the
Administrative Agent, deposit in the LC Collateral Account an additional Dollar
Amount of cash collateral equal to such shortfall to be held as cash collateral
in accordance with Section 2.06(k).

     

    ARTICLE
III

     

    Representatives
and Warranties

     

    Each Loan Party represents and warrants
to the Lender Parties that:

     

                          SECTION 3.01.      Organization;
Powers.  Each of the Loan Parties and each of the 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 and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is
required.

     

     

    
      
         

      

      
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                          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 each constitutes 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 any Requirement of Law
applicable to any Loan Party or any of the Subsidiaries, (c) will not violate or
result in a default under any indenture or other material agreement or
instrument binding upon any Loan Party or any of the Subsidiaries or its assets,
or give rise to a right under any such indenture, material agreement or
instrument (other than a Loan Document) to require any payment to be made by any
Loan Party or any of the Subsidiaries, and (d) will not result in the creation
or imposition of any Lien on any asset of any Loan Party or any of the
Subsidiaries, except Liens created pursuant to the Loan Documents.

     

                          SECTION 3.04.      Financial Condition; No
Material Adverse Change.  (a) The Company has heretofore
furnished to the Lenders (i) historical audited consolidated income
statements, balance sheets and statements of cash flow of the Company for its
2007 and 2008 fiscal years and (ii) unaudited interim consolidated income
statements, balance sheets and statements of cash flow of the Company for each
fiscal month and quarter ended after December 31, 2008 through the Effective
Date.  Such financial statements present fairly, in all material
respects, the financial condition and results of operations and cash flows of
the Company and its consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP, consistently applied, subject to year end audit
adjustments and the absence of footnotes in the case of the unaudited
consolidated income statements, balance sheets and statements of cash flows of
the Company.

     

    (b)           No
event, change or condition has occurred that has had, or could reasonably be
expected to have, a Material Adverse Effect, since December 31,
2008.

     

                          SECTION 3.05.      Properties.  (a)
As of the date of this Agreement, Schedule 3.05 sets
forth the address of each parcel of real property that is owned or leased by
each Loan Party.  Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no
default by any party to any such lease or sublease exists, except where the
foregoing, individually or in the aggregate, would not reasonably be expected to
have a  Material Adverse Effect.  Each of the Loan Parties
and the Subsidiaries has good and indefeasible title to, or valid leasehold
interests in, all its real and personal property that is material to its
business, free of all Liens other than Permitted Liens.

     

     

    
      
         

      

      
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    (b)           Each
Loan Party and the Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property necessary to its
business as currently conducted, a correct and complete list of which, as of the
date of this Agreement is set forth on Schedule 3.05, and
the use thereof by the Loan Parties and the 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
as of the Effective Date (except for agreements and arrangements reflected on
Schedule 3.05
and other licensing agreements that are not, either individually or in the
aggregate, material to any Loan Party).

     

                          SECTION 3.06.      Litigation and Environmental
Matters.  (a) Except for the Disclosed Matters, there are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting the Loan Parties or any of the Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.

     

    (b)           Except
for the Disclosed Matters (i) no Loan Party nor any of the Subsidiaries has
received written notice of any claim with respect to any material Environmental
Liability or knows of any basis for any Environmental Liability that,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect, and (ii) except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, no Loan Party nor any of the Subsidiaries (1) has
failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law
or (2) has become subject to any Environmental Liability.

     

    (c)           Since
the Effective Date, 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 the 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 the 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 each Subsidiary has timely filed or caused to be filed all Tax
returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, 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 reasonably be expected
to result in a Material Adverse Effect.  No Liens for Taxes (other
than Permitted Encumbrances) have been filed and no claims are being asserted
with respect to any such Taxes.

     

     

    
      
         

      

      
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                          SECTION 3.10.      ERISA.  (a)
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.  Except for any failure that would not reasonably be expected
to have a Material Adverse Effect, each Pension Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to be
so qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. No liability that could reasonably be
expected to result in a Material Adverse Effect has been incurred by the Loan
Parties or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Pension Plan or any Multiemployer
Plan.

     

                                  
(b)           Canadian
Pension Plans.  Each Canadian Loan Party and its Subsidiaries
is in compliance with the requirements of the Pension Benefits Act (Ontario) and
other federal, provincial or state laws with respect to each Canadian Pension
Plan, except where the failure to so comply would not reasonably be expected to
have a Material Adverse Effect.  No fact or situation that may
reasonably be expected to result in a Material Adverse Effect exists in
connection with any Canadian Pension Plan.  Neither any Canadian Loan
Party nor any of its Subsidiaries has any material withdrawal liability in
connection with a Canadian Pension Plan.  No Pension Event has
occurred.  No Lien has arisen, choate or inchoate, in respect of any
Canadian Loan Party or its Subsidiaries or their property in connection with any
Canadian Pension Plan (save for contribution amounts not yet
due)

     

                          SECTION 3.11.      Disclosure.  Each
Borrower has disclosed to the Lenders 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 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), when taken 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, (a) the
Borrowers 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, and (b) it is understood and agreed that uncertainty is
inherent in any forecasts or projections and no assurances can be given by the
Company or the other Loan Parties of the future achievement of such
performance.

     

     

    
      
         

      

      
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                          SECTION 3.12.      No
Default.  No Loan Party nor any of the Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound in any respect that could reasonably be expected to have a
Material Adverse Effect.  Immediately prior to, and after giving
effect to the occurrence of, the Effective Date, (a) no default or event of
default has occurred or will occur under the Indenture or the Existing Debt
Securities and (b) the Borrowers are not compelled under the Indenture to secure
the Existing Debt Securities equally and ratably with the
Obligations.  No Default or Event of Default has occurred and is
continuing.

     

                          SECTION 3.13.      Solvency.  (a)
Immediately after the consummation of the Transactions to occur on the Effective
Date (after giving effect to Sections 10.08 and 10.09), (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) no Loan Party
will 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 the Subsidiaries to, and no Loan
Party believes that it or any of the 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, the timing of the
amounts of cash to be payable on or in respect of its Indebtedness or the
Indebtedness of any such Subsidiary and the funds available under this
Agreement.

     

                          SECTION 3.14.      Insurance.  Schedule 3.14 sets
forth a description of all insurance maintained by or on behalf of the Loan
Parties as of the Effective Date.  As of the Effective Date, all
premiums in respect of such insurance have been paid.  The Borrowers
believe that the insurance maintained by or on behalf of the Loan Parties 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
Company of each of the Company’s Subsidiaries and each joint venture,
partnership or similar arrangement of the Company and its Subsidiaries, (b) a
true and complete listing of each class of each of the Borrowers’ authorized
Equity Interests (other than the Company), 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 Company and each of the Subsidiaries and each
joint venture, partnership or similar arrangement of the Company and its
Subsidiaries, in each case as of the Effective Date.  All of the
issued and outstanding Equity Interests of a Subsidiary owned by any Loan Party
have been duly authorized and issued and are fully paid and non-assessable (to
the extent such concepts are relevant with respect to such ownership
interests).

     

     

    
      
         

      

      
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                          SECTION 3.16.      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 Lender Parties and the Canadian
Lender Parties, as the case may be, and, for so long as UCC and PPSA financing
statements, RDPRM recordations or Deposit Account Control Agreements, as the
case may be, with respect to such Collateral have not been terminated by the
Administrative Agent (or otherwise amended by the Administrative Agent in a
manner that adversely affects the Lien in favor of the Lender Parties or the
Canadian Lender Parties, as the case may be, thereby perfected) such Liens
constitute perfected and continuing Liens on the Collateral to the extent
perfection can be obtained by filing UCC or PPSA financing statements, RDPRM
recordations or the entering into of a Deposit Account Control Agreement,
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 Liens to the extent any such
Liens would have priority over the Liens in favor of the Administrative Agent
pursuant to any applicable law or agreement 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 3.17.      Employment
Matters.  As of the Effective Date, there are no material
strikes, lockouts or slowdowns against any Loan Party or any Subsidiary pending
or, to the knowledge of the Borrowers, threatened.  The hours worked
by and payments made to employees of the Loan Parties and the Subsidiaries have
not been in material violation of the Fair Labor Standards Act, the Employee
Standards Act (Ontario) or any other applicable federal, provincial,
territorial, state, local or foreign law dealing with such
matters.  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, vacation pay and employee health and welfare
insurance and other benefits, including with respect to the Canada Pension
Plans, have been paid or accrued as a liability on the books of the Loan Party
or such Subsidiary.

     

                          SECTION 3.18.      Credit Card
Arrangements.  Schedule 3.18 (as
updated from time to time as permitted by Section 5.15) sets forth, a list of
all credit card processing arrangements to which any Loan Party is a party with
respect to the payment to any Borrower of the proceeds of all credit card
charges for sales by such Loan Party in the United States of America or
Canada.

     

                          SECTION 3.19.      PATRIOT Act and Other
Specified Laws.  (a) To the extent applicable, each Loan Party
is in compliance, in all material respects, with the (i) Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, (ii)
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”), and
(iii) the Proceeds of Crime Act.  No part of the proceeds of the
Loans, Letters of Credit or payments made to vendors of the Open Account
Obligors pursuant to any Open Account Agreement will be used, directly or
indirectly, in violation in any material respect of the United States Foreign
Corrupt Practices Act of 1977, as amended or the Proceeds of Crime
Act.  No Loan Party is engaged in or has engaged in any course of
conduct that could reasonably be expected to subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal Law,
racketeer influenced and corrupt organizations law or the Proceeds of Crime Act
or other similar laws.  None of the Loan Parties is named on the list
of Specially Designated Nationals and Blocked Persons maintained by the United
States Department of Treasury Office of Foreign Assets Control.

     

     

    
      
         

      

      
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    (b)           No
Borrower nor any other Loan Party (i) is a Person whose property or interest in
property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)), (ii) engages in any dealings or transactions prohibited by
Section 2 of such Executive Order, or is otherwise associated with any such
Person in any manner that violates such Section 2, or (iii) is a Person on the
list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s Office
of Foreign Assets Control regulation or executive order.

     

                          SECTION 3.20.      Margin
Regulations.  No Borrower nor any other Loan Party 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” (as defined in
Regulation U of the Board).  None of the proceeds of any Loan or
Letter of Credit will be used by the Borrowers or any Subsidiaries for the
purpose of purchasing or carrying “margin stock” as defined in Regulation U of
the Board or otherwise in violation of Regulations T, U or X of the
Board.

     

    ARTICLE
IV

     

    Conditions

     

                          SECTION 4.01.      Effective
Date.  The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions are satisfied (or
waived in accordance with Section 9.02) to the satisfaction of each Lender and,
where specifically referred to below, the Administrative Agent and the Joint
Collateral Agents; provided that the
Administrative Agent may declare the Effective Date to have occurred if all the
conditions set forth below are satisfied, other than the Administrative Agent
receiving satisfactory evidence that its first priority security interest in the
Collateral securing the Canadian Secured Obligations has been perfected; provided further, however, that the
Canadian Borrower may not utilize the Canadian Commitments unless the
Administrative Agent has received evidence of its first priority perfected
security interest in the Collateral securing the Canadian Secured Obligations in
a manner that is in form and substance satisfactory to the Administrative Agent
and the Lenders:

     

    (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 PDF or facsimile transmission of a
signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and (ii) duly executed copies (or PDF or facsimile
copies) of the Loan Documents and such other certificates, documents,
instruments and agreements as the Lenders 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’ counsel, addressed to the Administrative Agent,
the Canadian Administrative Agent, the Issuing Banks, the Citibank Open Account
Agent, the Citibank Open Account Banks and the Lenders in substantially the form
of Exhibit
B.

     

     

    
      
         

      

      
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    (b)           Closing Certificates;
Certified Certificate of Incorporation; Good Standing
Certificates.  The Agents shall have received (i) a certificate
of each Loan Party, dated the Effective Date and executed by its Secretary or an
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 bylaws or operating, management or partnership
agreement, and (ii) if obtainable from the applicable jurisdiction, a long form
good standing certificate for each Loan Party from its jurisdiction of
organization.

     

    (c)           No Default
Certificate.  The Agents shall have received a certificate,
signed by the chief financial officer of the Borrower Representative and dated
the Effective 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 any Agent.

     

    (d)           Fees.  The
Lenders, the Administrative Agent, the Joint Collateral Agents and the Joint
Bookrunners shall have received all fees required to be paid, and all expenses
for which invoices have been presented (including the reasonable fees and
expenses of legal counsel of the Administrative Agent), on or before the
Effective Date.  All such amounts will be paid with proceeds of Loans
made on the Effective Date and will be reflected in the funding instructions
given by the Borrower Representative to the Administrative Agent on or before
the Effective Date.

     

    (e)           Lien
Searches.  The Agents shall have received the results of a
recent lien search report in each of the jurisdictions where assets of the Loan
Parties are located, and such search shall reveal no Liens on any of the assets
of the Loan Parties except for Permitted Liens or Liens discharged on or prior
to the Effective Date pursuant to a pay-off letter or other documentation
satisfactory to the Agents.

     

    (f)           Pay-Off
Letter.  The Agents shall have received pay-off letters with
respect to the Prior Credit Agreement and all other existing Indebtedness to be
repaid from the proceeds of the initial Borrowing, confirming that all Liens
upon any of the property of the Loan Parties constituting Collateral will be
terminated concurrently with such payment (other than Liens in favor of the
Administrative Agent).

     

     

    
      
         

      

      
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    (g)           Funding
Accounts.  The Agents shall have received a notice from the
Borrower Representative setting forth the deposit account(s) of the Borrowers
(the “Funding
Accounts”) to which the Lender is authorized by the Borrowers to transfer
the proceeds of any Borrowings requested or authorized pursuant to this
Agreement.

     

    (h)           Customer
List.  The Agents shall have received a true and complete
customer list as of a recent date to be specified by the Administrative
Agent.

     

    (i)           Credit Card Notification
Agreement.  The Agents shall have received PDF or facsimile
copies of Credit Card Notification Agreements distributed to each of the
Borrowers’ credit card processors.

     

    (j)           Solvency.  The
Agents shall have received a solvency certificate from a Financial Officer of
each Borrower.

     

    (k)           Borrowing Base
Certificate.  The Agents shall have received a Borrowing Base
Certificate which calculates the Borrowing Base as of April 18,
2009.

     

    (l)           Closing
Availability.  After giving effect to all Borrowings to be made
on the Effective Date, the issuance of any Letters of Credit (or deemed
issuance, in the case of Existing 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, the Borrowers’
Availability plus
cash on hand shall not be less than $300,000,000.

     

    (m)           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 U.S. Security Agreement or the Canadian 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 U.S. Security
Agreement or the Canadian Security Agreement endorsed (without recourse) in
blank (or accompanied by an executed transfer form in blank) by the pledgor
thereof.

     

    (n)           Filings, Registrations and
Recordings.  Each document (including any Uniform Commercial
Code financing statement, PPSA financing statement or RDPRM recordation)
required by the Collateral Documents or under law or reasonably requested by any
Agent to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Permitted Liens), shall be in proper form for filing, registration or
recordation.

     

    (o)           Approvals.  All
governmental and third party approvals necessary in connection with the
Transactions and the financing contemplated hereby shall have been obtained and
be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose adverse conditions on the
Transactions or the financing contemplated hereby.

     

     

    
      
         

      

      
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    (p)           Amendment to
Indenture.  The Indenture shall have been amended in accordance
with the terms thereof to provide that the Indebtedness under  this
Agreement is excepted from the requirements of Section 4.04 of the
Indenture.

     

    (q)           Citibank Open Account
Agreement.  The Agents shall have received a true and complete
copy of the Citibank Open Account Agreement.

     

    (r)           Insurance.  The
Agents shall have received evidence of insurance coverage in form, scope and
substance evidencing compliance with the terms of Section 5.09 and Section 4.12
of the U.S. Security Agreement.

