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  Exhibit 10(z)    
    

 
 

  STOCK PURCHASE AGREEMENT    
    

        THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
January 17, 2008, by and among Regis Corporation ("Regis"), Trade Secret, Inc., a wholly-owned subsidiary of Regis
("Buyer"), Cameron Capital Investments Inc. ("Seller"), Cameron Capital Inc. (the
"Company"), Stephen Powell (an officer of the Company) ("Powell") (with respect to Articles II,
V.1, VII and IX and Sections 4.1, 4.7, 4.8 and 8.2(f) only, as provided therein), Mackenzie Limited Partnership (an entity under the control and direction of Duncan Robinson, an officer of the
Company) ("Mackenzie") (with respect to Articles II, V.2, VII and IX and Sections 4.1, 4.7, 4.8 and 8.2(f) only, as provided therein), and
Cameron Capital Corporation ("CCC") (with respect to Articles VII and IX and Section 8.2(i) only, as provided therein). 

        WHEREAS,
Seller owns 14,758 Class A Shares of the issued and outstanding Capital Stock of the Company, and Powell and Mackenzie each own 500 Class B non-voting
Shares of the issued and outstanding Capital Stock of the Company (all of such shares representing all of the issued and outstanding Capital Stock of the Company, and collectively referred to herein
as the "Shares"); 

        WHEREAS,
the Company owns, directly or indirectly, all of the issued and outstanding Capital Stock of Cameron Capital I Inc.
("CC1") (other than Capital Stock of CC1 owned by Buyer), BeautyFirst, Inc. ("BeautyFirst")
(other than the Outside BF Interests (as defined herein)) and PureBeauty, Inc. ("PureBeauty"); and 

        WHEREAS,
on the terms and subject to the conditions set forth in this Agreement, Buyer desires to purchase from Seller, Powell and Mackenzie, and Seller, Powell and Mackenzie desire to
sell to Buyer, all of the Shares; and 

        WHEREAS,
to induce Buyer to enter into this Agreement, the Seller, Powell and Mackenzie are entering into this Agreement and making their agreements as set forth herein. 

        NOW,
THEREFORE, in consideration of the mutual covenants, agreements and understandings contained herein and intending to be legally bound, the parties hereto hereby agree as follows: 

 
 

  ARTICLE I
  CERTAIN DEFINITIONS    
    

        1.1    Definitions.    For the purposes of this Agreement, the following terms have the meanings set forth below: 

        "Accounting Firm" has the meaning set forth in Section 2.4(c). 

        "Affiliate" of any particular Person means any other Person controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and such "control" will be presumed if any
Person owns 10% or more of the voting capital stock or other ownership interests, directly or indirectly, of any other Person. 

        "Affiliated Group" means any affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or
unitary group defined under state, local or foreign income Tax law) of which the Company or any of its Subsidiaries is or has been a member. 

        "Applicable Rate" means the prime rate of interest as published from time to time in The Wall Street
Journal. 

 

        "Buyer Parties" means Regis and its Affiliates (including, after the Closing, the Company and its Subsidiaries, but excluding Seller and
its Affiliates) and their respective stockholders, officers, directors, employees, agents, partners, members, representatives, successors and assigns. 

        "Buyout Adjustment Amount" means the aggregate of the Buyout Payments, provided that, where the amount of any such payment or cost (or
portion thereof) is deductible for Tax purposes, such amount (or portion thereof) shall be multiplied by 0.6. 

        "Buyout Payments" means the amounts paid to the holders of Outside BF Interests for the purchase or repurchase of Capital Stock of
BeautyFirst and the repurchase or cancellation of Options with respect to BeautyFirst, whether before, at or after Closing, together with any Losses incurred by Buyer Parties after Closing in causing
BeautyFirst to become a wholly-owned Subsidiary (including costs and expenses incurred in effecting a "squeeze-out" merger if necessary and any amounts payable under the BeautyFirst
stockholders agreement). 

        "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a
corporation and any and all ownership interests in a Person (other than a corporation), including membership interests, partnership interests, joint venture interests and beneficial interests, and any
and all warrants, options or rights to purchase any of the foregoing. 

        "CC Newco" means a newly incorporated Delaware corporation that will be party to, among other things, the Consulting Agreement. 

        "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. 

        "Closing" has the meaning set forth in Section 2.2(a). 

        "Closing Date" has the meaning set forth in Section 2.2(a). 

        "Closing Statement" has the meaning set forth in Section 2.5(b). 

        "Code" means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to
include any revision of or successor to that section regardless of how numbered or classified. 

        "Company Transaction" has the meaning set forth in Section 4.8. 

        "Confidential Information" means all information of a confidential or proprietary nature (whether or not specifically labeled or
identified as "confidential"), in any form or medium, that relates to the business, products, services or research or development of the Company or its Subsidiaries or their respective suppliers,
distributors, customers, independent contractors or other business relations. Confidential Information includes the following: (i) internal business information (including historical and
projected financial information and budgets and information relating to strategic and staffing plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate
and pricing structures); (ii) identities of, individual requirements of, specific contractual arrangements with, and other confidential or proprietary information about, the Company's or any of
its Subsidiaries' suppliers, distributors, customers, independent contractors or other business relations and their confidential or proprietary information; (iii) trade secrets,
know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, documentation, models, data and data bases relating thereto; and
(iv) inventions, innovations, improvements, developments, designs, analyses, software architectures, drawings, reports and all similar or related information (whether or not patentable and
whether or not reduced to practice). 

        "Consulting Agreement" has the meaning set forth in Section 3.1(i). 

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        "Encumbrance" means any lien, charge, security interest, community property interest, claim, pledge, Tax, option, warrant, right,
contract, call, commitment, equity, demand, proxy, voting agreement, restriction on transfer (other than restrictions on transfer under the Securities Act and applicable state securities laws) or
other encumbrance or restriction of any kind. 