     

    (s)           Appraisals and Field
Exams.  The Agents shall have received appraisals of Inventory
and field exams from appraisers satisfactory to the Joint Collateral Agents (it
being understood and agreed that the receipt of the field examination, dated as
of March 17, 2009, and the appraisal, dated as of March 26, 2009, shall satisfy
the condition precedent set forth in this paragraph (s)).

     

    (t)           Letter of Credit
Application.  The applicable Issuing Bank 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.  The Borrowers shall
have executed the applicable Issuing Bank’s master agreement for the issuance of
Commercial Letters of Credit.

     

    (u)           Other
Documents.  The Agent shall have received such other documents
as any Agent, any Issuing Bank, any Open Account Bank, any Lender or their
respective counsel may have reasonably requested.

     

    The
Administrative Agent shall notify the Borrowers and the Lenders as 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 Banks to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 2:00 p.m., Chicago
time, on June 1, 2009 (and, in the event such conditions are not so satisfied or
waived, the Revolving Commitments shall terminate at such time).

     

                          SECTION 4.02.      Each Credit
Event.  The obligation of (i) each Lender to make a Loan on the
occasion of any Borrowing and (ii) each 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 Loan Parties set forth in this Agreement
shall be true and correct in all material respects on and as of the date of (i)
such Borrowing or (ii) the issuance, amendment, renewal or extension of such
Letter of Credit, except that such representations and warranties (A) that
relate solely to an earlier date shall be true and correct in all material
respects as of such earlier date and (B) shall be true and correct in all
respects to the extent they are qualified by a materiality
standard.

     

     

    
      
         

      

      
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    (b)           At
the time of and immediately after giving effect to (i) such Borrowing and (ii)
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 (i) such Borrowing and (ii) the issuance of such Letter of
Credit, Availability is not less than zero.

     

    Each (i)
Borrowing and (ii) issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a), (b)
and (c) of this Section 4.02.

     

    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 (or
authorize the Canadian Administrative Agent to make) Loans and an Issuing Bank
may, but shall have no obligation to, issue or cause to be issued any Letter of
Credit, in each case for the ratable account and risk of Lenders from time to
time if the Administrative Agent believes that making such Loans, issuing or
causing to be issued any such Letter of Credit is in the best interests of the
Lenders.

     

    ARTICLE V

     

    Affirmative
Covenants

     

    Until all the Revolving Commitments
have expired or been terminated as provided in Section 2.09(a) or (b), as the
case may be, each Loan Party executing this Agreement covenants and agrees,
jointly and severally with all of the Loan Parties, with the Lender Parties
that:

     

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

     

    (a)           within
90 days after the end of each fiscal year of the Company, its audited
consolidated and unaudited consolidating balance sheet and related statements of
operations, stockholders’ 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 BDO Seidman, 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 financial statements present
fairly in all material respects the financial condition and results of
operations of the Company and its consolidated Subsidiaries in accordance with
GAAP consistently applied accompanied by any management letter prepared by said
accountants;

     

    (b)           within
45 days after the end of each of the first three fiscal quarters of each fiscal
year of the Company, its consolidated balance sheet and related statements of
operations, stockholders’ 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 the Financial Officers of the Borrower
Representative as presenting fairly in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes;

     

     

    
      
         

      

      
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    (c)           within
30 days after the end of each fiscal month of the Company, its consolidated
balance sheet and related statements of operations and cash flows as of the end
of and for such fiscal 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 the Company 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 paragraph (a) or (b) or (c)
above, a Compliance Certificate of a Financial Officer of the Borrower
Representative (i) certifying, in the case of the financial statements delivered
under paragraph (b) or (c), as presenting fairly in all material respects the
financial condition and results of operations of the Company 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) certifying in the case of
the financial statements delivered under paragraph (c), a reasonably detailed
calculation of the Fixed Charge Coverage Ratio and, during any Level 1 Minimum
Availability Period, demonstrating compliance with Section 6.12, and (iv)
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 paragraph (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 within 15 days prior to the end of each fiscal year of
the Company, a copy of the plan and forecast (including a projected consolidated
and consolidating balance sheet, income statement and funds flow statement in
form acceptable to the Administrative Agent) of the Company for each month of
the upcoming fiscal year (the “Projections”) in form
reasonably satisfactory to the Administrative Agent;

     

     

    
      
         

      

      
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    (g)           as
soon as available, but in any event within 20 days of the end of each fiscal
month (or, within three Business Days of the end of each calendar week (it being
understood that a calendar week ends on Sunday), during any Weekly Reporting
Period), a Borrowing Base Certificate which calculates the Borrowing Base as of
the last day of the fiscal period then ended, together with supporting
information in connection therewith and any additional reports with respect to
the Borrowing Base as the Administrative Agent may reasonably
request;

     

    (h)           as
soon as available, but in any event within 20 days of the end of each fiscal
month (or, in the case of clauses (h)(i)(B)and (h)(ii) below within three
Business Days of the end of each calendar week, during any Weekly Reporting
Period) and at such other times as may be reasonably requested by the
Administrative Agent, as of the fiscal period then ended, all delivered
electronically in a formatted file acceptable to the Administrative
Agent:

     

    (i)           (A)
a detailed aging of the Borrowers’ Accounts (1) including all invoices aged by
invoice date and due date (with an explanation of the terms offered) and (2)
reconciled to the Borrowing Base Certificate delivered as of such date prepared
in a manner reasonably acceptable to the Administrative Agent, and (B) a summary
aging of the Borrowers’ Accounts specifying the name, address and balance due
for each Account Debtor;

     

    (ii)          a
schedule detailing the Borrowers’ Inventory, in form satisfactory to the
Administrative Agent (which shall be in a short-form format that is reasonably
satisfactory to the Administrative Agent if delivered during a Weekly Reporting
Period), (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 in accordance with the historical practices of the Borrowers
prior to the Effective Date) or market and adjusted for Reserves as the Joint
Collateral Agents have previously indicated to the Borrower Representative are
deemed by the Joint Collateral Agents to be appropriate, (2) including a report
of any variances or other results of Inventory counts performed by the Borrowers
since the last Inventory schedule (including information regarding sales or
other reductions, additions, returns, credits issued by Borrowers and complaints
and claims made against the Borrowers), and (3) reconciled to the Borrowing Base
Certificate delivered as of such date;

     

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

     

     

    
      
         

      

      
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    (iv)         a
reconciliation of the Borrowers’ Accounts and Inventory between the amounts
shown in the Borrowers’ general ledger and financial statements and the reports
delivered pursuant to paragraphs (i) and (ii) above; and

     

    (v)          a
reconciliation of the loan balance per the Borrowers’ general ledger to the loan
balance under this Agreement;

     

    (i)           as
soon as available, but in any event within 20 days of the end of each fiscal
month (or, within three Business Days of the end of calendar week, during any
Weekly Reporting Period) and at such other times as may be reasonably requested
by the Administrative Agent, as of the fiscal period then ended, a schedule and
aging of the Borrowers’ accounts payable, delivered electronically in a
formatted file acceptable to the Administrative Agent;

     

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

     

    (i)           copies
of invoices issued by the Borrowers in connection with any Accounts, 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;

     

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

     

    (iv)          a
sales journal, cash receipts journal (identifying trade and non-trade cash
receipts) and debit memo/credit memo journal; and

     

    (v)           copies
of all tax returns filed by any Loan Party with the IRS or Canada Revenue
Service;

     

    (k)           within
45 days of each March 31 and September 30, an updated customer list for each
Borrower and its Subsidiaries, which list shall state the customer’s name,
mailing address and phone number and shall be certified as true and correct by a
Financial Officer of the Borrower Representative;

     

    (l)           promptly
upon the Administrative Agent’s request (but, in any event not more than once
each calendar year), a certificate of good standing for each Loan Party from the
appropriate governmental officer in its jurisdiction of incorporation, formation
or organization;

     

    (m)           promptly
after the same become publicly available, copies of all periodic reports, proxy
statements and registration statements filed by the Company or any Subsidiary
with the U.S. Securities and Exchange Commission, the Ontario Securities
Commission or any Governmental Authority succeeding to any or all of the
functions of said Commissions, or with any national or provincial securities
exchange, or distributed by the Company to its shareholders generally, as the
case may be; provided that any
documents required to be delivered pursuant to this paragraph (n) shall be
deemed to have been delivered on the date (i) on which the Company posts such
documents, or provides a link thereto on the Company’s website on the Internet
at the website address referenced in Section 9.01(b); or (ii) on which such
documents are posted on the Company’s behalf on IntraLinks/IntraAgency or
another relevant website, if any to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent); provided further that: (x)
upon written request by the Administrative Agent, the Company shall deliver
paper copies of such documents to the Administrative Agent for further
distribution to each Lender until a written request to cease delivering paper
copies is given by the Administrative Agent and (y) the Company shall notify
(which may be by facsimile or electronic mail) the Administrative Agent of the
posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents;
and

     

     

    
      
         

      

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

     

                          SECTION 5.02.      Notices of Material
Events.  The Borrowers will furnish to the Administrative Agent
(for delivery to each Lender) written notice of the following:

     

    (a)           the
occurrence of any Default or Event of Default;

     

    (b)           receipt
of any notice of any governmental investigation or any governmental or other
litigation or proceeding commenced or threatened against any Loan Party that (i)
if adversely determined, could reasonably be expected to result in liability in
excess of $30,000,000, (ii) seeks injunctive relief, (iii) is asserted or
instituted against any Pension 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 which
would result in liabilities or costs in excess of $30,000,000, (vi) contests any
tax, fee, assessment or other governmental charge in excess of $30,000,000 or
(vii) involves any material product recall;

     

    (c)           any
Lien (other than Permitted Encumbrances and Liens in favor of the Administrative
Agent (for the benefit of the Lender Parties or the Canadian Lender Parties, as
the case may be)) or claim made or asserted in writing against any material
portion of the Collateral;

     

    (d)           any
loss, damage or destruction to the Collateral in the amount of $30,000,000 or
more, whether or not covered by insurance;

     

    (e)           any
and all default notices received under or with respect to (i) the Indenture or
(ii) any actual knowledge of a Financial Officer of any leased location or
public warehouse where Collateral with a cost in excess of $5,000,000 is located
(which shall be delivered within two Business Days after receipt
thereof);

     

     

    
      
         

      

      
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    (f)           all
amendments to the Indenture, together with a copy of each such
amendment;

     

    (g)           any
Loan Party entering into a Swap Agreement or an amendment to a Swap Agreement,
together with copies of all agreements evidencing such Swap Agreement or
amendments thereto (which shall be delivered within two Business
Days);

     

    (h)           any
actual knowledge of a Financial Officer of the occurrence of any ERISA Event or
Pension Event that, alone or together with any other ERISA Events and Pension
Events that have occurred, could reasonably be expected to result in liability
of the Borrowers and their Subsidiaries in an aggregate amount exceeding
$30,000,000;

     

    (i)           any
amendment, modification or waiver of or with respect to any licensing agreement
pursuant to which any Eligible Licensee Receivable is subject if the foregoing
would reasonably be expected to reduce the amounts paid, or postpone the date of
any payment of any such Eligible Licensee Receivable; and

     

    (j)           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 the Borrower Representative
setting forth in reasonable detail the nature 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
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, except where the failure to so
preserve, renew or keep in full force and effect any of the following could not
reasonably be expected to result in a
Material Adverse Effect, the rights, qualifications, licenses, permits,
franchises, governmental authorizations, intellectual property rights, licenses
and permits 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; 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, 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.

     

     

    
      
         

      

      
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                          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 and 5.12,
each Loan Party will, and will cause each Subsidiary to, (i) keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities and (ii)
permit any representatives designated by the Administrative Agent (including
employees of the Administrative Agent or any consultants, accountants, lawyers
and appraisers retained by the Administrative Agent), upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, including environmental assessment reports and Phase I or
Phase II studies, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.  For purposes of this Section 5.06, it is
understood and agreed that a single site visit and inspection may consist of
examinations conducted at multiple relevant sites and involve one or more
relevant Loan Parties and Subsidiaries and their respective
assets.  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 and
Contractual Obligations.

     

    (a)           Each
Loan Party will, and will cause each Subsidiary to, comply with all of its
contractual obligations and 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.

     

    (b)           In
addition to and without limiting the generality of paragraph (a), each Loan
Party will, and will cause each Subsidiary and ERISA Affiliate to (i) comply
with all applicable provisions of ERISA, the Code, the ITA, the Pension Benefits
Act (Ontario) (or similar provincial statutes) and the regulations and published
interpretations thereunder with respect to all Pension Plans and Canadian
Pension Plans, except where the failure to comply could not reasonably be
expected to have a Material Adverse Effect, (ii) not take any action or fail to
take action the result of which would result in a liability to the PBGC, FSCO
(or similar Governmental Authority) or to a Multiemployer Plan in an amount that
could reasonably be expected to have a Material Adverse Effect and (iii) furnish
to the Administrative Agent upon the Administrative Agent’s request such
additional information about any Pension Plan and Canadian Pension Plans
concerning compliance with this covenant as may be reasonably requested by the
Administrative Agent.

     

                          SECTION 5.08.      Use of
Proceeds.  The proceeds of the Loans will be used only to (a)
repay amounts outstanding under the Prior Credit Agreement, (b) repay the
Existing Debt Securities that are maturing in November 2009, subject to the
limitations set forth in Section 6.08(b)(v), and (c) for general corporate
purposes (including, without limitation, payments on Open Account Obligations)
of the Borrowers and, subject to compliance with Article VI of this Agreement,
their respective 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.

     

     

    
      
         

      

      
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                          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
Borrowers 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 Borrowers (a) will furnish to the
Administrative Agent (for delivery to 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 Joint Collateral Agents request, the Borrowers and the
Subsidiaries will provide the Joint Collateral Agents with appraisals or updates
thereof of their Inventory from an appraiser selected and engaged by the Joint
Collateral Agents, and prepared on a basis satisfactory to the Joint Collateral
Agents, such appraisals and updates to include, without limitation, information
required by applicable law and regulations; provided, however, only one
such appraisal per calendar year shall be at the sole expense of the Loan
Parties; provided further, however, (a) two such
appraisals per calendar year shall be at the sole expense of the Loan Parties if
a Revolving Loan has been made during such calendar year, (b) three such
appraisals per calendar year shall be at the sole expense of the Loan Parties if
a Level 2 Minimum Availability Period, solely with respect to clause (a) of such
defined term, has been in effect for a period of at least five consecutive
Business Days during such calendar year and (c) if an Event of Default has
occurred during any calendar year there shall be no limitation as to number and
frequency of such appraisals during such calendar year that shall be at the sole
expense of the Loan Parties.  For purposes of this Section 5.11, it is
understood and agreed that a single appraisal may consist of examinations
conducted at multiple relevant sites, both domestic and international, and
involve one or more relevant Loan Parties and their assets.  The Joint
Collateral Agents will conduct not less than one appraisal per calendar year of
the Inventory of the Loan Parties.

     

                          SECTION 5.12.      Field
Examinations.  At any time that the Joint Collateral Agents
request, the Borrowers and the Subsidiaries will allow the Joint Collateral
Agents to conduct field examinations or updates thereof during normal business
hours to ensure the adequacy of Collateral included in any Borrowing Base and
related reporting and control systems; provided, however, only one
such field examination per calendar year shall be at the sole expense of the
Loan Parties; provided further, however, (a) two such
field examinations per calendar year shall be at the sole expense of the Loan
Parties if a Revolving Loan has been made during such calendar year, (b) three
such field examinations per calendar year shall be at the sole expense of the
Loan Parties if a Level 2 Minimum Availability Period, solely with respect to
clause (a) of such defined term, has been in effect for a period of at least
five consecutive Business Days during such calendar year and (c) if an Event of
Default has occurred during any calendar year there shall be no limitation as to
number and frequency of such field examinations during such calendar year that
shall be at the sole expense of the Loan Parties. 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, both domestic and
international, and involve one or more relevant Loan Parties and their
assets.  The Joint Collateral Agents will conduct not less than one
field examination per calendar year of the Collateral included in each Borrowing
Base.

     

     

    
      
         

      

      
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                          SECTION 5.13.      Depository
Banks.  The Borrowers and the Subsidiaries will maintain one or
more of the Lenders as its principal depository bank, including for the
maintenance of operating, administrative, cash management, collection activity,
and other deposit accounts for the conduct of its business.

     

                          SECTION 5.14.      Additional Collateral;
Further Assurances.  (a) Subject to applicable law, each
Borrower and each Subsidiary that is a U.S. Loan Party shall cause each of the
Domestic Subsidiaries and each of the First-Tier Foreign DREs (other than
Investments in Persons that are permitted to be made pursuant to Sections
6.04(c)(ii) and (iii)) formed or acquired after the Effective Date in accordance
with the terms of this Agreement to become a U.S. Loan Party by executing the
Joinder Agreement set forth as Exhibit E hereto (the
“Joinder
Agreement”).  Upon execution and delivery thereof, each such
Person (i) shall automatically become a U.S. 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 Lender Parties in any property of
such U.S. Loan Party which constitutes Collateral.

     

    (b)           To
secure the prompt payment and performance of all the U.S. Secured Obligations,
each Borrower and each Subsidiary that is a U.S. Loan Party will cause (i) 100%
of the issued and outstanding Equity Interests of each of the Domestic
Subsidiaries, (ii) 100% of the issued and outstanding Equity Interests of each
of the First-Tier Foreign DREs, (iii) 65% of the Equity Interests constituting
the total combined classes of Equity Interests entitled to vote in each
First-Tier Foreign Subsidiary, (iv) 100% of the non-voting Equity Interests of
each First-Tier Foreign Subsidiary, and (v) 309/476 of the Equity Interests
constituting the total combined classes of Equity Interests entitled to vote,
and 100% of the non-voting Equity Interests, of the Canadian Borrower (it being
understood that all such Equity Interests described in this clause (v) shall be
pledged by Jones Canada LP and not by Jones Canada GP) to be subject at all
times to a first priority, perfected Lien in favor of the Administrative Agent
(for the benefit of the U.S. Lender Parties) pursuant to the terms and
conditions of the Loan Documents or other security documents as the
Administrative Agent shall reasonably request, provided, however, that (i) if
the Canadian Borrower issues additional Equity Interests that are entitled to
vote, Jones Canada LP agrees to promptly pledge to the Administrative Agent such
additional number of whole limited partnership units of the Canadian Borrower
equal to approximately (but not in excess of) 65% of such additional limited
partnership units that are so issued and (ii) none of the Equity Interests of
Rachel Roy IP Company LLC shall be subject to such Lien so long as 100% of the
Equity Interests of Rachel Roy IP Company LLC are not owned by one or more U.S.
Loan Parties.  The Borrowers agree if (a) the Administrative Agent
notifies the Borrower Representative that as a result of a change in law there
is a reason to believe that a pledge of a greater percentage of any First-Tier
Foreign Subsidiary’s voting Equity Interests or a guarantee by any First-Tier
Foreign Subsidiary of the Guaranteed Obligations would not result in a “deemed
dividend” under Section 956 of the Code and (b) subsequent to the receipt of
such notice the Borrower Representative reasonably determines (which
determination the Borrower Representative agrees to consider, in consultation
with its counsel and other tax advisors, promptly following receipt of such
notice from the Administrative Agent) that a pledge of more than 65% of the
total combined voting power of all classes of Equity Interests entitled to vote
of such First-Tier Foreign Subsidiary or a guarantee by such First-Tier Foreign
Subsidiary of the Guaranteed Obligations would not result in such a “deemed
dividend” or any other tax liability to the Borrowers, the applicable Borrower
will promptly pledge such greater percentage of the voting Equity Interests of
each such First-Tier Foreign Subsidiary and cause each such First-Tier Foreign
Subsidiary to provide a guarantee of the Guaranteed Obligations, in each case to
the extent that the foregoing would not result in such a “deemed dividend” under
Section 956 of the Code or other tax liability to the Borrowers.

     

     

    
      
         

      

      
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    (c)           Subject
to applicable law, the Canadian Borrower and each other Canadian Loan Party
shall cause each of their Subsidiaries that is organized under the laws of
Canada or any province thereof (other than those Persons in which Investments
are made pursuant to Section 6.04(c)(ii) and (iii)) to become party to a
guarantee agreement that guarantees repayment of the Canadian Obligations (which
guarantee agreement shall be in substantially the form of the Canadian Guarantee
referred to  in clause (a) of the definition thereof) and a security
agreement (which shall, among other things, pledge 100% of the Equity Interests
in each such Subsidiary and grant a security interest in all the personal
property of each such Subsidiary, the foregoing to be in a form substantially
similar to General Security Agreement, the Securities Pledge Agreement and, if
any of such assets is located in the Province of Quebec, the Deed of Hypothec,
in each case as the foregoing are referred to in the definition of “Canadian
Security Agreement”) that secures repayment of the Canadian Obligations,
together with such other documentation and filings that the Administrative Agent
may reasonably require in order to perfect its first priority security interest
in the assets subject to the terms of such Security Agreement; provided, however, that so long
as 100% of the Equity Interests of GRI are not owned by one or more Loan
Parties, none of the Equity Interests of GRI shall be subject to such
Lien.

     

    (d)           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, and will take
or cause to be taken such further actions (including the filing and recording of
financing statements, hypothecs, fixture filings, mortgages, deeds of trust 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 at the expense of the Loan Parties.

     

     

    
      
         

      

      
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    (e)           If
any assets constituting personal property that are acquired by any Borrower or
any Subsidiary that is a Loan Party have at any time a fair market value in
excess of $2,000,000 individually or $5,000,000 in the aggregate for all Loan
Parties (other than assets constituting Collateral under the U.S. Security
Agreement or the Canadian Security Agreement that become subject to the Lien in
favor of the Administrative Agent (for the benefit of the Lender Parties or the
Canadian Lender Parties, as the case may be) upon acquisition thereof), the
Borrower Representative will promptly notify the Administrative Agent and the
Lenders thereof, and, if requested by the Administrative Agent or the Required
Lenders, the Borrowers will cause such assets to be subjected to a Lien in favor
of Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be) securing the Secured Obligations and will
take, and cause the Subsidiary 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.

     

                          SECTION 5.15.      Credit Card Notification
Agreements.  The Borrowers and the Subsidiaries will maintain
credit card processing arrangements with the credit card issuers and processors
identified on Schedule
3.18; provided, however, that the
Borrowers may amend Schedule 3.18 to
remove any credit card issuer or processor identified therein or to add
additional credit card issuers and processors that are satisfactory to the
Administrative Agent, in its sole discretion, and concurrently with the making
of any such amendment the Borrowers shall provide to the Administrative Agent a
Credit Card Notification Agreement with respect thereto.

     

                          SECTION 5.16.      Post Closing
Requirements.  The Borrowers and the other Loan Parties shall
deliver, when and as required by the terms of the Post-Closing Deliverables
Agreement, the items referenced therein.

     

    ARTICLE
VI

     

    Negative
Covenants

     

    Until all the Revolving Commitments
have expired or been terminated as provided in Section 2.09(a) or (b), as the
case may be, each Loan Party executing this Agreement covenants and agrees,
jointly and severally with all of the Loan Parties, with the Lender Parties
that:

     

                          SECTION 6.01.      Indebtedness.  No
Loan Party will, nor will it permit any of the Subsidiaries 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 paragraph (f) hereof;

     

     

    
      
         

      

      
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    (c)           Indebtedness
of any Borrower to any Subsidiary and of any Subsidiary to any Borrower or any
other Subsidiary; provided
that (i) Indebtedness of any Subsidiary that is not a Loan Party to any
Borrower or any Subsidiary that is a Loan Party shall be subject to Section 6.04
and (ii) Indebtedness of any 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 any Borrower of Indebtedness of any Subsidiary and by any Subsidiary of
Indebtedness of any Borrower or any other Subsidiary, provided
that (i) the Indebtedness so Guaranteed is permitted by this
Section 6.01, (ii) Guarantees by any Borrower or any Subsidiary that is a Loan
Party of Indebtedness of any Subsidiary that is not a Loan Party shall be
subject to Section 6.04(e) and (iii) Guarantees permitted under this paragraph
(d) shall be subordinated to the Secured Obligations of the applicable
Subsidiary if, and on the same terms as, the Indebtedness so Guaranteed is
subordinated to the Secured Obligations;

     

    (e)           Indebtedness
of any 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;
provided
that (i) such Indebtedness is incurred prior to or within 120 days
after such acquisition or the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this paragraph
(e) shall not exceed $75,000,000 at any time
outstanding;

     

    (f)           
Indebtedness which represents an extension, refinancing, replacement or renewal
of any of the Indebtedness described in paragraphs (b), (e), (i), (j) and (k)
hereof; provided that (i) the
principal amount of such Indebtedness is not increased (except to the extent
used to finance accrued interest and premiums (including tender or make-whole
premiums) thereon and underwriting discounts, defeasance costs, fees,
commissions and expenses), (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, replacement or renewal does not result in a shortening of the
average weighted maturity of the Indebtedness so extended, refinanced, replaced
or renewed and (v) if the Indebtedness that is refinanced, replaced, renewed or
extended was subordinated in right of payment to the Secured Obligations, then
the terms and conditions of the refinancing, replacement, 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, replaced, 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;

     

     

    
      
         

      

      
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    (h)           Indebtedness
of any 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)           secured
Indebtedness incurred in connection with the IP Secured
Financing;

     

    (j)           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 paragraph (j) shall not exceed $50,000,000 at any
time outstanding;

     

    (k)          other
unsecured Indebtedness in an aggregate principal amount not exceeding
$300,000,000 at any time outstanding;

     

    (l)           Indebtedness
arising out of leases incurred in connection with sale and leaseback
transactions permitted by Section 6.06;

     

    (m)         the
Indebtedness of any joint venture, partnership or similar arrangement which
would be consolidated with those of the Company in the Company’s consolidated
financial statements in accordance with GAAP but of which not more than 50% of
the equity or the ordinary voting power (or in the case of a partnership, not
more than 50% of the general partnership interests) are, as of such date, owned,
controlled or held by the Company or any of its consolidated Subsidiaries;
and

     

    (n)          Indebtedness
of any Subsidiaries that are not Loan Parties; provided
that the aggregate principal amount of Indebtedness permitted by this paragraph
(n) shall not exceed $50,000,000 at any time
outstanding.

     

                          SECTION 6.02.      Liens.  No
Loan Party will, nor will it permit any of the Subsidiaries 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 any Borrower 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 such Borrower or Subsidiary 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;

     

     

    
      
         

      

      
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    (d)          Liens
on fixed or capital assets acquired, constructed or improved by any Borrower or
any Subsidiary; provided
that (i) such security interests secure Indebtedness permitted by
paragraph (e) of Section 6.01, (ii) such security interests and the Indebtedness
secured thereby are incurred prior to or within 120 days after such acquisition
or the completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed 100% 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 such Borrower or Subsidiary or any
other Borrower or Subsidiary;

     

    (e)          any
Lien existing on any property or asset (other than Accounts and Inventory) prior
to the acquisition thereof by any Borrower or any Subsidiary, including or as a
result of merger or consolidation with any Borrower or any Subsidiary that is
permitted pursuant to Section 6.03, or existing on any property or asset (other
than Accounts and Inventory) of any Person that becomes a Subsidiary after the
date hereof prior to the time such Person becomes a Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection with such
acquisition, merger or consolidation or such Person becoming a Subsidiary, as
the case may be, (ii) such Lien shall not apply to any other property or assets
of such Borrower or Subsidiary or any other Borrower or Subsidiary 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 Subsidiary, as the case may
be and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof except to the extent permitted by paragraph
(f) of Section 6.01;

     

    (f)           Liens
(i) of a collecting bank arising in the ordinary course of business under
Section 4-210 of the Uniform Commercial Code in effect in the relevant
jurisdiction covering only the items being collected upon or (ii) in favor of a
banking institution arising as a matter of law, encumbering amounts credited to
deposit or securities accounts (including the right of set-off) and which are
within the general parameters customary in the banking
industry;

     

    (g)          Liens
arising out of sale and leaseback transactions permitted by Section
6.06;

     

    (h)          Liens
on the registered intellectual property of the Borrowers pursuant to the IP
Secured Financing;

     

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

     

    (j)           Liens
arising from precautionary UCC or PPSA financing statements, including in
respect of any operating lease or disposition permitted by this
Agreement;

     

    (k)          Liens
arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of setoff or similar rights and remedies, in each case as
to deposit accounts or other funds maintained with a creditor depositary
institution;

     

     

    
      
         

      

      
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    (l)           Liens
granted to secure payment of the Indebtedness permitted pursuant to Section
6.01(f); provided
that such Liens do not spread to cover any property or assets that were not
originally secured by the Indebtedness being so refinanced;
and

     

    (m)         Liens
not otherwise permitted by this Section 6.02 so long as (i) neither (A) the
aggregate outstanding principal amount of the obligations secured thereby nor
(B) the aggregate fair market value (determined as of the date such Lien is
incurred) of the assets subject thereto exceeds (as to the Borrowers and all
Subsidiaries) $25,000,000 at any one time and (ii) any such Liens do not cover
any Collateral.

     

    Notwithstanding
the foregoing, none of the Permitted Liens (other than nonconsensual Permitted
Liens securing Indebtedness in an aggregate amount at any time not exceeding
$5,000,000) may at any time attach to any Loan Party’s (1) Accounts, other than
those permitted under paragraph (a) of the definition of “Permitted
Encumbrances” and paragraph (a) and (g) above and (2) Inventory, other than
those permitted under paragraphs (a) and (b) of the definition of “Permitted
Encumbrances” and paragraph (a) above.

     

                          SECTION 6.03.      Fundamental
Changes.  (a) No Loan Party will, nor will it permit any of the
Subsidiaries to, merge into or consolidate or amalgamate with any other Person,
or permit any other Person to merge into or consolidate or amalgamate 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 any Borrower may merge into or amalgamate with
any Borrower in a transaction in which such Borrower is the surviving
corporation, (ii) any Loan Party (other than a Borrower) may merge into or
amalgamate with any Loan Party in a transaction in which the surviving entity is
a Loan Party (iii) any Subsidiary may transfer its assets to a Loan Party and
any Subsidiary which is not a Loan Party may transfer its assets to another
Subsidiary that is not a Loan Party, (iv) any Borrower may merge with any other
Borrower, (v) any Loan Party (other than a Borrower) may merge into or
amalgamate with any other person if required to complete a Permitted
Acquisition; (vi) any Subsidiary that is not a Loan Party may merge into or
amalgamate with any other Subsidiary that is not a Loan Party and (vii) any
Subsidiary that is not a Loan Party may liquidate or dissolve if the Borrower
which owns such Subsidiary determines in good faith that such liquidation or
dissolution is in the best interests of such 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.