        "Environmental and Safety Requirements" means all federal, state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law, in each case concerning public health and safety, worker
health and safety, exposure to hazardous substances or materials, pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling,
transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup of, or exposure to, any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, radiation or radon, each as amended and as now or hereafter in effect. 

        "Escrow Agent" means LaSalle National Bank of Chicago. 

        "Escrow Agreement" means the escrow agreement substantially in the form of  Exhibit A attached hereto. 

        "Escrow Amount" means an amount equal to $1,000,000. 

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 

        "Excluded Subsidiaries" means Cameron Capital Marketing Inc. and Cameron Capital Technologies Inc. 

        "GAAP" means United States generally accepted accounting principles, as in effect from time to time. 

        "Governmental Approvals" has the meaning set forth in Section 3.1(c). 

        "Guaranty" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon the debt, obligation or other liability of any other Person (other than by endorsements of instruments in the ordinary course of collection), or guaranties of the payment of
dividends or other distributions upon the shares of any other Person. 

        "Harris Bank Agreements" means the credit agreement dated as of June 28, 2007 among BeautyFirst, the lenders from time to time
parties thereto and Harris N.A. as administrative agent, and the related security documents, in each case in the form provided to Buyer. 

        "Headquarter Cost" means the liabilities, costs and expenses of any nature relating to the closure of or cessation or reduction of
operations at the Headquarter Facility, in the case of any such liabilities, costs or expenses which are deductible for Tax purposes, multiplied by 0.6. Without limiting the generality of the
foregoing, Headquarter Cost shall include the cost (i) to terminate or settle obligations under the lease(s) for such facility (including any penalties, liquidated damages and repayment of
forgivable loans), (ii) to terminate all contracts relating to matters or operations at the Headquarter Facility, (iii) for related legal, consulting and advisory fees, (iv) to
relocate or dispose of the equipment and other assets located there (net of any net proceeds of disposition of such equipment or assets that is received after Closing and any Tax benefit (without
duplication of any 40% adjustment above in this definition) from the write-down or liquidation of such equipment or assets), and (v) to operate or maintain the facility from and
after the date that is 75 days after delivery of a notice pursuant to Section 2.4(a) (which operation and maintenance costs include, without limitation, rent, taxes, insurance, security
and maintenance services, utilities and all other costs and expenses). 

        "Headquarter Cost Statement" has the meaning set forth in Section 2.4(e). 

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        "Headquarter Facility" means the BeautyFirst corporate headquarters facility located at 10610 East 26th Circle North,
Wichita, Kansas 67226. 

        "Headquarter Severance" means all liabilities, costs and expenses of any nature with respect to termination and severance to any
Headquarter Staff if they are terminated at any time within one year after Closing (but in each case only in the amounts determined under the agreements, plans and programs in place as of Closing),
including legal disputes raised by them with respect to such severance, in the case of any such costs or expenses which are deductible for Tax purposes, multiplied by 0.6. 

        "Headquarter Staff" means all employees or consultants of the Company or its Subsidiaries whose principal location of employment or work
is the Headquarter Facility as of the Closing, including but not limited to the individuals listed on the attached Headquarter Staff Schedule. 

        "Indebtedness" means, with respect to any Person at any date, without duplication: (i) all obligations of such Person for borrowed
money or in respect of loans or advances, including (in the case of the Company and its Subsidiaries) all notes, advances, payables and other inter-company obligations to Seller or any of its
Affiliates (other than the Company and its Subsidiaries) but excluding any such obligations of the Company or its Subsidiaries to the Buyer Parties and any such obligations under forgivable loans in
relation to the Headquarters Facility, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments or debt securities, excluding any such obligations of the Company or its Subsidiaries to the Buyer Parties and any such obligations under
forgivable loans in relation to the Headquarters Facility, (iii) all obligations in respect of letters of credit and bankers' acceptances issued for the account of such Person, (iv) all
obligations arising from cash/book overdrafts, (v) all obligations arising from deferred compensation arrangements and all obligations under severance plans, bonus plans or similar arrangements
payable as a result of the consummation of the sale of the Shares to Buyer hereunder, (vi) all Guaranties of such Person in connection with any of the foregoing, (vii) all capital lease
obligations, (viii) all unpaid Taxes for periods prior to the Closing Date (other than commodity or sales taxes in relation to current accounts payable and property, social security,
unemployment, disability, payroll or employee or other withholding Taxes, in each case that are not in arrears (nor paid later than in past general practice) and were accrued in the ordinary course),
(ix) all indebtedness for the deferred purchase price of property or services with respect to which the Person is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables incurred in the ordinary course of business which are not past due), (x) all trade payables that are either (A) not incurred in the ordinary course of business, or
(B) past due as of the Closing (based on the due date specified in the original invoice thereof, or if no due date is specified in the invoice or no invoice exists, then based on past custom
and practice), (xi) any amounts incurred by Buyer Parties as a prepayment or termination penalty under the Harris Bank Agreements in connection with the payoff and termination of such Harris
Bank Agreements, and (xii) all accrued interest, prepayment premiums or penalties related to any of the foregoing. 

        "Indebtedness Addback" means, for the Company and its Subsidiaries, without duplication, the sum of: (i) the amount of cash held by
the Company and its Subsidiaries as of Closing (other than cash held at the store level, which shall be maintained at customary levels); plus
(ii) the aggregate amount, if any, of excess inventory bought by the Company and its Subsidiaries between the date of this Agreement and Closing and pre-approved in writing by Buyer
to be treated as "excess inventory" for purposes hereof, less any amount of such inventory sold prior to Closing; plus (iii) refunds received
after Closing in respect of amounts on account of federal and state income Tax for pre-Closing periods (as long as the refund is of an amount actually paid prior to Closing);  plus (iv) any refund
received after Closing of the amount deposited prior to Closing with the State of California in respect of sales tax;  plus (v) refunds of previously paid insurance premiums, or portions thereof,
received by the Buyer Parties after Closing as a result of
cancellation or termination of existing insurance policies of the Company and its Subsidiaries (but the parties agree Buyer Parties have no obligation to cancel or terminate such 

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policies);
plus (vi) an amount for outside vendor costs for the Dierbergs store not to exceed $29,368.08 plus any additional amounts related
thereto supported by invoices; plus (vii) design fees paid to Innersalon in respect of the Northern California Trade Secret Stores, not to exceed
$9,300.00; plus (viii) an amount equal to $16,044.00 in respect of the sale of Wella color product to Regis. A schedule listing, where possible,
anticipated or known amounts of the foregoing items is attached hereto as the Indebtedness Addback Schedule. 