     

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

     

                          SECTION 6.04.      Investments,
Loans, Advances, Guarantees and Acquisitions.  No Loan Party
will, nor will it permit any of the Subsidiaries to, purchase, hold or acquire
(including pursuant to any merger or amalgamation with any Person that was not a
Loan Party and a wholly owned Subsidiary prior to such merger) any Equity
Interests, 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 obligations 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:

     

     

    
      
         

      

      
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    (a)           Permitted
Investments, subject (as provided in the U.S. Security Agreement or the Canadian
Security Agreement, as the case may be) to control agreements in favor of the
Administrative Agent (for the benefit of the Lender Parties or the Canadian
Lender Parties, as the case may be) or otherwise subject to a perfected security
interest in favor of the Administrative Agent (for the benefit of the Lender
Parties or the Canadian Lender Parties, as the case may be);

     

    (b)           Investments
in existence on the date of this Agreement and described in Schedule
6.04;

     

    (c)           Investments
by the Borrowers and the Subsidiaries in Equity Interests in Persons that are
(i) Loan Parties, (ii) Subsidiaries that are not Loan Parties and (iii) GRI and
Rachel Roy IP Company LLC; provided that (A) any
such Equity Interests held by a U.S. Loan Party shall be
pledged pursuant to the U.S. Security Agreement (subject to the limitations
applicable to Equity Interests of First-Tier Foreign Subsidiaries referred to in
Section 5.14(b)(iv) and any such Equity Interests held by a Canadian Loan Party
shall be pledged pursuant to the applicable Canadian Security Agreement) and (B)
the aggregate amount of Investments made after the date hereof by Loan Parties
in any Person described in clause (ii) or (iii) above (including intercompany
loans permitted under clause (B) to the proviso to Section 6.04(d) and
outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not
exceed the sum of (1) (x) Investments existing on the Effective Date in GRI,
Rachel Roy IP Company LLC and Subsidiaries that are not Loan Parties, (y) loans
and advances existing on the Effective Date of the Loan Parties to Subsidiaries
that are not Loan Parties and (z) Guarantees existing on the Effective Date by
Loan Parties of the aggregate principal amount of Indebtedness of Subsidiaries
that are not Loan Parties (in each case as set forth on Schedule 6.04) and (2)
$30,000,000 (the “Investment Basket”)
at any time outstanding (in each case determined without regard to any
write-downs or write-offs);

     

    (d)           loans
or advances made by (i) any Borrower to any Subsidiary or any other Borrower and
(ii) any Subsidiary to any Borrower or any other Subsidiary, provided
that (A) any such loans and advances made by a Loan Party shall be
evidenced by a promissory note pledged pursuant to the U.S. Security Agreement
or the applicable Canadian Security Agreement, as applicable, and (B) the amount
of such loans and advances made after the Effective Date 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 made after the
Effective Date and outstanding Guarantees permitted under the proviso to Section
6.04(e) and made after the Effective Date) shall not exceed the Investment
Basket 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
after the Effective Date shall (together with outstanding Investments permitted
under clause (B) to the proviso to Section 6.04(c) and made after the Effective
Date and outstanding intercompany loans permitted under clause (B) to the
proviso to Section 6.04(d) and made after the Effective Date) shall not exceed
the Investment Basket at any time outstanding (in each case determined without
regard to any write-downs or write-offs);

     

     

    
      
         

      

      
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    (f)           loans
or advances by the Borrowers and the Subsidiaries to their employees in the
ordinary course of business consistent with past practices for travel and
entertainment expenses, relocation costs and similar purposes up to a maximum of
$4,000,000 in the aggregate at any one time outstanding;

     

    (g)          loans
and advances to third party contractors in the ordinary course of business and
consistent with past practices in an aggregate outstanding amount not to exceed
at any time $2,000,000 (excluding such loans and advances consisting of
prepayments or advances for inventory or services);

     

    (h)          subject
to Sections 4.2(a) and 4.4 of the U.S. Security Agreement, notes payable, or
stock or other securities issued by Account Debtors 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;

     

    (i)           Investments
in the form of Swap Agreements permitted by Section 6.07;

     

    (j)           Investments
of any Person existing at the time such Person becomes a Subsidiary of a
Borrower or consolidates or merges with a Borrower or any of the 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;

     

    (k)           Investments
received in connection with the dispositions of assets permitted by Section
6.05;

     

    (l)           Permitted
Acquisitions; provided that both
immediately before and immediately after giving effect thereto, (i) no Default
or Event of Default shall have occurred and be continuing, (ii) the Fixed Charge
Coverage Ratio for the Test Period in effect at the time such Permitted
Acquisition is to occur shall be not less than 1.25 to 1.00 (determined on a Pro
Forma Basis in respect of the Test Period in effect at such time) and (iii)
Availability will not be less than 30% of the total Revolving Commitment as of
the date such Permitted Acquisition is consummated and for the period of 60
consecutive days immediately preceding the consummation of such Permitted
Acquisition after giving pro forma effect thereto;

     

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

     

    (n)           Guarantees
by the Borrower or any of the Subsidiaries of leases (other than Capital Lease
Obligations) or of other obligations of the Borrower or any of its Subsidiaries
that do not constitute Indebtedness, in each case entered into in the ordinary
course of business that is consistent with past practice; and

     

     

    
      
         

      

      
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    (o)           other
Investments not otherwise permitted by this Section 6.04; provided that both
immediately before and immediately after giving effect thereto, (i) no Default
or Event of Default shall have occurred and be continuing, (ii) the Fixed Charge
Coverage Ratio  for the Test Period in effect at the time such
Investment is to occur shall be not less than 1.25 to 1.00 (determined on a Pro
Forma Basis in respect of the Test Period in effect at such time), (iii)
Availability will not be less than 30% of the total Revolving Commitment as of
the date such Investment is consummated and for the period of 60 consecutive
days immediately preceding the consummation of such Permitted Acquisition after
giving pro forma effect thereto, and (iv) the aggregate amount of all
Investments made pursuant to this paragraph (o) shall not exceed $50,000,000 in
any fiscal year of the Borrower.

     

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

     

    (a)           the
sales, transfers, leases or dispositions of assets described in Schedule
6.05;

     

    (b)           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;

     

    (c)           sales,
transfers and dispositions to any Borrower or any Subsidiary, provided
that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall (i) be made in compliance with Section
6.09 and (ii) not have an aggregate fair market value, when added to the fair
market value of all the assets sold, transferred or disposed of pursuant to
paragraph (h) below, of more than $10,000,000 during any fiscal year of the
Borrowers;

     

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

     

    (e)           sales,
transfers and dispositions of Investments permitted by paragraphs (c)(ii), (h)
and (i) of Section 6.04 and the proviso to Section 6.04(d);

     

    (f)           
sale and leaseback transactions permitted by Section 6.06;

     

    (g)           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 Borrower or any Subsidiary;

     

     

    
      
         

      

      
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    (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) and
pursuant to paragraph (c) to Subsidiaries that are not Loan Parties shall not
exceed $10,000,000 during any fiscal year of the
Borrowers;

     

    (i)           
Restricted Payments permitted by Section 6.08; and

     

    (j)           
dispositions of cash and Permitted Investments in the ordinary course of
business that is consistent with past practices;

     

    provided that all sales,
transfers, leases and other dispositions permitted hereby (other than those
permitted by paragraphs (c) (to the extent that the applicable transaction is
solely among Loan Parties), (g) and (i) above) shall be made for fair value and
for at least 75% cash consideration.

     

                          SECTION 6.06.      Sale and Leaseback
Transactions.  No Loan Party will, nor will it permit any of
the Subsidiaries 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 Borrower 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 is consummated within 120 days after such Borrower 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 of the
Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which any Borrower or any Subsidiary
has actual exposure (other than those in respect of Equity Interests of any
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 Borrower or
any Subsidiary.

     

                          SECTION 6.08.      Restricted Payments; Certain
Payments of Indebtedness.  (a) No Loan Party will, nor will it
permit any of the Subsidiaries 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) each Borrower 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)
Subsidiaries may declare and pay dividends ratably with respect to their Equity
Interests, (iii) the Company may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of the Company and any of its Subsidiaries in an aggregate amount not
to exceed $2,000,000 during any fiscal year of the Company; provided that, both
immediately before and immediately after giving effect to each such Restricted
Payment, no Default or Event of Default shall have occurred and be continuing,
and (iv) the Borrowers may make other Restricted Payments; provided that, (A)
both immediately before the declaration of, and (other than the declaration of a
dividend of a Loan Party that is a public company, which dividend shall be
subject to a Reserve as provided in the definition thereof) immediately after
giving effect to each such Restricted Payment, no Default or Event of Default
shall have occurred and be continuing, and (B) at the time any Restricted
Payment is declared (x) the Fixed Charge Coverage Ratio for the Test Period in
effect at the time shall not be less than 1.25 to 1.00 (determined on a Pro
Forma Basis in respect of the Test Period in effect at such time) and (y)
Availability shall not be less than 30% of the total Revolving Commitment for
the period of 60 consecutive days immediately preceding the date such Restricted
Payment is declared after giving pro forma effect thereto.

     

     

    
      
         

      

      
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    (b)           No
Loan Party will, nor will it permit any of the Subsidiaries 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 (including the Existing Debt Securities that are
maturing in November 2009), other than payments in respect of the Subordinated
Indebtedness prohibited by the subordination provisions thereof or relating
thereto;
provided that (A) if, either immediately before or after giving effect to
any such payment on the Existing Debt Securities any Default or Event of Default
has occurred and is continuing, no such payment may be made in an amount
exceeding the Existing Debt Securities Reserve and (B) no payment on any other
Indebtedness shall be made if, either immediately before or after giving effect
to any such payment, any Default or Event of Default has occurred and is
continuing;

     

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

     

    (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;

     

    (v)           prepayment
of the Existing Debt Securities that are maturing in November 2009 pursuant to
the tender offer for such Existing Debt Securities; provided that both
immediately before and after giving effect to such prepayment, (A) no Default or
Event of Default shall have occurred and be continuing and (B) Availability
plus
cash on hand of the Loan Parties (which is reasonably identified to the
satisfaction of the Joint Collateral Agents) is not less than $300,000,000;
provided further, however,
that such payment shall be made not later than 30 days after the Effective Date;
and

     

    (vi)          payment
of intercompany Indebtedness in accordance with past practices arising in
connection with cash management transactions in the ordinary course of business;
provided that
no such payment shall be made by a Loan Party to a Person that is not a Loan
Party if immediately before or after giving effect thereto any Default or Event
of Default has occurred and is continuing.

     

     

    
      
         

      

      
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                          SECTION 6.09.      Transactions with
Affiliates.  No Loan Party will, nor will it permit any of the
Subsidiaries 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 such Borrower or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among any Borrowers and other Loan Parties
(including transfers of Inventory) and any Subsidiary that is a Loan Party not
involving any other Affiliate, (c) any loans, advances, Guarantees or other
Investments permitted by Sections 6.04(c), (d) or (e), (d) any Indebtedness
permitted under Section 6.01(c), (d) or (e), (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 any Borrower or
any Subsidiary who are not employees of such Borrower or Subsidiary, and
compensation and employee benefit arrangements paid to, and indemnities provided
for the benefit of, directors, officers or employees of the Borrowers or their
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, stock options and equity
incentive and stock ownership plans approved by a Borrower’s board of
directors.

     

                          SECTION 6.10.      Restrictive
Agreements.  No Loan Party will, nor will it permit any of the
Subsidiaries 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 the Subsidiaries to
create, incur or permit to exist any Lien upon any of its property or assets to
secure the Secured Obligations, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its Equity
Interests or to make or repay loans or advances to any Borrower or any other
Subsidiary or to Guarantee Indebtedness of any Borrower or any other Subsidiary;
provided
that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by any Loan Document, (ii) the foregoing shall not
apply to restrictions and conditions imposed on the Loan Parties existing on the
date hereof identified on Schedule
6.10 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to the IP Secured Financing to the extent approved
by the Administrative Agent in accordance with such defined term, (iv) the
foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale; provided
further
that such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (v) clause (a) of the foregoing shall
not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness or sale and leaseback transactions permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (vi) clause (a) of the foregoing shall not
apply to customary provisions in leases restricting the assignment
thereof.

     

                          SECTION 6.11.      Amendment
of Material Documents.  No Loan Party will, nor will it permit
any of the Subsidiaries to, amend, modify or waive any of its rights under (a)
agreement relating to any Subordinated Indebtedness, (b) its certificate of
incorporation, by-laws, operating, memorandum of association, management or
partnership agreement or other organizational documents or (c) the Indenture,
any Open Account Agreement or the Existing Debt Securities to the extent any
such amendment, modification or waiver would be materially adverse to the
Lenders in any respect.

     

     

    
      
         

      

      
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                          SECTION 6.12.      Fixed Charge Coverage
Ratio.  During any Level 1 Minimum Availability Period, the
Borrowers will not permit the Fixed Charge Coverage Ratio as at the last day of
any Test Period to be less than 1.0 to 1.0.

     

                          SECTION 6.13.      Open Account
Agreements.  No Loan Party will, nor will it permit any of its
Subsidiaries to, enter into any Other Open Account Agreement without the prior
consent of the Administrative Agent, such consent not to be unreasonably
withheld or delayed.  The aggregate amount of Open Account Obligations
that are authorized to be outstanding at any time pursuant to the terms of any
Open Account Agreement shall not exceed (a) in the case of Citibank Open Account
Agreement, the Citibank Open Account Cap, and (b) in the case of any Other Open
Account Agreement, the Open Account Other Cap with respect thereto as provided
in the definition of “Open Account Other Cap.”

     

    ARTICLE
VII

     

    Events
of Default

     

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

     

    (a)           any
Borrower shall fail to pay (i) any principal of any Loan or any repayment or
reimbursement obligation in respect of any LC Disbursement or (ii) any Open
Account Obligation, in each case, 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)           any
Borrower shall fail to pay any interest on any Loan or any fee or any other
Obligation (other than an amount referred to in paragraph (a) of this Article)
payable pursuant to this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
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 other Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with this Agreement or any other Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have
been materially incorrect 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 5.16 or in Article VI;

     

     

    
      
         

      

      
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    (e)           any
Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement or any other Loan Document (other than those which
constitute a default under another Section of this Article), and such failure
shall continue unremedied for (i) during a Weekly Reporting Period, a period of
one day 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(g),
(h) or (i), (ii) a period of five 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 (other than Section 5.01(g), (h) or (i)
during a Weekly Reporting Period), 5.02 (other than Section 5.02(a)), 5.03
through 5.07, 5.09, 5.10, 5.11 or 5.12 of this Agreement or (iii) a period of 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 paragraph (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, provincial or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, interim receiver, trustee, custodian, sequestrator,
monitor, administrator, 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 60
days or an order or decree approving or ordering any of the foregoing shall be
entered;

     

    (i)           
any Loan Party or any Subsidiary shall (i) voluntarily commence any proceeding
or file any petition, proposal or notice of intention to file a proposal seeking
liquidation, reorganization or other relief under any federal, state, provincial
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 paragraph (h) of
this Article, (iii) apply for or consent to the appointment of a receiver,
interim receiver, trustee, custodian, sequestrator, monitor, administrator,
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;

     

     

    
      
         

      

      
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    (j)           
any Loan Party or any Subsidiary 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
$50,000,000 shall be rendered against any Loan Party, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of any Loan Party or any Subsidiary to enforce any such judgment or any
Loan Party or any Subsidiary shall fail within 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)           
(i)(A) an ERISA Event shall have occurred, (B) a trustee shall be appointed by a
United States district court to administer any Pension Plan, (C) the PBGC shall
institute proceedings to terminate any Pension Plan, (D) any Loan Party or any
of their respective ERISA Affiliates shall have been notified by the sponsor of
a Multiemployer Plan that it has incurred or will be assessed Withdrawal
Liability to such Multiemployer Plan and such entity does not have reasonable
grounds for contesting such Withdrawal Liability or is not contesting such
Withdrawal Liability in a timely and appropriate manner; or (E) any other
event or condition shall occur or exist with respect to a Pension Plan; and in
each case in paragraphs (A) through (E) above, such event or condition, together
with all other such events or conditions, if any, could, in the opinion of the
Required Lenders, reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect; or (ii) a Pension Event shall occur
which, in the Administrative Agent’s determination, constitutes grounds for the
termination under any applicable law, of any Canadian Pension Plan or for the
appointment by the appropriate Governmental Authority of a trustee for any
Canadian Pension Plan, or if any Canadian Pension Plan shall be terminated or
any such trustee shall be requested or appointed, or if a Loan Party or any of
its Subsidiaries is in default with respect to payments to a Multiemployer Plan
or Canadian Pension Plan resulting from their complete or partial withdrawal
from such Canadian Pension Plan and any such event may reasonably be expected to
have a Material Adverse Effect or any Lien arises (except for contribution
amounts not yet due) in connection with any Canadian Pension Plan;

     

    (m)          a
Change in Control shall occur;

     

    (n)           the
occurrence of any “default”, under and as defined in the U.S. Security Agreement
or the Canadian Security 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;

     

     

    
      
         

      

      
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    (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 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 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 Borrowers described
in paragraph (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 Representative, take
either or both of the following actions, at the same or different
times:  (i) terminate the Revolving Commitments, and thereupon the
Revolving Commitments shall terminate immediately and (ii) declare the Loans and
other Obligations then outstanding to be due and payable in whole (or in part,
in which case any Obligations not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans and other Obligations so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrowers
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 Borrowers; and in case of any event with respect to the
Borrowers described in paragraph (h) or (i) of this Article, the Revolving
Commitments shall automatically terminate and the principal of the Loans and
other Obligations then outstanding, together with accrued interest thereon and
all fees and other Obligations of the Borrowers 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
Borrowers.  Upon the occurrence and the continuance of an Event of
Default, the Administrative Agent or the Canadian Administrative Agent, may, and
at the request of the Required Lenders shall, exercise any rights and remedies
provided to it under the Loan Documents or at law or equity, including all
remedies provided under the UCC, the PPSA, the Civil Code of Quebec or any other
legislation.