        "Indebtedness Excess" means (A) $0, if the estimated amount of Indebtedness as of Closing  less the estimated Indebtedness Addback as of Closing does not exceed
$5,000,000, and (B) if the estimated amount of Indebtedness as of Closing  less the estimated Indebtedness Addback as of Closing exceeds $5,000,000, the amount by which the estimated Indebtedness as
of Closing  less the estimated
Indebtedness Addback as of Closing exceeds $5,000,000. The estimate of Indebtedness and Indebtedness Addback for the foregoing purposes shall be made in good faith by the Seller and Buyer at least two
(2) days prior to Closing. 

        "Indemnitee" has the meaning set forth in Section 8.2(d). 

        "Indemnitor" has the meaning set forth in Section 8.2(d). 

        "Insurance Policies" has the meaning set forth in Section 5.18. 

        "Intellectual Property Rights" means any and all legally recognizable intellectual and industrial proprietary rights and rights in
confidential information of every kind and description anywhere in the world, including without limitation (i) patents and patent applications, (ii) Internet domain names, trademarks,
service marks, trade dress, trade names, slogans, logos and corporate names (and all translations, adaptations, derivations and combinations of the foregoing), and registrations and applications for
registration thereof together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works, and registrations and applications for
registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software (including source code and executable code), data, databases and
all documentation related to any of the foregoing, (vi) trade secrets and other confidential information (including ideas, formulas, recipes, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, methods of doing business, research and development information,
software development methodologies, drawings, specifications, software architectures, designs, plans, proposals, technical data, copyrightable works, non-public data and databases,
financial and marketing plans and customer and supplier lists and information, (vii) all other intellectual property rights, and (viii) copies and tangible embodiments of any of the
foregoing (in whatever form of medium). 

        "Investment" as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any notes,
obligations, instruments, stock, securities or ownership interest (including limited liability company interests, partnership interests and joint venture interests) of any other Person and
(ii) any capital contribution by such Person to any other Person. 

        "knowledge of the Company" or "Company's knowledge" or similar phrase means the actual
knowledge of Steven Hudson, Powell, Troy Biggs, Chris Parmentier and Duncan Robinson, after making reasonable inquiry with respect to the particular matter in question. 

        "Latest Balance Sheet" has the meaning set forth in Section 5.5(c). 

        "Leased Real Property" and "Leased Realty" have the respective meanings set forth in  Section 5.10(b). 

        "Lien" means any mortgage, pledge, hypothecation, lien (statutory or otherwise), preference, priority, security interest, community
property interest, security agreement or other encumbrance of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any lease having substantially the
same effect as any of the foregoing and any assignment or deposit arrangement in the nature of a security device). 

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        "Losses" means any loss, liability, demand, claim, action, cause of action, cost, damage, royalty, deficiency, penalty, Tax, fine or
expense, whether or not arising out of third-party claims (including interest, penalties, reasonable attorneys' fees and expenses and all reasonable amounts paid in investigation or defense, and all
amounts paid in settlement, of any of the foregoing). 

        "Material Adverse Effect" means a material and adverse effect or development upon the business, operations, assets, liabilities, financial
condition, operating results, cash flow or employee, customer or supplier relations of the Company and its Subsidiaries taken as a whole. 

        "Notice of Disagreement" has the meaning set forth in Sections 2.4(e) and 2.5(b),
respectively. 

        "Options" shall mean all options, warrants, plans, purchase rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments to issue, sell or otherwise cause to become outstanding any Capital Stock, whether or not vested or exercisable in accordance with their terms and conditions. 

        "Other Holder Purchase Price" means the sum of $550,000 payable to Powell for his Shares, and $550,000 payable to Mackenzie for its
Shares, pursuant to Article II. 

        "Outside BF Interests" means (i) all outstanding Options with respect to BeautyFirst, and (ii) all Capital Stock of
BeautyFirst that is not owned by CC1. 

        "Permitted Liens" means (i) Liens that are set forth on the Permitted Liens
Schedule attached hereto, (ii) Liens for Taxes not delinquent or the validity of which are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been established on the Company's financial statements in accordance with GAAP consistently applied, (iii) statutory landlord's,
mechanic's, carrier's, workmen's, repairmen's or other similar Liens arising or incurred in the ordinary course of business for amounts which are not due and payable and which would not, individually
or in the aggregate, have a Material Adverse Effect, (iv) Liens arising from zoning ordinances which are not material to the Company's or its Subsidiaries' business as currently conducted
thereon, (v) Liens in favour of Regis or its Affiliates, or (vi) Liens pursuant to the Harris Bank Agreements. 

        "Person" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited
liability company, entity or governmental entity (whether foreign, federal, state, county, city or otherwise and including any instrumentality, division, agency or department thereof). 

        "Plan" has the meaning set forth in Section 5.17(a). 