     

     

    
      
         

      

      
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    ARTICLE
VIII

     

    The
Administative Agent and Canadian Administrative Agent, Joint Collateral Agents;
Other Agents

     

                          SECTION 8.01.      The Administrative Agent and
the Canadian Administrative Agent.  Each of the Lender Parties
hereby irrevocably appoints each of the Administrative Agent and the Canadian
Administrative Agent as its agent hereunder and under the other Loan Documents
and authorizes the Administrative Agent and the Canadian Administrative Agent to
take such actions on its behalf, including execution of the other Loan Documents
and an intercreditor agreement in connection with the IP Secured Financing (as
provided in the definition of such term in Section 1.01), and to exercise such
powers as are delegated to the Administrative Agent and the Canadian
Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.

     

    Without limiting the powers of the
Administrative Agent hereunder and under the other Loan Documents, each Lender
Party and the Administrative Agent (in its sole capacity as the initial holder
of the Bonds (as defined below)) hereby acknowledges and agrees that the
Administrative Agent (or any successor thereto) shall, for the purposes of
holding any security granted under the Loan Documents pursuant to the laws of
the Province of Quebec to secure payment of debentures (or any similar
instruments) issued by the Canadian Borrower or any other Loan Party (which
debentures as amended, restated, replaced, modified or supplemented at any time,
for purposes of this Section, shall be hereinafter referred to as the “Bonds”), be the
holder of an irrevocable power of attorney (“fondé de pouvoir”) (within the meaning of
Article 2692 of the Civil Code of Quebec) for all present and future Lender
Parties and holders of the Bonds.  Each Lender Party and the
Administrative Agent (solely in its capacity as the initial holder of the Bonds)
hereby ratifies the appointment of and constitutes, to the extent necessary, the
Administrative Agent as the holder of such irrevocable power of attorney (“fondé de pouvoir”) in order to hold hypothecs
or other Liens granted by any one of the Loan Parties under the Loan Documents
in the Province of Quebec to secure payment of the Bonds.  Each
assignee Lender Party and each assignee holder of Bonds shall be deemed to have
confirmed and ratified the constitution of the Administrative Agent as the
holder of such irrevocable power of attorney (“fondé de pouvoir”) by execution of the
relevant agreements relating to such assignment.  The Administrative
Agent agrees to act in such capacity.  Furthermore, the Administrative
Agent hereby agrees and each of the other Lender Parties hereby appoints the
Administrative Agent to act in the capacity of the holder and depositary of the
Bonds on its own behalf as Administrative Agent and for and on behalf and for
the benefit of all present and future Lender Parties.  Each assignee
Lender Party shall be deemed to have confirmed and ratified the constitution of
the Administrative Agent as such holder and depositary of the Bonds by execution
of the relevant agreements relating to such assignment.  To the extent
necessary, each Lender Party shall be deemed to confirm and ratify the
appointments made under this Section by its execution of any the relevant Loan
Document.  The execution by the Administrative Agent prior to the date
hereof of any document creating or evidencing any such hypothec or other Lien
for the benefit of any of the Lender Parties is hereby ratified and
confirmed.

     

    The parties hereto expressly waive the
provisions and protection of Section 32 of An Act Respecting Special Powers of
Legal Persons (Québec).  The Administrative Agent may acquire and be
the holder of the Bonds or other titles of indebtedness.  Each of the
parties hereto acknowledges and agrees that the Bonds constitute a title of
indebtedness as such term is used in Article 2692 of the Civil Code of
Quebec.

     

     

    
      
         

      

      
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    The bank serving as the Administrative
Agent or the Canadian 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 or the Canadian
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 or the Canadian Administrative Agent
hereunder.

     

    Neither the Administrative Agent nor
the Canadian Administrative Agent shall have any duties or obligations except
those expressly set forth in the Loan Documents.  Without limiting the
generality of the foregoing, (a) neither the Administrative Agent nor the
Canadian Administrative Agent shall be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent and the Canadian 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 or the Canadian 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, neither the Administrative Agent nor the Canadian
Administrative Agent shall 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 the Subsidiaries that is communicated to or obtained by the bank serving as
Administrative Agent or Canadian Administrative Agent or any of its Affiliates
in any capacity.  The Administrative Agent and the Canadian
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
wilful misconduct.  The Administrative Agent or the Canadian
Administrative Agent, as the case may be, shall be deemed not to have knowledge
of any Default unless and until written notice thereof is given to the
Administrative Agent and the Canadian Administrative Agent by the Borrower
Representative or a Lender Party, and the Administrative Agent and the Canadian
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 adequacy, accuracy
or completeness of any information (whether oral or written) set forth or in
connection with any Loan Document, (v) the legality, the validity,
enforceability, effectiveness, adequacy 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 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 and the Canadian Administrative Agent, as
the case may be.

     

     

    
      
         

      

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

     

    The Administrative Agent and the
Canadian 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 or the Canadian Administrative Agent, as the case may
be.  The Administrative Agent, the Canadian Administrative Agent and
any such sub-agent thereof 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, the Canadian
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 the Administrative Agent and the Canadian
Administrative Agent.

     

    Subject to the appointment and
acceptance of a successor Administrative Agent and the Canadian Administrative
Agent, as the case may be, as provided in this paragraph, the Administrative
Agent and the Canadian Administrative Agent may resign at any time by notifying
the Lenders, the Issuing Banks and the Borrower Representative.  Upon
any such resignation, the Required Lenders shall have the right, in consultation
with the Borrowers, to appoint a successor (which shall, in the case of the
Canadian Administrative Agent only, be an Affiliate of the Administrative Agent
acting through a branch or an office in Canada).  If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent or
Canadian Administrative Agent, as the case may be, gives notice of its
resignation, then the retiring Administrative Agent or Canadian Administrative
Agent, as the case may be, may, on behalf of the Lender Parties, appoint a
successor Administrative Agent which shall be a commercial bank or an Affiliate
of any such commercial bank (which shall, in the case of the Canadian
Administrative Agent only, be an Affiliate of the Administrative Agent acting
through an office in Canada).  Upon the acceptance of its appointment
as Administrative Agent or Canadian Administrative Agent, as the case may be,
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges, obligations and duties of the retiring (or
retired) Administrative Agent or Canadian Administrative Agent, as the case may
be, and the retiring Administrative Agent or Canadian Administrative Agent shall
be discharged from its duties and obligations hereunder.  The fees
payable by the Borrowers to a successor Administrative Agent and Canadian
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrowers and such
successor.  After the Administrative Agent’s or Canadian
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 or Canadian Administrative Agent as the case
may be, 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 or Canadian Administrative Agent as the case may
be.

     

     

    
      
         

      

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

     

    The first time (and no subsequent time)
that Availability on any date is less than $125,000,000, the Administrative
Agent agrees to exercise its best efforts to give the Citibank Open Account
Agent prompt notice  of such event within one Business Day after the
occurrence thereof; provided that the
Administrative Agent shall not incur any liability for failing to deliver such
notice.

     

                          SECTION 8.02.      The Joint Collateral
Agents.  Each of the Lender Parties hereby irrevocably appoints
the Joint Collateral Agents as its agent hereunder and under the other Loan
Documents and authorizes the Joint Collateral Agents to take such actions on its
behalf and to exercise such powers as are delegated to the Joint Collateral
Agents by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

     

    Each of the banks serving as a Joint
Collateral 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
a Joint Collateral 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 a Joint Collateral Agent hereunder.

     

    The Joint Collateral Agents shall not
have any duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the generality of the foregoing, (a)
neither Joint Collateral Agent shall be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) neither Joint Collateral Agent shall have any duty to take any discretionary
action or exercise any discretionary powers except as expressly set forth in
this Agreement and (c) except as expressly set forth in the Loan Documents,
neither Joint Collateral Agent shall have any duty to disclose, nor shall be
liable for the failure to disclose, any information relating to any Loan Party
or any of the Subsidiaries that is communicated to or obtained by any bank
serving as a Joint Collateral Agent or any of its Affiliates in any
capacity.  Neither Joint Collateral Agent shall be liable for any
action taken nor not taken by it in the absence of its own gross negligence or
wilful misconduct.  Neither Joint Collateral Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with 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 adequacy, accuracy or completeness of any information
(whether oral or written) set forth or in connection with any Loan Document, (v)
the legality, the validity, enforceability, effectiveness, adequacy or
genuineness of any Loan Document or any other agreement, instrument or document,
(vi) the creation, perfection or priority of Liens on the Collateral or the
existence of the Collateral, or (vii) the 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 Joint Collateral
Agents.

     

     

    
      
         

      

      
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    The Joint Collateral Agents shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
representation, notice, request, certificate, consent, statement, instrument,
document or other writing or communication believed by it to be genuine, correct
and to have been authorized, signed or sent by the proper Person.  The
Joint Collateral Agents may consult with legal counsel (who may be counsel for
the Borrowers), independent accountants and other experts selected by them, in
their Permitted Discretion, 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 Joint Collateral Agents may perform
any and all their duties and exercise their rights and powers by or through any
one or more sub-agents appointed by either Joint Collateral
Agent.  The Joint Collateral Agents and any such sub-agent may perform
any and all their duties and exercise their 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 Joint Collateral Agents 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 the Joint Collateral
Agents.

     

    Either or both Joint Collateral Agents
may resign at any time by notifying the other Joint Collateral Agent, if any,
the Administrative Agent, the Issuing Banks and the Borrower
Representative.  Upon any such resignation, the remaining Joint
Collateral Agent (the “Sole Remaining Collateral
Agent”) shall perform all of the functions of the Joint Collateral
Agents, and the retiring Joint Collateral Agent shall be discharged from its
duties and obligations hereunder.  If both Joint Collateral Agents
shall resign substantially simultaneously, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint one successor collateral
agent, who shall be the sole successor collateral agent hereunder (the “Sole Successor Collateral
Agent”).  If a Sole Successor Collateral Agent has not been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after both Joint Collateral Agents have given their notice of
such resignation, then the retiring Joint Collateral Agents may, on behalf of
the Lender Parties, appoint a Sole Successor Collateral Agent which shall be a
commercial bank or an Affiliate of any such commercial bank.  Upon the
acceptance of its appointment as Sole Successor Collateral Agent, such Person
shall succeed to and become vested with all the rights, powers, privileges,
obligations and duties of the retiring (or retired) Joint Collateral Agents, and
the retiring Joint Collateral Agent shall be discharged from the duties and
obligations hereunder.

     

     

    
      
         

      

      
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    The fees payable by the Borrowers to
the Sole Remaining Collateral Agent or Sole Successor Collateral Agent shall be
the same as those payable to the Joint Collateral Agents unless otherwise agreed
between the Borrowers and such Sole Remaining Collateral Agent or Sole Successor
Collateral Agent, as the case may be.  After any Joint Collateral
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 Joint
Collateral 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 Joint Collateral Agent.

     

    Each Lender Party hereby agrees that
(a) it has requested a copy of each Report prepared by or on behalf of the Joint
Collateral Agents; (b) no Joint Collateral Agent (i) makes any 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 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 Joint Collateral
Agents undertake no obligation to update, correct or supplement the Reports; (d)
it will keep all Reports confidential and strictly for its internal use, and it
will 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 Joint Collateral
Agents 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.

     

                          SECTION 8.03.      Other
Agents.  The Joint Bookrunners, the Joint Lead Arrangers, the
Syndication Agent and the Documentation Agents shall not have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such.

     

    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 the Borrower Representative at:

     

    Jones
Apparel Group, Inc.

    1411
Broadway

    New York,
NY  10018

    Attention:
Chief Financial Officer

    Telephone
No.: (212) 703-9152

    Telecopy
No.: (212) 703-9154

     

     

    
      
         

      

      
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    with a copy to:

     

    Jones
Apparel Group Canada, LP

    388
Applewood Crescent

    Vaughan,
Ontario

    L4K
4B4

    Attention:
Roger Flores

    Phone:
(905) 760-6070

    Fax:
(905) 660-6777

    

    (ii)         if
to the Administrative Agent or the Swingline Lender, to:

     

    JPMorgan
Chase Bank, N.A.

    270 Park
Avenue, 44th
Floor

    NY1-K855

    New York,
NY 10017

     

    Attention:
Jones Apparel Account Officer

     

    Facsimile
No:  (646) 534-2270

     

    (iii)         if
to the Canadian Administrative Agent or the Canadian Swingline Lender,
to:

     

    JPMorgan
Chase Bank, N.A., Toronto Branch

    200 Bay
Street

    Royal
Bank Plaza, Floor 18

    Toronto
M57 2J2 Canada

    Attention:  Dan
Howat

    Telecopy:  (416)
981-2375

     

    (iv)             if
to any other Lender, any other Agent or any Issuing Bank, or any Open Account
Agent or Open Account Bank, to it at its address or facsimile number set forth
in its Administrative Questionnaire or in any other writing delivered by any
such Person to the Administrative Agent.

     

    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, to compliance notices or to Event of Default certificates delivered pursuant
to Section 5.01(d) unless otherwise agreed by the Administrative Agent and the
Canadian Administrative Agent, as the case may be, and the applicable
Lender.  The Administrative Agent or the Borrower Representative (on
behalf of the Loan Parties) may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided
that approval of such procedures may be limited to particular
notices or communications.  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.

     

     

    
      
         

      

      
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    (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 any Lender Party 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
Lenders Parties, 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 the issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether any Lender Party
may have had notice or knowledge of such Default at the time.