        "Pre-Closing Shutdown Liability" means all liabilities, costs and expenses of any nature outstanding at Closing or incurred
after Closing (i) with respect to stores of the Company or its Subsidiaries that have been closed at any time prior to Closing, including but not limited to the cost to terminate or settle the
leases for such stores and terminate all contracts with respect to such stores, all related legal, consulting and advisory fees, and all costs to relocate or dispose of the equipment and other assets
located at such stores (net of any net proceeds of disposition of such equipment or assets that is received after Closing and any Tax benefit (without duplication of any 40% adjustment below in this
definition), and (ii) relating to the termination of employment of Pat Neville, Tara Denman and Daniel Greenberg, including but not limited to the cost of severance, accrued vacation and
related legal disputes, in the case of both (i) and (ii) where any such liabilities, costs or expenses are deductible for Tax purposes, the amount thereof shall be multiplied by 0.6. For
the avoidance of doubt, such closed stores include the stores previously located in Woodridge, IL (BeautyFirst), Aurora, IL (BeautyFirst), Algonquin, IL (PureBeauty) and Las Vegas, NV
(PureBeauty). 

        "Pre-Closing Straddle Taxes" has the meaning set forth in  Section 8.9(c). 

        "Pre-Closing Tax Period" has the meaning set forth in Section 8.9(a). 

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        "Preliminary Headquarter Cost Statement" has the meaning set forth in  Section 2.4(c). 

        "Purchase Price" has the meaning set forth in Section 2.3(a). 

        "Realty Leases" has the meaning set forth in Section 5.10(b). 

        "Securities Act" means the Securities Act of 1933, as amended, or any similar federal law then in force. 

        "Seller Parties" means (i) during the period prior to Closing, each of Seller, Powell, Mackenzie, CCC, the Company, CC1,
BeautyFirst and PureBeauty, and (ii) from and after Closing, the Seller, Powell, Mackenzie and CCC. 

        "Seller Group Members" has the meaning set forth in Section 8.2(b). 

        "Specified Representations and Warranties" has the meaning set forth in  Section 8.2(g). 

        "Straddle Tax Return" has the meaning set forth in Section 8.9(c). 

        "Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or
other business entity of which (i) if a corporation, at least 50% of the total voting power of shares of stock entitled (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of the happening of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company,
association, joint venture or other business entity, at least 25% of the partnership, joint venture or other similar ownership interest thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. 

        "Tax" means any (i) federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding, or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing whether disputed or not; (ii) liability of the Company or any of its Subsidiaries for the payment of any amounts
of the type described in clause (i) above arising as a result of being (or ceasing to be) a member of any Affiliated Group (or being included (or required to be included) in any Tax Return
relating thereto); and (iii) liability of the Company or any of its Subsidiaries for the payment of any amounts of the type
described in clause (i) above as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person. 

        "Tax Returns" means returns, declarations, reports, claims for refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes of any party or the administration of any
laws, regulations or administrative requirements relating to any Taxes. 

 
 

  ARTICLE II
  PURCHASE AND SALE OF THE SHARES    
    

        2.1    Basic Transaction.    

        (a)   On
the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall purchase from Seller, and Seller shall sell, convey, assign, transfer
and deliver to Buyer, 14,758 Shares, free and clear of all Encumbrances. 

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        (b)   On
the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall purchase from Powell, and Powell shall sell, convey, assign, transfer
and deliver to Buyer, 500 Shares, free and clear of all Encumbrances. 

        (c)   On
the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall purchase from Mackenzie, and Mackenzie shall sell, convey, assign,
transfer and deliver to Buyer, 500 Shares, free and clear of all Encumbrances. 

        2.2    Closing Transactions.    

        (a)    Closing.    The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Bell, Boyd & Lloyd LLP located at 70 West Madison Street, Chicago, Illinois, or at such
other place as is mutually agreeable to Buyer and the Seller, at 10:00 a.m. local time on February 20, 2008 (or such other date agreed by the Seller and the Buyer), or, if any of the
conditions to Closing set forth in Article III have not been satisfied or waived by the party entitled to the benefit thereof on or prior to such
date, on the second business day following satisfaction or waiver of such conditions (the "Closing Date"). 

        (b)    Closing Deliveries.    At the Closing: 

        (i)    Buyer
shall pay to Seller the Purchase Price, less the Escrow Amount,  less the Other Holder Purchase Price, less
the amount of the Indebtedness Excess, if any, by wire
transfer of immediately available funds to the account designated in writing by Seller to the Buyer; 

        (ii)   Buyer
shall pay to Powell his portion of the Other Holder Purchase Price, and shall pay to Mackenzie its portion of the Other Holder Purchase Price, by wire transfer of
immediately available funds to the account designated in writing by Powell and Mackenzie, as applicable, to the Buyer; 

        (iii)  Buyer
shall deliver the Escrow Amount to the Escrow Agent for deposit into an escrow account established pursuant to the terms of the Escrow Agreement. The Escrow
Amount shall be available to satisfy amounts owing to the Buyer Parties pursuant to Section 8.2 as provided therein and in the Escrow Agreement; 

        (iv)  Buyer
shall, if and as directed by the Seller, pay the Buyout Payments so directed by Seller to holders of Outside BF Interests as provided in  Section 2.6. 

        (v)   Each
of Seller, Powell and Mackenzie shall deliver to Buyer the certificate(s) representing the Shares held by him or it, duly endorsed in blank or accompanied by duly
executed stock power(s), with appropriate transfer stamps (if any) affixed thereto; 

        (vi)  The
Company and Seller shall deliver to Buyer evidence (in form and substance reasonably satisfactory to Buyer) that the Company's and its Subsidiaries' legal counsel
and other professional advisors have been paid in full, and that none of the Company or any of its Subsidiaries has any liability for fees owing to any of such legal counsel, investment bankers or
other professional advisors (other than amounts owing for services in the ordinary course of the business of the Company and its Subsidiaries that are not past due (nor paid later than in past general
practice), in each case other than (i) those to Blake, Cassels & Graydon LLP or PricewaterhouseCoopers, or (ii) those for which Seller is responsible under  Section 8.5);

        (vii) Each
party, as applicable, shall deliver the certificates and other documents and instruments required to be delivered by or on behalf of such party under
Article III below; and 

        (viii)  Seller
and its Affiliates shall collect all corporate books and records and other property of the Company or any of its Subsidiaries in their possession and arrange
for delivery thereof to Buyer within 5 business days after Closing. 