     

     

    
      
         

      

      
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    (b)           Neither
this Agreement nor any other Loan Document nor any provision hereof or thereof
may be waived, amended or modified except (i) in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by the Borrowers
and the Required Lenders or (ii) in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the
Administrative Agent, the Canadian Administrative Agent (to the extent it is a
party to such Loan Document) and each Loan Party that is a party thereto, with
the consent of the Required Lenders; provided that no such
agreement shall (A) increase the Commitment of any Lender without the written
consent of such Lender, (B) reduce or forgive the principal amount of any Loan,
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, (C) 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, postpone the scheduled date of expiration
of the Revolving Commitment, without the written consent of each Lender directly
affected thereby, (D) increase the advance rates set forth in the definition of
“Borrowing Base”, without the written consent of each Lender, (E) change the
penultimate sentence of Section 2.08(a), the last sentence of Section 2.09(d),
the third sentence of Section 2.18(a), Section 2.18(b) or Section 2.18(d) in a
manner that would alter the manner or order in which payments are shared or
change any provision requiring ratable funding, without the written consent of
each Lender, (F) modify eligibility criteria, as such eligibility criteria are
in effect on the Effective Date (including adding new categories of eligible
assets or eliminating any category of the reserves), in any manner that has the
effect of weakening or eliminating any applicable eligibility criteria or
increasing the amounts available to be borrowed hereunder without the written
consent of the Joint Collateral Agents and the Supermajority Lenders, (G) change
any of the provisions of this Section or the definition of “Required Lenders”,
“Joint Collateral Agents”  or “Supermajority 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, (H) 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, (I) except as provided
in paragraphs (c) and (d) of this Section or Section 6.01(i), release all or
substantially all of the Collateral, without the written consent of each Lender,
(J) change Section 2.10(b) or Section 2.11(f) without the written consent of
each Lender, (K) increase the total Revolving Commitments to an aggregate amount
exceeding $700,000,000 without the written consent of each Lender, (L)
subordinate the Liens of the Administrative Agent, or with respect to any other
Indebtedness of the Borrowers cause the Liens of the Administrative Agent to be
pari passu with the Liens
securing such other Indebtedness, in each case with respect to all or
substantially all of the Collateral (other than the Liens securing the IP
Secured Financing, the Indebtedness permitted to be incurred pursuant to Section
2.09(e) or other Indebtedness that is permitted to be outstanding pursuant to
Section 6.01) without the written consent of each Lender, (M) subordinate the
repayment of all or any substantial part of the Obligations to the repayment of
any other Indebtedness without the written consent of each Lender, (N) modify
(except as the following relates to the Citibank Open Account Agreement and
related terms, which shall be subject to clause (O)) (x) the defined terms “Open
Account Agent”, “Open Account Agreement”, “Open Account Bank”, “Open Account
Other Cap”, “Open Account Obligations” and “Open Account Excess Obligations” or
(y) Section 2.18(b) in a manner that would alter the manner or order in which
payments are made to any Open Account Agent or any Open Account Bank, in each
case without the written consent of the Required Lenders and the applicable Open
Account Agent affected thereby, or (O) modify (x) the defined terms “Citibank
Open Account Agent”, “Citibank Open Account Agreement”, “Citibank Open Account
Bank”, “Citibank Open Account Cap”, “Citibank Open Account Obligations”, and
“Open Account Excess Obligations” or (y) Section 2.18(b) in a manner that would
alter the manner or order in which payments are made to the Citibank Open
Account Agent or any Citibank Open Account Bank, in each case without the
written consent of the Required Lenders and the Citibank Open Account Agent;
provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of any
Agent, Swingline Lender or Issuing Bank without the prior written consent of
such Agent, Swingline Lender or Issuing Bank. The Administrative Agent may also
amend the Revolving Commitment Schedule to reflect assignments entered into
pursuant to Section 9.04.

     

     

    
      
         

      

      
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    (c)           The
Lender Parties 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 or the Canadian Loan Parties, as the
case may be, on any Collateral (i) upon the termination of all Revolving
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 each affected Lender Party,
(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, (v) constituting registered intellectual
property that will secure other Indebtedness as permitted by Section 6.01(i) or
(vi) if such Liens were granted by any Loan Party with respect to which
100% of the Equity Interests have been sold in a transaction permitted by
Section 6.05.  Except as provided in the preceding sentence and
in Section 9.02(b)(ii)(I), the Administrative Agent will not release any Liens
on Collateral without the prior written authorization of the Required
Lenders.  The Lender Parties hereby irrevocably authorize the
Administrative Agent, at its option and in its sole discretion, to release any
Loan Guarantor from its obligation under its Loan Guaranty if 100% of the Equity
Interests of such Loan Guarantor have been sold in a transaction permitted
pursuant to Section 6.05.  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.  In connection with any termination or release pursuant to
this Section, the Administrative Agent shall reasonably 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.

     

    (d)           If,
in connection with any proposed amendment, waiver or consent requiring the
consent of “each Lender” or “each Lender affected thereby,” the consent of the
Required 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 Borrowers 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 Borrowers 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 paragraph (b)
of Section 9.04, and (ii) the Borrowers 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
Borrowers 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.

     

     

    
      
         

      

      
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                          SECTION 9.03.      Expenses; Indemnity; Damage
Waiver.  (a) The Borrowers shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and the Canadian
Administrative Agent, the Joint Collateral Agents, the Joint Lead Arrangers and
their Affiliates, including the reasonable fees, charges and disbursements of a
single New York counsel for the Administrative Agent and such special and local
counsel as the Administrative Agent and the Canadian Administrative Agent may
deem appropriate in its good faith discretion, 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
applicable Issuing Bank in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder, (iii)
all reasonable out-of-pocket expenses incurred by the Joint Collateral Agents in
connection with the performance of their duties pursuant to the provisions of
the Loan Documents and (iv) all reasonable out-of-pocket expenses incurred by
the Administrative Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
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 and Letters of
Credit issued hereunder including all such reasonable out-of pocket expenses
incurred in connection with any workout, restructuring or negotiations in
respect of such Loans or Letters of Credit.  Expenses being reimbursed
by the Borrowers under this Section include, without limiting the generality of
the foregoing, costs and expenses incurred in connection with:

     

    (i)           subject
to Section 5.11, appraisals and insurance reviews;

     

    (ii)           subject
to Section 5.12, field examinations and the preparation of Reports based on the
fees charged by a third party retained by the Joint Collateral Agents or the
internally allocated fees for each Person employed by the Joint Collateral
Agents with respect to each field examination;

     

    (iii)           taxes,
fees and other charges for (A) lien and title searches and title insurance and
(B) recording the Collateral Documents, 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.

     

     

    
      
         

      

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

     

    (b)           The
Borrowers shall, jointly and severally, indemnify each Lender Party, and Related
Party thereof (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 reasonable 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 any actual or prospective claim, litigation,
investigation or proceeding relating to any of the following, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto (i) the execution or delivery of the Loan Documents or any
agreement or instrument contemplated thereby (other than the Open Account
Agreements, the Swap Agreements and the agreements pursuant to which Banking
Services are provided), the performance by the parties hereto of their
respective obligations thereunder or the consummation of the Transactions or any
other transactions contemplated hereby (other than transactions contemplated by
the Open Account Agreements, the Swap Agreements and the Banking Services), (ii)
any Loan or any Letter of Credit or the use of the proceeds therefrom (including
any refusal by an 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 any Borrower or any of their Subsidiaries, or any Environmental
Liability related in any way to any Borrower or any of their Subsidiaries or
(iv) the failure of the Borrowers to deliver to the Administrative Agent the
required receipts or other required documentary evidence with respect to a
payment made by the Borrowers for Taxes pursuant to Section 2.17; 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 wilful
misconduct of such Indemnitee.

     

    (c)           To
the extent that the Borrowers fail to pay any amount required to be paid by them
to the Administrative Agent, the Canadian Administrative Agent, an 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 Canadian Administrative
Agent, such 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;
provided
that (i) 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, such Issuing Bank or the
Swingline Lender in its capacity as such and (ii) if (A) all the Revolving
Commitments have been terminated, (B) all the Secured Obligations (other than
Unliquidated Obligations, Open Account Obligations, Banking Services Obligations
and Swap Obligations) owing to all the Lender Parties have been paid in full in
cash or, in the case of Letters of Credit, cash collateralized, subject to a
back-up standby letter of credit or refinanced, in each case as provided in
Section 2.09(b)(ii) (the date in which the events described in clauses (A) and
(B) having occurred being the “Revolver
Termination Date”), and (c) one or more of the Loan Documents continue to
be effective for the sole purpose of the Collateral securing the Open Account
Obligations, the Banking Services Obligations or the Swap Obligations, each
Lender that ceases to be a Lender hereunder shall have no additional liability
to the Administrative Agent or any other Lender Party or Loan Party with respect
to events or circumstances occurring after the date it ceases to be a Lender
hereunder; provided
that, notwithstanding the foregoing, each such Lender shall, for the period
prior to the time it ceases to be a Lender, have all the rights and be subject
to the obligations as set forth in this Agreement and in the other Loan
Documents.

     

     

    
      
         

      

      
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    (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 promptly after written demand
therefor.

     

    (f)           Notwithstanding
any other provision contained in this Agreement or any other Loan Document, no
Open Account Bank, Open Account Agent or party to any Swap Agreement or
agreement relating to Banking Services shall have any voting or consent rights
under this Agreement or any other Loan Document (or any actions taken or omitted
to be taken in connection therewith) in its capacity as obligee or obligor
thereunder, except as provided in Section 9.02(b)(ii)(N) or (O); provided that any
such Person’s rights or obligations in its capacity as a Lender under this
Agreement or any other Loan Document shall be unaffected as a result of it
acting as an Open Account Bank, Open Account Agent or party to any Swap
Agreement or agreement relating to Banking Services.  No Lender Party
(solely in its capacity as a Lender Party) shall have any liability or
responsibility of any kind whatsoever in respect of any matters arising out of
or relating to any Open Account Agreement, Swap Agreement or agreement relating
to Banking Services Obligations.  To the extent that any Open Account
Obligations, Banking Services Obligations or Swap Obligations are outstanding on
the Revolver Termination Date (or there are any outstanding commitments with
respect thereto), this Agreement and the other Loan Documents shall continue in
order to provide security in the Collateral for such Secured Obligations on such
terms as may be mutually agreed upon by the Company, the Administrative Agent
and the applicable Open Account Banks, Open Account Agents and parties to the
Swap Agreements or agreements relating to the Banking Services.

     

                          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 an Issuing
Bank that issues any Letter of Credit), except that (i) no Borrower may 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 a Borrower without such consent shall be null and void) and (ii) no Lender
may assign or otherwise transfer its rights 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 an 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 Agents, the
Issuing Banks and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

     

     

    
      
         

      

      
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    (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 Revolving 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 Representative, provided
that no consent of the Borrower Representative shall be required for an
assignment to a Lender, an Affiliate of a Lender, any Approved Fund, a
successor-in-interest to a Lender pursuant to a consolidation, sale or merger
or, if any Default or Event of Default has occurred and is continuing, any other
assignee;

     

    (B)     the
Administrative Agent; and

     

    (C)     the Issuing
Banks.

     

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

     

    (A)    
except in the case of an assignment to a Lender, an Affiliate of a Lender or a
successor-in-interest to a Lender pursuant to a consolidation, sale or merger or
an assignment of the entire remaining amount of the assigning Lender’s Revolving
Commitment or Loans, the amount of the Revolving 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 Representative and the Administrative Agent otherwise consent; provided
that no such consent of the Borrower Representative 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;

     

    (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 Company, 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;
and

     

     

    
      
         

      

      
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    (E)     any
assignments of all or a portion of a Lender’s Canadian Commitment or other
rights and obligations under this Agreement relating to the Canadian Borrower
shall be made to a Canadian Lender.

     

    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.

     

    (iii)             Subject
to acceptance and recording thereof pursuant to paragraph (b)(v) 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 Borrowers and
the Lender Parties, 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 Revolving 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 Borrowers, the
Administrative Agent, the Agents, the Issuing Banks and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender or Issuing Bank, as the case may be, hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary.  The Register
shall be available for inspection by the Borrowers, any 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), 2.21(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.

     

     

    
      
         

      

      
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    (c)           (i)           Any
Lender may, without the consent of the Borrowers, the Administrative Agent, the
Issuing Banks 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 Revolving 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 Borrowers, the
Agents, the Issuing Banks 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
Borrowers agree that each Participant 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
that 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 Representative’s
prior written consent.  A Participant that would be a Lender that is
not a U.S. Person if it were a Lender shall not be entitled to the benefits of
Section 2.17 unless the Borrower Representative is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 2.17(f) as though it were a
Lender.

     

    (iii)            Each
Lender that sells a participation shall, acting solely for this purpose as an
agent of the Borrowers, maintain a register on which it enters the name and
address of each Participant and the Revolving Commitment of, and principal
amount of the Loans, LC Disbursements and Factoring Advances owing to each
participant under the Loans or other obligations under this Agreement (the
“Participant
Register”).  The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Agreement, notwithstanding notice to the
contrary.

     

    (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.

     

     

    
      
         

      

      
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                          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 any
Lender Party 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
(unless the same has been cash collateralized in accordance with Section
2.06(k)) and so long as the Revolving 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 Revolving
Commitments or the termination of this Agreement or any provision
hereof.

     

                          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 or PDF transmission shall be
effective as delivery of a manually executed counterpart of this
Agreement.

     

                          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 Borrowers 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
Representative 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.

     

     

    
      
         

      

      
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               SECTION 9.09.      Governing Law; Jurisdiction;
Consent to Service of Process.  (a)  The Loan
Documents (other than those containing a contrary express choice of law
provision) shall be governed by and construed in accordance with the laws of the
State of New York, but giving effect to federal laws applicable to national
banks; provided, however, that if the laws of any
jurisdiction other than the State of New York shall govern in regard to the
validity, perfection or effect of perfection of any Lien or in regard to
procedural matters affecting enforcement of any Liens on all or any party of the
Collateral, such laws of such other jurisdictions shall continue to apply to
that extent, and provided further that the appointment of the
Administrative Agent as fondé de
pouvoir in accordance
with Section 8.01 shall be governed by the laws of
Quebec.

     

    (b)           Each
Loan Party hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any U.S. Federal or New York State
court sitting in the Borough of Manhattan, New York in any action or proceeding
arising out of or relating to any Loan Documents, 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; provided that claims
with respect to Canadian Loan Documents may, as provided therein, also be tried
in the courts of the Province of Ontario.  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
Canadian Administrative Agent, any 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.

     

     

    
      
         

      

      
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    (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 THE TRANSACTIONS CONTEMPLATED 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 Lender Parties 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 or self-regulatory authority, (c) to the
extent required by Requirement of Laws or by any subpoena or similar legal
process (in which case each such Person agrees to promptly notify the Borrower
Representative to the extent not prohibited by law), (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 (and
any such Person may disclose such Information 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)), (g) with the written consent
of the Borrower Representative, (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 any Lender Party on a non-confidential basis from
a source other than the Borrowers or their representatives which is not known by
any such Person to be under a duty of confidentiality with respect to the
Information or (i) subject to clause (d), in connection with a legal action
related to this Agreement (in which case each Lender Party shall at the sole
cost and expense of the Borrowers and if not adverse to its interests, use
commercially reasonable efforts to seek confidential treatment of the
Information).  In addition, each Lender Party may disclose the
existence of this Agreement and the information about this Agreement to market
data collectors, similar service providers to the lending industry and service
providers to the Lender Parties in connection with administration and management
of this Agreement and the other Loan Documents.  For the purposes of
this Section, “Information” means all information received from the Borrowers
relating to the Borrowers or their business, other than any such information
that is available to any Lender Party on a non-confidential basis prior to
disclosure by the Borrowers; provided
that, in the case of information received from the Borrowers 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.

     

     

    
      
         

      

      
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    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 COMPANY 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 BORROWERS OR THE ADMINISTRATIVE AGENT
PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE
SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION
ABOUT THE COMPANY, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE
BORROWERS 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 any Issuing
Bank nor Lender shall be obligated to extend credit to the Borrowers in
violation of any Requirement of Law.