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        2.3    Purchase Price.    

        (a)   The
aggregate purchase price (the "Purchase Price") for the Shares shall equal $31,782,933.00. 

        (b)   Following
Closing, the Purchase Price shall be reduced by the sum of the following amounts: 

        (i)    the
amount (if any) by which the Pre-Closing Shutdown Liability exceeds $683,331; plus 

        (ii)   the
amount (if any) by which the Headquarter Cost exceeds $1,014,770; plus 

        (iii)  the
amount (if any) by which (A) the Indebtedness of the Company and its Subsidiaries as of Closing less the
Indebtedness Addback, exceeds (B) $4,200,000; plus 

        (iv)  the
amount (if any) by which the Buyout Adjustment Amount exceeds $369,880; plus 

        (v)   the
amount (if any) by which the Headquarter Severance exceeds $0. 

For
the purposes of this Agreement and the Consulting Agreement (as defined in Section 3.1), the "Excess Amount" shall be equal to the sum of the
amounts specified in clauses (i) to (v) above; provided, that if any amount of Indebtedness Excess is deducted at Closing (and not returned to the Seller pursuant to  Section 2.5(d)), such
amount shall be deducted from the Excess Amount. The Excess Amount, if any, may be recovered (x) from the Escrow
Funds (as defined in the Escrow Agreement) in the Escrow Account (as defined in the Escrow Agreement), and/or (y) by reducing annual fee payments for Phase II Services to CC Newco under
the Consulting Agreement as provided therein, which shall be the sole sources of recourse of Buyer Parties for recovery of such amounts. The components of the Excess Amount shall be determined from
time to time as provided in Section 2.4 and 2.5, below, provided that, notwithstanding anything to the contrary in  Section 2.4 and 2.5 below, the
Buyer and Seller may, from time to time, agree in writing as to the final resolution of the amount payable under
one of the clauses (i) to (v) above, in which case the matters under such clause need not be included in the determinations to be made pursuant to  Section 2.4 and 2.5. 

        (c)   If
the actual amount of any of the components of the Excess Amount specified in clauses (b)(i) to (b)(v) above, is less than the specified target amount, the
difference shall be applied to reduce, on a dollar for dollar basis (but not to an amount below $0), the amount of $889,553 specified in Section 4.1(1)(a) of the Consulting Agreement. 

        2.4    BeautyFirst Headquarter Facility Matters.    

        (a)   The
Buyer agrees that it will give the Seller and CC Newco at least 75 days prior written notice of its intention to close, cease or materially reduce operations
at the Headquarter Facility in a manner that would reasonably be expected to result in Headquarter Costs. 

        (b)   If
the Buyer intends to close, cease or materially reduce operations at the Headquarter Facility, the Buyer Parties will give the Seller, CC Newco, Steven Hudson and
Powell the opportunity to generally manage, direct and supervise any and all material activities (including, without limitation, provision of notices, termination or transfer of employees, termination
or settlement of lease or sublease obligations and related obligations and/or finding successor or replacement tenants) in relation to such closure, cessation or reduction of operations on behalf of
the Buyer and BeautyFirst in a reasonable manner with a view to eliminating, reducing or mitigating any related costs and expenses (including Headquarter Costs) and minimizing negative impact on the
overall business of the Buyer and BeautyFirst, all subject to the ultimate oversight, direction and approval of the Buyer. The Buyer Parties will provide reasonable cooperation in connection
therewith. 

        (c)   Within
three hundred (300) days after the date of Closing, the Seller shall prepare and deliver to Buyer a preliminary statement (the
"Preliminary Headquarter Cost Statement") setting forth the estimated Headquarter Cost (unless such costs are otherwise agreed as provided in the final
sentence of Section 2.3(c)). The Buyer Parties and Seller Parties shall cooperate as reasonably requested in 

9

 

connection
with the preparation of the Preliminary Headquarter Cost Statement. During the 30-day period immediately following Buyer's receipt of the Preliminary Headquarter Cost Statement,
Buyer shall be permitted to review Seller's working papers related to the preparation of the Preliminary Headquarter Cost Statement and determination of the amounts therein. If the Buyer does not
agree to any items on the Preliminary Headquarter Cost Statement, Buyer shall notify Seller within such 30-day period and specify in reasonable detail the nature and dollar amount of any
disagreement so asserted. During the twenty (20) days following delivery of such a notice, Buyer and Seller shall seek in good faith to resolve in writing any differences which they may have
with respect to the matters specified. If, at the end of the 20-day period referred to above, the matters in dispute have not been fully resolved, then (i) Buyer may immediately
make a claim under the Escrow Agreement in an amount equal to the amount, if any, by which the Buyer's estimate of Headquarter Cost exceeds $1,014,770 (with respect to which Seller may then file an
objection with respect to any portion of such excess as is then in dispute under this Section 2.4(c), which shall remain in place until the final
determination is made and a "Disbursement Request" is provided pursuant to Section 2.4(d) below), and (ii) the parties shall submit to an
independent "Big 4" accounting firm agreed to by the Buyer and the Seller, acting reasonably (the "Accounting Firm") for review and resolution of all
matters (but only such matters) which remain in dispute, and the Accounting Firm shall make a final determination of the estimated Headquarter Cost to the extent such amounts are in dispute, in
accordance with the guidelines and procedures set forth in this Agreement. The parties will cooperate with the Accounting Firm during the term of its engagement. The Accounting Firm's determination
will be based solely on presentations by Buyer and Seller which are in accordance with the guidelines and procedures set forth in this Agreement (i.e., not on the basis of an independent
review). The Preliminary Headquarter Cost Statement and the determination of the estimated Headquarter Cost amounts in dispute shall become final and binding on the parties on the date the Accounting
Firm delivers its final resolution in writing to the parties (which the Accounting Firm shall be instructed to deliver not more than forty-five (45) days following submission of
such disputed matters). The fees and expenses of the Accounting Firm shall be shared equally between Buyer and Seller. 

        (d)   If,
following finalization of the Preliminary Headquarter Cost Statement, the estimated Headquarter Cost is greater than $1,014,770, the excess amount shall
(i) be recoverable under the Escrow Agreement (and the Buyer and Seller shall immediately provide the Escrow Agent with a "Disbursement Request" under the Escrow Agreement with respect to such
amount (or portion thereof for which there are "Escrow Funds" available thereunder)), and (ii) to the extent not recovered under the Escrow Agreement, be included in the "Excess Amount"
determined pursuant to Section 2.3 above. If, upon finalization of the Headquarter Cost Statement, the actual amount of Headquarter Cost is less
than that determined in the Preliminary Headquarter Cost Statement, such final Headquarter Cost shall be used in the final determination of Excess Amount and the Buyer Parties shall promptly repay any
amount (if any) previously recovered (whether from the Escrow Amount or pursuant to the Consulting Agreement) based on the estimated Headquarter Cost that is in excess of the amount actually entitled
to be recovered based on the final Headquarter Cost. If, upon finalization of the Headquarter Cost Statement, the actual amount of Headquarter Cost is more than that determined in the Preliminary
Headquarter Cost Statement, then (x) such final Headquarter Cost shall be used in the final determination of Excess Amount (less any amount (if any) actually recovered from the Escrow Amount
based on the estimated Headquarter Cost), and (y) the Buyer may keep any amount (if any) it has recovered from the Escrow Amount based on the estimated Headquarter Cost. 

        (e)   Within
sixty (60) days after the final settlement of all obligations and liabilities comprising the Headquarter Cost, the Buyer shall prepare and deliver to
Seller a statement (the "Headquarter Cost Statement") setting forth such costs (unless such costs are otherwise agreed as provided in the final sentence
of Section 2.3(c)). The Seller Parties shall cooperate as reasonably requested in connection with the preparation of the Headquarter Cost
Statement. During the 30-day period immediately following Seller's receipt of the Headquarter Cost Statement, Seller shall be permitted to review 

10

 

Buyer's
working papers related to the preparation of the Headquarter Cost Statement and determination of the amounts therein. The Headquarter Cost Statement shall become final and binding upon the
parties thirty (30) days following Seller's receipt thereof, unless Seller shall give written notice of its disagreement (a "Notice of
Disagreement") to Buyer prior to such date. Any Notice of Disagreement shall specify in reasonable detail the nature and dollar amount of any disagreement so asserted. If a
timely Notice of Disagreement is received by Buyer, then the Headquarter Cost Statement (as revised in accordance with clause (x) or (y) below) shall become final and binding upon the
parties on the earliest of (x) the date the parties resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement or (y) the date all
matters in dispute are finally resolved in writing by the Accounting Firm. During the twenty (20) days following delivery of a Notice of Disagreement, Buyer and Seller shall seek in good faith
to resolve in writing any differences which they may have with respect to the matters specified in the Notice of Disagreement. Following delivery of a Notice of Disagreement, Buyer and its agents and
representatives shall be permitted to review Seller's and its representatives' working papers relating to the Notice of Disagreement. If, at the end of the 20-day period referred to above,
the matters in dispute have not been fully resolved, then the parties shall submit to the Accounting Firm for review and resolution of all matters (but only such matters) which remain in dispute, and
the Accounting Firm shall make a final determination of the Headquarter Cost to the extent such amounts are in dispute, in accordance with the guidelines and procedures set forth in this Agreement.
The parties will cooperate with the Accounting Firm during the term of its engagement. In resolving any matters in dispute, the Accounting Firm may not assign a value to any item in dispute greater
than the greatest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Seller, on
the other hand. The Accounting Firm's determination will be based solely on presentations by Buyer and Seller which are in accordance with the guidelines and procedures set forth in this Agreement
(i.e., not on the basis of an independent review). The Headquarter Cost Statement and the determination of the Headquarter Cost amounts in dispute shall become final and binding on the parties
on the date the Accounting Firm delivers its final resolution in writing to the parties (which the Accounting Firm shall be instructed to deliver not more than forty-five (45) days
following submission of such disputed matters). The fees and expenses of the Accounting Firm shall be shared equally between Buyer and Seller. 

        2.5    Other Adjustment Amounts.    

        (a)   The
Buyer Parties will give the Seller, CC Newco, Steven Hudson and Powell the opportunity to generally manage, direct and supervise any and all material activities
(including, without limitation, settlement of the terms of share or option purchases, settlement of lease obligations and related obligations and/or finding successor or replacement tenants) in
relation to the Pre-Closing Shutdown Liability, the Headquarter Severance and the settlement of any liabilities, costs or expenses relating to the repurchase or cancellation of Outside BF
Interests on behalf of the Buyer and BeautyFirst in a reasonable manner with a view to eliminating, reducing or mitigating any such liabilities, costs and expenses, and minimizing negative impact on
the overall business of the Buyer and BeautyFirst, all subject to the ultimate oversight, direction and approval of the Buyer. The Buyer Parties will provide reasonable cooperation in connection
therewith. 