     

     

    
      
         

      

      
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                          SECTION 9.14.      USA PATRIOT
Act.  Each Lender that is subject to the requirements of the
Patriot Act hereby notifies the Borrowers that pursuant to the requirements of
the Patriot Act, it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the names and addresses of
the Borrowers and other information that will allow such Lender to identify the
Borrowers in accordance with the Patriot 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 Party hereby appoints each other
Lender Party as its agent for the purpose of perfecting Liens, for the benefit
of the Lender Parties or the Canadian Lender Parties, as the case may be, in
assets which, in accordance with Article 9 of the UCC, the PPSA, the Securities
Transfer Act (Ontario) or any other applicable law can be perfected only by
possession.  Should any Lender Party (other than the Administrative
Agent) obtain possession of any such Collateral, such Lender Party 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.

     

                          SECTION 9.18.      Judgment
Currency.  If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the “Original Currency”)
into another currency (the “Second Currency”),
the rate of exchange applied shall be that at which, in accordance with normal
banking procedures, the Administrative Agent could purchase in the New York
foreign exchange market, the Original Currency with the Second Currency on the
date two Business Days preceding that on which judgment is given. Each Loan
Party agrees that its obligation in respect of any Original Currency due from it
hereunder shall, notwithstanding any judgment or payment in such other currency,
be discharged only to the extent that, on the Business Day following the date
the Administrative Agent receives payment of any sum so adjudged to be due
hereunder in the Second Currency, the Administrative Agent may, in accordance
with normal banking procedures, purchase, in the New York foreign exchange
market, the Original Currency with the amount of the Second Currency so paid;
and if the amount of the Original Currency so purchased or could have been so
purchased is less than the amount originally due in the Original Currency, each
Loan Party agrees as a separate obligation and notwithstanding any such payment
or judgment to indemnify the Administrative Agent against such loss. The term
“rate of
exchange” in this Section 9.18 means the spot rate at which the
Administrative Agent, in accordance with normal practices, is able on the
relevant date to purchase the Original Currency with the Second Currency, and
includes any premium and costs of exchange payable in connection with such
purchase.

     

     

    
      
         

      

      
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                          SECTION 9.19.      Canadian Anti-Money
Laundering Legislation.  (a) Each Borrower acknowledges that,
pursuant to the Proceeds of Crime Act and other applicable anti-money
laundering, anti-terrorist financing, government sanction and “know your client”
laws (collectively, including any guidelines or orders thereunder, “AML Legislation”),
the Lender Parties may be required to obtain, verify and record information
regarding the Borrowers and their respective directors, authorized signing
officers, direct or indirect shareholders or other Persons in control of the
Borrowers, and the transactions contemplated hereby. Each Borrower shall
promptly provide all such information, including supporting documentation and
other evidence, as may be reasonably requested by any Lender Party or any
prospective assignee or participant of a Lender, any Issuing Bank or any Agent,
in order to comply with any applicable AML Legislation, whether now or hereafter
in existence.

     

    (b)          If
the Canadian Administrative Agent has ascertained the identity of any Borrower
or any authorized signatories of the Borrower for the purposes of applicable AML
Legislation, then the Canadian Administrative Agent:

     

    (i)           shall
be deemed to have done so as an agent for each Lender Party, and this Agreement
shall constitute a “written agreement” in such regard between each Lender Party
and the Canadian Administrative Agent within the meaning of the applicable AML
Legislation; and

     

    (ii)          shall
provide to each Lender Party copies of all information obtained in such regard
without any representation or warranty as to its accuracy or
completeness.

     

    Notwithstanding the preceding sentence
and except as may otherwise be agreed in writing, each of the Lender Parties
agrees that neither the Canadian Administrative Agent nor any other Agent has
any obligation to ascertain the identity of the Borrowers or any authorized
signatories of the Borrowers on behalf of any Lender Party, or to confirm the
completeness or accuracy of any information it obtains from any Borrower or any
such authorized signatory in doing so.

     

                          SECTION 9.20.      Lender Loss Sharing
Agreement.

     

    (a)          Definitions.  As
used in this Section 9.20, the following terms shall have the following
meanings:

     

    (i)           “CAM” means the
mechanism for the allocation and exchange of interests in the Loans,
participations in Letters of Credit and collections thereunder established under
Section 9.20(b).

     

     

    
      
         

      

      
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    (ii)          “CAM Exchange” means
the exchange of the U.S. Lenders’ interests and the Canadian Lenders’ interests
provided for in Section 9.20(b).

     

    (iii)         “CAM Exchange Date”
means the first date after the Effective Date on which there shall occur (a) any
event described in paragraphs (h) or (i) of Article VII with respect to any
Borrower, or (b) an acceleration of Loans and termination of the Commitments
pursuant to Article VII.

     

    (iv)         “CAM Percentage” means
as to each Lender, a fraction, (a) the numerator of which shall be the aggregate
amount of such Lender’s Commitments immediately prior to the CAM Exchange Date
and the termination of the Commitments, and (b) the denominator of which shall
be the amount of the Commitments of all the Lenders immediately prior to the CAM
Exchange Date and the termination of the Commitments.

     

    (v)          “Designated
Obligations” means all Obligations of the Borrowers with respect to (a)
principal and interest under the Loans, (b) unreimbursed drawings under Letters
of Credit and interest thereon and (c) fees under Section 2.12.

     

    (vi)         “Revolver Facility”
means the facility established under the U.S. Commitments and the Canadian
Commitments.

     

    (b)          CAM
Exchange.

     

    (i)           On
the CAM Exchange Date,

     

    (A)     the U.S.
Commitments and the Canadian Commitments shall have terminated in accordance
with Article VII;

     

    (B)     each U.S.
Lender shall fund its participation in any outstanding Swingline Loans and
Protective Advances in accordance with Section 2.04 and Section 2.05 of this
Agreement, and each Canadian Lender shall fund its participation in any
outstanding Swingline Loans and Protective Advances in accordance with Section
2.04 and Section 2.05;

     

    (C)     each U.S.
Lender shall fund its participation in any unreimbursed LC Disbursements made
under the U.S. Letters of Credit in accordance with Section 2.06(e), and each
Canadian Lender shall fund its participation in any unreimbursed LC
Disbursements made under the Canadian Letters of Credit in accordance with
Section 2.06(e); and

     

    (D)     the Lenders
shall purchase in dollars at par Dollar Amount interests in the Designated
Obligations under each Revolver Facility (and shall make payments in dollars to
the Administrative Agent for reallocation to other Lenders to the extent
necessary to give effect to such purchases) and shall assume the obligations to
reimburse Issuing Banks for unreimbursed LC Disbursements under outstanding
Letters of Credit under such Revolver Facility such that, in lieu of the
interests of each Lender in the Designated Obligations under the U.S.
Commitments and the Canadian Commitments in which it shall have participated
immediately prior to the CAM Exchange Date, such Lender shall own an interest
equal to such Lender’s CAM Percentage in each component of the Designated
Obligations immediately following the CAM Exchange.

     

     

    
      
         

      

      
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    (ii)           Each
Lender and each Person acquiring a participation from any Lender as contemplated
by this Section 9.20 hereby consents and agrees to the CAM
Exchange.  Each Borrower agrees from time to time to execute and
deliver to the Lenders all such promissory notes and other instruments and
documents as the Administrative Agent shall reasonably request to evidence and
confirm the respective interests and obligations of the Lenders after giving
effect to the CAM Exchange, and each Lender agrees to surrender any promissory
notes originally received by it in connection with its Loans under this
Agreement to the Administrative Agent against delivery of any promissory notes
so executed and delivered; provided that the
failure of any Lender to deliver or accept any such promissory note, instrument
or document shall not affect the validity or effectiveness of the CAM
Exchange.

     

    (iii)           As
a result of the CAM Exchange, from and after the CAM Exchange Date, each payment
received by the Administrative Agent pursuant to any Loan Document in respect of
any of the Designated Obligations shall be distributed to the Lenders, pro rata
in accordance with their respective CAM Percentages.

     

    (iv)           In
the event that on or after the CAM Exchange Date, the aggregate amount of the
Designated Obligations shall change as a result of the making of a disbursement
under a Letter of Credit by an Issuing Bank that is not reimbursed by U.S.
Borrowers or Canadian Borrower, if applicable, then each Lender shall promptly
reimburse such Issuing Bank for its CAM Percentage of such unreimbursed payment
in the Dollar Amount thereof.

     

    Notwithstanding any other provision of
this Section 9.20, the Administrative Agent and each Lender agree that if the
Administrative Agent or a Lender is required under applicable law to withhold or
deduct any taxes or other amounts from payments made by it hereunder or as a
result hereof, such Person shall be entitled to withhold or deduct such amounts
and pay over such taxes or other amounts to the applicable Governmental
Authority imposing such tax without any obligation to indemnify the
Administrative Agent or any Lender with respect to such amounts and without any
other obligation of gross up or offset with respect thereto and there shall be
no recourse whatsoever by the Administrative Agent or any Lender subject to such
withholding to the Administrative Agent or any other Lender making such
withholding and paying over such amounts, but without diminution of the rights
of the Administrative Agent or such Lender subject to such withholding as
against Borrowers and the other Loan Parties to the extent (if any) provided in
this Agreement and the other Loan Documents.  Any amounts so withheld
or deducted shall be treated as, for the purpose of this Section 9.20, having
been paid to the Administrative Agent or such Lender with respect to which such
withholding or deduction was made.

     

                          SECTION 9.21.      No Fiduciary
Duty.  Each Lender Party may have economic interests that
conflict with those of any Loan Party and its Affiliates.  The Loan
Parties agree that nothing in the Loan Documents or otherwise will be deemed to
create an advisory, fiduciary or agency relationship or fiduciary or other
implied duty between any Lender Party, on the one hand, and any Loan Party and
its Affiliates, on the other.  The Loan Parties acknowledge and agree
that (a) the transactions contemplated by the Loan Documents (including the
exercise of rights and remedies thereunder) are arm’s-length commercial
transactions between each Lender Party, on the one hand, and each Loan Party, on
the other, and (b) in connection therewith and with the process leading thereto,
(i) no Lender Party has assumed an advisory or fiduciary responsibility in favor
of any Loan Party and its Affiliates with respect to the transactions
contemplated hereby (or the exercise of rights or remedies with respect thereto)
or the process leading thereto (irrespective of whether any Lender Party has
advised, is currently advising or will advise any Loan Party or any of its
Affiliates on other matters) or any other obligation to any Loan Party except
the obligations expressly set forth in the Loan Documents and (ii) each Lender
Party is acting solely as principal and not as the agent or fiduciary of each
Loan Party, its management, stockholders, creditors or any Affiliates
thereof.  Each Loan Party acknowledges and agrees that each Loan Party
has consulted its own legal and financial advisors to the extent it deemed
appropriate and that it is responsible for making its own independent judgment
with respect to the transactions contemplated by the Loan Documents and the
process leading thereto.  Each Borrower agrees that it will not claim
that any Lender has rendered advisory services of any nature or respect, or owes
a fiduciary or similar duty to any Borrower, in connection with the transaction
contemplated by the Loan Documents or the process leading thereto.

     

     

    
      
         

      

      
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    ARTICLE X

     

    Loan
Guaranty of US. Obligations

     

                          SECTION 10.01.      Guaranty.  Each
U.S. Loan Guarantor 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 Lender Parties the prompt payment when due, whether at stated
maturity, upon acceleration or otherwise, and at all times thereafter, of the
Secured Obligations (the “Guaranteed
Obligations”).  Each U.S. 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 Party 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 U.S. Loan Guarantor waives any right to require
any Lender Party to sue any Borrower, any other U.S. 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 U.S. 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 any 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; (iv) the existence of any claim, setoff
or other rights which any U.S. Loan Guarantor may have at any time against any
Obligated Party, any Lender Party, or any other Person, whether in connection
herewith or in any unrelated transactions, or (v) any law or regulation of any
jurisdiction or any other event affecting any term of a guaranteed
obligation.

     

     

    
      
         

      

      
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    (b)           The
obligations of each U.S. 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.

     

    (c)           Further,
the obligations of any U.S. Loan Guarantor hereunder are not discharged or
impaired or otherwise affected by:  (i) the failure of any Lender
Party 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 any 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 any Lender Party 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 U.S. Loan Guarantor or that would otherwise
operate as a discharge of any U.S. 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 U.S. Loan Guarantor hereby waives any defense based on or arising out of
any defense of any Borrower or any U.S. 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 any Borrower or any U.S. Loan
Guarantor, other than the indefeasible payment in full in cash of the Guaranteed
Obligations.  Without limiting the generality of the foregoing, each
U.S. 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, following the occurrence of an Event
of Default, 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 U.S. 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 U.S.
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 U.S.
Loan Guarantor against any Obligated Party or any security.

     

     

    
      
         

      

      
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                          SECTION 10.05.      Rights of
Subrogation.  No U.S. 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 U.S. Loan Guarantors have fully
performed all their obligations to the Lender Parties and no Obligation is
outstanding.

     

                          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 any Borrower or otherwise,
each U.S. 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 Lenders Parties 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 any 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 U.S. Loan Guarantors forthwith
on demand by the Lender Parties.

     

                          SECTION 10.07.      Information.  Each
U.S. Loan Guarantor assumes all responsibility for being and keeping itself
informed of the Borrowers’ 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 U.S. Loan Guarantor
assumes and incurs under this Loan Guaranty, and agrees that no Lender Party
shall have any duty to advise any U.S. Loan Guarantor of information known to it
regarding those circumstances or risks.

     

                          SECTION 10.08.      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 U.S. 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 U.S. 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 U.S. Loan Guarantors or the Lender Parties, 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 U.S. Loan Guarantor’s “Maximum
Liability”).  This Section with respect to the Maximum
Liability of each U.S. Loan Guarantor is intended solely to preserve the rights
of the Lender Parties to the maximum extent not subject to avoidance under
applicable law, and no U.S. 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 U.S.
Loan Guarantor hereunder shall not be rendered voidable under applicable
law.  Each U.S. Loan Guarantor agrees that the Guaranteed Obligations
may at any time and from time to time exceed the Maximum Liability of each U.S.
Loan Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lender Parties hereunder; provided
that nothing in this sentence shall be construed to increase any U.S.
Loan Guarantor’s obligations hereunder beyond its Maximum
Liability.

     

     

    
      
         

      

      
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                          SECTION 10.09.      Contribution.  In
the event any U.S. 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 U.S. 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 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 Borrowers after the date hereof (whether by loan, capital
infusion or by other means) to (ii) the aggregate Maximum Liability of all U.S.
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 U.S. Loan Guarantor, the aggregate amount of all monies
received by such U.S. Loan Guarantors from the Borrowers after the date hereof
(whether by loan, capital infusion or by other means).  Nothing in
this provision shall affect any U.S. Loan Guarantor’s several liability for the
entire amount of the Guaranteed Obligations (up to such U.S. Loan Guarantor’s
Maximum Liability).  Each of the U.S. 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 Lender Parties and the U.S. Loan
Guarantors and may be enforced by any one, or more, or all of them in accordance
with the terms hereof.

     

                          SECTION 10.10.      Liability
Cumulative.  The liability of each Loan Party as a U.S. Loan
Guarantor under this Article X is in addition to and shall be cumulative with
all liabilities of each Loan Party to the Lenders Parties 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.

     

                          SECTION 10.11.      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) the successful operations of each of the other Loan Parties
and (ii) the credit extended by the Lenders to the Borrowers hereunder, both in
their separate capacities and as members of the group of
companies.  Each Loan Party has determined that execution, delivery,
and performance of this Agreement and any other Loan Documents to be executed by
such Loan Party is within its purpose, will be of direct and indirect benefit to
such Loan Party, and is in its best interest.