        (b)   Within
three hundred (300) days following the Closing Date, Buyer shall deliver to Seller a statement (in its final and binding form as determined below, the
"Closing Statement") setting forth the Pre-Closing Shutdown Liability, the aggregate Buyout Amount, the aggregate Headquarter Severance and
the aggregate amount of Indebtedness less Indebtedness Addback as of Closing (unless such amounts are otherwise agreed as provided in the final sentence of  Section 2.3(c)). The Seller Parties shall
cooperate as reasonably requested in connection with the preparation of the Closing Statement. During
the 30-day period immediately following Seller's receipt of the Closing Statement, Seller shall be permitted to review Buyer's working papers related to the preparation of the Closing
Statement and 

11

 

determination
of the amounts therein. The Closing Statement shall become final and binding upon the parties thirty (30) days following Seller's receipt thereof, unless Seller shall give written
notice of its disagreement (a "Notice of Disagreement") to Buyer prior to such date. Any Notice of Disagreement shall specify in reasonable detail the
nature and dollar amount of any disagreement so asserted. If a timely Notice of Disagreement is received by Buyer, then the Closing Statement (as revised in accordance with clause (x) or
(y) below) shall become final and binding upon the parties on the earliest of (x) the date the parties resolve in writing any differences they have with respect to the matters specified
in the Notice of Disagreement or (y) the date all matters in dispute are finally resolved in writing by the Accounting Firm. During the twenty (20) days following delivery of a Notice of
Disagreement, Buyer and Seller shall seek in good faith to resolve in writing any differences which they may have with respect to the matters specified in the Notice of Disagreement. Following
delivery of a Notice of Disagreement, Buyer and its agents and representatives shall be permitted to review Seller's and its representatives' working papers relating to the Notice of Disagreement. If,
at the end of the 20-day period referred to above, the matters in dispute have not been fully resolved, then (i) Buyer may immediately make a claim under the Escrow Agreement in an
amount equal to the amount, if any, by which the Buyer's estimate of Excess Amount (other than with respect to Headquarter Cost) exceeds $0 (with respect to which Seller may then file an objection
with respect to any portion of such Excess Amount as is then in dispute under this Section 2.5(b), which shall remain in place until the final
determination is made and a "Disbursement Request" is provided pursuant to Section 2.5(c) below), and (ii) the parties shall submit to the
Accounting Firm for review and resolution of all matters (but only such matters) which remain in dispute, and the Accounting Firm shall make a final determination of the amounts referred to in this  Section 2.5(b)
 to the extent such amounts are in dispute, in accordance with the guidelines and procedures set forth in this Agreement. The
parties will cooperate with the Accounting Firm during the term of its engagement. In resolving any matters in dispute, the Accounting Firm may not assign a value to any item in dispute greater than
the greatest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Seller, on the
other hand. The Accounting Firm's determination will be based solely on presentations by Buyer and Seller which are in accordance with the guidelines and procedures set forth in this Agreement
(i.e., not on the basis of an independent review). The Closing Statement and the determination of the amounts referred to in this  Section 2.5(b) shall become final and binding on the parties
on the date the Accounting Firm delivers its final resolution in writing to the
parties (which the Accounting Firm shall be instructed to deliver not more than forty-five (45) days following submission of such disputed matters). The fees and expenses of the
Accounting Firm shall be shared equally between Buyer and Seller. 

        (c)   If,
following finalization of the Closing Statement, the Excess Amount (other than with respect to Headquarter Cost) exceeds $0, such excess amount shall (i) be
recoverable under the Escrow Agreement (and the Buyer and Seller shall immediately provide the Escrow Agent with a "Disbursement Request" under the Escrow Agreement with respect to such amount (or
portion thereof for which there are "Escrow Funds" available thereunder)), and (ii) to the extent not recovered under the Escrow Agreement, be included in the "Excess Amount" determined
pursuant to Section 2.3 above. 

        (d)   If
any Indebtedness Excess was deducted from the payment of Purchase Price pursuant hereto and, upon the final determination of Indebtedness and Indebtedness Addback
pursuant to Section 2.5, the actual amount of Indebtedness less Indebtedness Addback is less than
the estimated Indebtedness Excess used to determine the amount so deducted, the Buyer shall promptly pay to Seller the amount of such shortfall (i.e., the amount by which the deduction was
greater than the actual final Indebtedness Excess). 

12

 

 

        2.6    Outside BF Interests.    

        (a)   Prior
to Closing Seller Parties shall use their respective reasonable best efforts to (i) cause each Person (other than CC1) who owns any Capital Stock of
BeautyFirst to enter into a stock purchase agreement with CC1 in form reasonably acceptable to Seller and Buyer (each a "BF Purchase Agreement") with
respect to all such Capital Stock owned by such Person, and (ii) cause each Person who holds any Options with respect to BeautyFirst to enter into an option cancellation agreement in form
reasonably acceptable to Seller and Buyer (each an "Option Cancellation Agreement") with respect to all such Options held by such Person. 

        (b)   At
Closing Seller Parties shall take all actions reasonably necessary to consummate the stock purchases under any BF Purchase Agreements entered into prior to Closing
and the option cancellations under any Option Cancellation Agreements entered into prior to Closing, in each case in exchange for the payments by CC1 or BeautyFirst, as applicable, to each such Person
required under such agreements; provided, that Seller may direct Buyer to (and Buyer shall, if so directed by the Seller, subject to  Section 2.6(c)
below) pay such amounts directly to such Persons pursuant to such agreements on behalf of CC1 and BeautyFirst, respectively. The
parties agree that (i) Seller has separately and previously agreed to fund such payments to CC1 and BeautyFirst at or before Closing to facilitate such purchases and cancellations, and
(ii) for convenience, Seller, CC1 and BeautyFirst have asked Buyer to make such payments. 

        (c)   If
any portion of the payments payable pursuant to Section 2.6(b) is required to be deducted or withheld therefrom
under the Code or under any applicable provision of federal, state, local or foreign Tax law, then the Seller Parties shall so instruct Buyer to reduce the payments to such applicable Persons
accordingly and to pay over to CC1 or BeautyFirst, as applicable, such amounts being withheld or deducted promptly after Closing (which amounts shall still be deemed payments paid by Buyer hereunder). 