     

     

    
      
         

      

      
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    ARTICLE
XI

     

    The
Borrower Representative

     

      
                    SECTION 11.01.      Appointment; Nature of
Relationship.  The Company is hereby appointed by each of the
Borrowers as its contractual representative (herein referred to as the “Borrower
Representative”) hereunder and under each other Loan Document, and each
of the Borrowers irrevocably authorizes the Borrower Representative to act as
the contractual representative of such Borrower with the rights and duties
expressly set forth herein and in the other Loan Documents.  The
Borrower Representative agrees to act as such contractual representative upon
the express conditions contained in this Article XI.  Additionally,
the Borrowers hereby appoint the Borrower Representative as their agent to
receive all of the proceeds of the Loans in the Funding Account(s), at which
time the Borrower Representative shall promptly disburse such Loans to the
appropriate Borrower; provided
that, in the case of a Revolving Loan, such amount shall not
exceed such Borrower’s Availability.  None of the Lender Parties,
respective officers, directors, agents or employees shall be liable to the
Borrower Representative or any Borrower for any action taken or omitted to be
taken by the Borrower Representative or the Borrowers pursuant to this
Section 11.01.

     

                          SECTION 11.02.      Powers.  The
Borrower Representative shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Borrower Representative by the
terms of each thereof, together with such powers as are reasonably incidental
thereto.  The Borrower Representative shall have no implied duties to
the Borrowers, or any obligation to the Lenders Parties to take any action
thereunder except any action specifically provided by the Loan Documents to be
taken by the Borrower Representative.

     

                          SECTION 11.03.      Employment of
Agents.  The Borrower Representative may execute any of its
duties as the Borrower Representative hereunder and under any other Loan
Document by or through authorized officers.

     

                          SECTION 11.04.      Notices.  Each
Borrower shall immediately notify the Borrower Representative of the occurrence
of any Default hereunder referring to this Agreement describing such Default and
stating that such notice is a “notice of default.”  In the event that
the Borrower Representative receives such a notice, the Borrower Representative
shall give prompt notice thereof to the Administrative Agent and the other
Lender Parties.  Any notice provided to the Borrower Representative
hereunder shall constitute notice to each Borrower on the date received by the
Borrower Representative.

     

                          SECTION 11.05.      Successor Borrower
Representative.  Upon the prior written consent of the
Administrative Agent, the Borrower Representative may resign at any time, such
resignation to be effective upon the appointment of a successor Borrower
Representative.  The Administrative Agent shall give prompt written
notice of such resignation to the Lender Parties.

     

     

    
      
         

      

      
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                          SECTION 11.06.      Execution of Loan Documents;
Borrowing Base Certificate.  The Borrowers hereby empower and
authorize the Borrower Representative, on behalf of the Borrowers, to execute
and deliver to the Lender Parties the Loan Documents and all related agreements,
certificates, documents, or instruments as shall be necessary or appropriate to
effect the purposes of the Loan Documents, including without limitation, the
Borrowing Base Certificates and the Compliance Certificates.  Each
Borrower agrees that any action taken by the Borrower Representative or the
Borrowers in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Borrower Representative of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Borrowers.

     

                          SECTION 11.07.      Reporting.  Each
Borrower hereby agrees that such Borrower shall furnish promptly after each
fiscal month to the Borrower Representative a copy of its Borrowing Base
Certificate and any other certificate or report required hereunder or requested
by the Borrower Representative on which the Borrower Representative shall rely
to prepare the Borrowing Base Certificates and Compliance Certificates required
pursuant to the provisions of this Agreement.

     

     

    
      
        
        

      

      
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    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.

     

    
      
        	 	BORROWERS:
	 	 
	 	
                JONES
      APPAREL GROUP, INC.,

              
	 	a
      Pennsylvania corporation
	 	
                JONES
      APPAREL GROUP HOLDINGS, INC.,

              
	 	a
      Delaware corporation
	 	
                JONES
      APPAREL GROUP USA, INC.,

              
	 	
                a
      Delaware corporation

              
	
                 
      

              	
                JONES
      RETAIL CORPORATION,

              

      

    

    
      	
               
      

            	
              a
      New Jersey corporation

            

    

    
      	
               
      

            	
              NINE
      WEST FOOTWEAR CORPORATION,

            

    

    
      	
               
      

            	
              a
      Delaware corporation

            

    

    
      	
               
      

            	
              JONES
      INVESTMENT CO. INC.,

            

    

    
      	
               
      

            	
              a
      Delaware corporation

            

    

    
      	
               
      

            	
              NINE
      WEST DEVELOPMENT CORPORATION,

            

    

    
      	
               
      

            	
              a
      Delaware corporation

            

    

    
 

    
      
        
          
            
              	
                       
      

                    	By	
                      /s/
      Joseph T. Donnalley

                    	
                       

                    
	 	 	Name:  
      Joseph T. Donnalley
	 	 	
                      In
      his capacity as officer for each aforenamed

                      Borrower
      as set forth opposite such Borrower

                      on
      Schedule I attached
hereto

                    

            

          

        

      

    

     

     

     

     

     

     

     

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              ENERGIE
      KNITWEAR, INC.,

            

    

    
      	
               
      

            	
              a
      Delaware corporation

            

    

    
      	
               
      

            	
              JONES
      JEANSWEAR GROUP, INC.,

            

    

    
      	
               
      

            	
              a
      New York corporation

            

    

    
      	
               
      

            	
              L.E.I.
      GROUP, INC.,

            

    

    
      	
               
      

            	
              a
      Delaware corporation

            

    

    
 

    
      
        
          
            
              
                
                  	 
      	
                          By

                        	/s/
      Tami Fersko	
                           

                        
	 
      	 
      	
                          Name:  
      Tami
      Fersko

                        
	 
      	 
      	
                          In
      his capacity as officer for each aforenamed

                          Borrower
      as set forth opposite such Borrower

                          on
      Schedule I attached
hereto

                        

                

              

            

          

        

      

       

       

       

       

       

       

       

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              VICTORIA
      + Co Ltd.,

            

    

    
      	
               
      

            	
              a
      Rhode Island corporation

            

    

    

     

    
      
        
          
            
              
                	 
      	
                        By

                      	
                        /s/
      Thomas Murray

                      	
                         

                      
	 
      	 
      	
                        Name: 
      Thomas
      Murray

                      
	 
      	 
      	
                        In
      his capacity as officer for each aforenamed

                        Borrower
      as set forth opposite such Borrower

                        on
      Schedule I attached
hereto

                      

              

            

          

        

      

      
         

         

         

         

        
 

         

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                JONES
      APPAREL GROUP CANADA, LP,

                an
      Ontario Limited Partnership

              	 
	 	 	 
	 	By:
      JONES CANADA, INC., its General Partner	 
	 	 	 
	 	 	 
	 	 	 	 
	
                 

              	
                By
      

              	/s/ Roger
      Flores	 
	 	 	Name: 
      Roger Flores	 
	 	 	
                In
      his capacity as officer for each aforenamed

                Borrower
      as set forth opposite such Borrower

                on
      Schedule I attached hereto

              	 
	 	 	 	 

      

    

    

       

       

       

       

      
 

       

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              LOAN
      GUARANTORS:

            	 
	 	 	 
	 	
              APPAREL
      TESTING SERVICES, INC.,

              a
      New Jersey corporation

            	 
	 	
              JONES
      DISTRIBUTION CORPORATION,

              a
      Delaware corporation

            	 
	 	
              JONES
      MANAGEMENT SERVICE COMPANY,

              a
      Delaware corporation

            	 
	 	
              JONES
      HOLDING, INC.,

              a
      Delaware corporation

            	 
	 	 	 	 
	 	 	 	 
	
               

            	
              By
      

            	/s/ Joseph
      T. Donnalley	 
	 	 	Name: 
      Joseph
      T. Donnalley	 
	 	 	

              In
      his capacity as officer for each aforenamed Guarantor as set forth
      opposite such Guarantor on Schedule I attached hereto

            	 
	 	 	 	 

    

     

     

     

     

    
 

    
      

       

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                JPMORGAN
      CHASE BANK, N.A., as U.S. Lender, Issuing Bank, Administrative Agent,
      Joint Collateral Agent, U.S. Swingline Lender, Chase Open Account Agent
      and Chase Open Account Bank

              	 
	 	 	 	 
	 	 	 	 
	
                 

              	
                By
      

              	/s/ Susanna
      Profis	 
	 	 	Name: 
      Susanna
      Profis	 
	 	 	Title: 
      Vice President	 
	 	 	 	 

      

    

     

     

     

     

     

    
      

       

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                    JPMORGAN
      CHASE BANK, N.A., TORONTO BRANCH, as Canadian Lender, Issuing Bank,
      Canadian Administrative Agent, Canadian Swingline Lender and Chase Open
      Account Bank

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    By

                  	
                    /s/
      Dan Howat

                  	 
      
	 
      	 
      	
                    Name:
      Dan Howat

                  	 
      
	 
      	 
      	
                    Title:
      Senior Vice President

                  	 
      
	 
      	 
      	 
      	 
      

          

        

         

        

         

      

       

       

       

       

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                    GENERAL
      ELECTRIC CAPITAL CORPORATION, as Lender and Joint Collateral
      Agent

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      Philip
      F. Carfora

                	 
      
	 
      	 
      	
                  Name: 
      Philip
      F. Carfora

                	 
      
	 
      	 
      	
                  Title: 
      Duly
      Authorized Signatory

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

       

       

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                    CITIBANK,
      N.A., as Lender and Syndication Agent

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      Thomas
      M. Halsch

                	 
      
	 
      	 
      	
                  Name: 
      Thomas
      M. Halsch

                	 
      
	 
      	 
      	
                  Title: 
      Vice
      President

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

       

       

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                    BANK
      OF AMERICA, N.A., as Lender and Documentation Agent

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      David Vega

                	 
      
	 
      	 
      	
                  Name: 
      David Vega

                	 
      
	 
      	 
      	
                  Title: 
      Managing Director

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

      
        
          
            	 
      	
                    BANK
      OF AMERICA, NATIONAL ASSOCIATION, as Canadian Lender

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    By

                  	
                    /s/
      Medina Sales de Andrade

                  	 
      
	 
      	 
      	
                    Name:
      Medina Sales de Andrade

                  	 
      
	 
      	 
      	
                    Title:
      Vice President

                  	 
      
	 
      	 
      	 
      	 
      

          

        

         

        

         

      

       

       

       

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                        WACHOVIA
      BANK, NATIONAL ASSOCIATION,
      as Lender, Issuing Bank and Documentation Agent

                      

                    	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                      By

                    	
                      /s/
      Irene
      Rosen Marks

                    	 
      
	 
      	 
      	
                      Name:  
      Irene
      Rosen Marks

                    	 
      
	 
      	 
      	
                      Title: 
      Managing Director

                    	 
      
	 
      	 
      	 
      	 
      

            

          

           

           

           

           

          

          
            

             

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                    SUNTRUST
      BANK, as Lender and Documentation Agent

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      William
      L Otott Jr.

                	 
      
	 
      	 
      	
                  Name: 
      William
      L Otott Jr.

                	 
      
	 
      	 
      	
                  Title: 
      Director

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

       

       

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                    CIT
      BANK, as Lender

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      Benjamin
      Haslam

                	 
      
	 
      	 
      	
                  Name: 
      Benjamin
      Haslam

                	 
      
	 
      	 
      	
                  Title:  
      Authorized
      Signatory

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

      

       

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                      PNC
      BANK, NATIONAL ASSOCIATION, as Lender

                    

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    By

                  	
                    /s/
      Diane
      M. Shaak

                  	 
      
	 
      	 
      	
                    Name: 
      Diane
      M. Shaak

                  	 
      
	 
      	 
      	
                    Title: 
      Senior
      Vice President

                  	 
      
	 
      	 
      	 
      	 
      

          

        

         

         

         

         

         

         

         

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                    US
      BANK NATIONAL ASSOCIATION, as Lender

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      Jeffrey
      S. Gruender

                	 
      
	 
      	 
      	
                  Name: 
      Jeffrey
      S. Gruender

                	 
      
	 
      	 
      	
                  Title: 
      Vice President

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

       

       

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                    CAPITAL
      ONE LEVERAGE FINANCE CORP.,

                    as
      Lender

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      Paul
      Dellova

                	 
      
	 
      	 
      	
                  Name: 
      Paul
      Dellova

                	 
      
	 
      	 
      	
                  Title:  
      SVP
      & Manager – Syndicated Bank Loans

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

       

       

      [SIGNATURE
PAGE TO CREDIT AGREEMENT]

      S-16

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

     

    
      
        
          	 
      	
                  
                    GOLDMAN
      SACHS LENDING PARTNERS LLC,

                    as
      Lender

                  

                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By

                	
                  /s/
      Mark
      Walton

                	 
      
	 
      	 
      	
                  Name:  
      Mark
      Walton

                	 
      
	 
      	 
      	
                  Title: 
      Authorized
      Signatory

                	 
      
	 
      	 
      	 
      	 
      

        

      

       

       

       

       

       

       

       

      [SIGNATURE
PAGE TO CREDIT AGREEMENT]

      S-16

       

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              BORROWER/LOAN
      GUARANTOR

               

            	
              FINANCIAL
      OFFICER 
NAME & TITLE 

               

            
	
               

               

            	
               

               

            
	
              JONES APPAREL GROUP
      USA, INC. 

            	
              Joseph
      Donnalley

            
	
               

            	
              Treasurer

            
	
               

            	
               

            
	
              JONES APPAREL GROUP,
      INC. 

            	
              Joseph
      Donnalley

            
	
               

            	
              Treasurer and Senior
      Vice President,  Corporate Taxation and Risk
    Management

            
	
               

            	
               

            
	
              JONES APPAREL GROUP
      HOLDINGS, INC.

            	
              Joseph
      Donnalley

            
	
                  

            	
              Treasurer

            
	
               

            	
               

            
	
              JONES RETAIL
      CORPORATION 

            	
              Joseph
      Donnalley

            
	
               

            	
              Vice President and
      Treasurer

            
	
               

            	
               

            
	
              NINE WEST FOOTWEAR
      CORPORATION

            	
              Joseph
      Donnalley

            
	
               

            	
              Treasurer

            
	
               

            	
               

            
	
              ENERGIE KNITWEAR,
      INC.

            	
              Tami
      Fersko

            
	
               

            	
              Vice President and
      Treasurer

            
	
               

            	
               

            
	
              JONES INVESTMENT CO.
      INC.

            	
              Joseph
      Donnalley

            
	
               

            	
              Vice
      President/Finance, Treasurer and Assistant Secretary

            
	
               

            	
               

            
	
              JONES JEANSWEAR
      GROUP, INC.

            	
              Tami
      Fersko

            
	
               

            	
              Vice President and
      Treasurer

            
	
               

            	
               

            
	
              L.E.I. GROUP,
      INC.

            	
              Tami
      Fersko

            
	
               

            	
              Vice President and
      Treasurer

            
	
               

               

            	
               

            
	
              NINE WEST
      DEVELOPMENT CORPORATION

            	
              Joseph
      Donnalley

            
	
               

               

            	
              Vice
      President/Finance, Treasurer and Assistant Secretary

            
	
               

            	
               

            

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      	
              VICTORIA + CO
      LTD.

            	
              Thomas
      Murray

            
	
               

            	
              Senior Executive
      Vice President, Chief Financial Officer, Treasurer and
      Secretary

            
	
               

            	
               

            
	
              APPAREL TESTING
      SERVICES, INC.

            	
              Joseph
      Donnalley

            
	
               

            	
              Treasurer and
      Assistant

            
	
               

            	
              Secretary

            
	
               

               

            	
               

               

            
	
              JONES DISTRIBUTION
      CORPORATION

            	
              Joseph
      Donnalley

            
	
               

               

            	
              Vice President &
      Treasurer

            
	
               

            	
               

            
	
              JONES MANAGEMENT
      SERVICE COMPANY

            	
              Joseph
      Donnalley

            
	
               

            	
              Vice
      President/Finance

            
	
               

            	
              Treasurer and
      Assistant

            
	
               

            	
              Secretary

            
	
               

               

            	
               

               

            
	
              JONES HOLDING, INC.
      

            	
              Joseph
      Donnalley

            
	
               

            	
              Vice President and
      Treasurer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]