 
 

  ARTICLE III
  CONDITIONS TO CLOSING    
    

        3.1    Conditions to Buyer's Obligations.    The obligation of Buyer to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of the following conditions on or prior to the Closing Date: 

        (a)  (i)  Subject
to clause (ii), below, the representations and warranties in Articles V,  V.1 and V.2 hereof that
are subject to materiality qualifications shall be true and correct in all
respects at and as of the Closing and the representations and warranties contained in Articles V,  V.1 and V.2 hereof that are not subject to materiality qualifications shall be true and correct in all
material respects at and as of the Closing, in each case as though then made and as though the Closing Date was substituted for the date of this Agreement throughout such representations and
warranties (without taking into account any disclosures made to Buyer pursuant to Section 4.7 below), and Seller and the Seller Parties shall
have performed in all material respects all of the covenants and agreements required to be performed by them hereunder prior to the Closing; 

        (ii)   If
a representation and warranty in either Section 5.3(b) or Section 5.14 is not true or correct in all material respects, it shall nevertheless, for the
purposes of this condition, be deemed to be true and correct unless the inaccuracy in such representation and warranty could reasonably be expected to have a Material Adverse Effect. 

        (b)   The
Seller Parties shall have received or obtained all third party consents and approvals that are necessary for the consummation of the transactions contemplated hereby
(which shall be deemed not to include consents under any leases or contracts (other than (i) a contractual obligation that would prohibit the sale of the Shares or completion of the
transactions contemplated hereby, and (ii) any 

13

 

required
consent under the Harris Bank Agreements, which required consent may be conditioned upon the repayment (or, if Regis prefers, the guaranty by Regis) of the indebtedness under the Harris Bank
Agreements within 10 days after Closing)). 

        (c)   The
parties shall have received or obtained all federal, state, local and foreign governmental and regulatory consents, approvals, licenses and authorizations that are
necessary (i) for the consummation of the transactions contemplated hereby or (ii) for Buyer to own the Shares and to operate the businesses of and control the Company and its
Subsidiaries following the Closing, in each case on terms and conditions satisfactory to Seller and Buyer, acting reasonably (collectively, the "Governmental
Approvals"); 

        (d)   No
suit, action or other proceeding shall be pending or threatened before any court or governmental or regulatory official, body or authority or any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge could reasonably be expected to (i) prevent the performance of this Agreement or the consummation of any of the transactions
contemplated hereby or declare unlawful any of the transactions contemplated hereby, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation,
(iii) affect adversely the right of Buyer to own the Shares or operate the businesses of or control the Company and its Subsidiaries, or (iv) affect adversely the right of the Company
and its Subsidiaries to own their respective assets or control their respective businesses, and no such injunction, judgment, order, decree or ruling shall have been entered or be in effect; 

        (e)   Seller
and the Escrow Agent shall have executed and delivered the Escrow Agreement, and the Escrow Agreement shall be in full force and effect as of the Closing and
shall not have been amended or modified; 

        (f)    The
Seller Parties shall have terminated all agreements (if any) regarding voting, transfer or other arrangements related to the Shares or the Capital Stock of the
Company or its Subsidiaries that are in effect prior to the Closing (in each case on terms and conditions satisfactory to Buyer), except that, if the efforts of the Seller Parties have not resulted in
purchase or cancellation of all the Outside BF Interests, the stockholders agreement of BeautyFirst in the form provided to Buyer may remain in effect; 

        (g)   All
assets of the Excluded Subsidiaries shall have been transferred by the Excluded Subsidiaries to CC Newco and all liabilities (including but not limited to Tax
liabilities) of the Excluded Subsidiaries, but excluding liabilities owed by the Excluded Subsidiaries to each other or to the Company or any of its Subsidiaries, shall have been assumed by CC Newco
pursuant to the terms of an Asset Purchase Agreement in a form satisfactory to the Seller and the Buyer, acting reasonably. Such agreement shall contain full and perpetual indemnification by CC Newco,
without deductibles or other limitations, for any Losses suffered by the Company or any of its Subsidiaries with respect to (A) such assigned assets and assumed liabilities, (B) any
liabilities of the Excluded Subsidiaries as of Closing to be assumed as provided above that are not so assumed for any reason, and (C) Tax liabilities of the Company and its Subsidiaries
relating to the foregoing assignment and assumption; 

        (h)   Seller
and each of Steven Hudson and Powell shall each have executed and delivered the Non-Competition Agreement substantially in the form of  Exhibit B attached hereto; 

        (i)    Regis,
CC Newco, Steven Hudson and Powell shall have executed and delivered the Consulting Agreement substantially in the form of  Exhibit C attached hereto (the "Consulting
Agreement"); 

        (j)    At
the Closing, Seller and the Company shall have delivered to Buyer (i) a certificate signed by the Company, dated the date of the Closing, stating that the
conditions specified in this Section 3.1 have been satisfied as of the Closing; (ii) copies of any third-party approvals received and
Governmental Approvals; (iii) certified copies of the resolutions of the Seller's board of directors 

14

 

authorizing
the execution, delivery and performance of this Agreement and the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby;
(iv) the resignations, effective as of the Closing, of each director of the Company and its Subsidiaries and of the officers set forth on  Schedule 3.1(j); (v) good standing (or equivalent,
 if any) certificates for each of the Company and its Subsidiaries from their respective
jurisdictions of organization and each jurisdiction in which the Company or its Subsidiaries is qualified to do business as a foreign entity and in which the Company or a Subsidiary does a material
amount of business, in each case dated as of a recent date prior to the Closing Date; and (vi) such other documents or instruments as are required to be delivered by any Seller Party at the
Closing pursuant to the terms hereof or that Buyer reasonably requests prior to the Closing Date to effect the transactions contemplated hereby; and 

        (k)   The
Company shall have reimbursed Regis for all legal costs and expenses for which Regis is entitled to reimbursement under the Credit Agreement dated May 30,
2006 (as amended) between the Company and Regis and all related agreements, including without limitation the Securities Agreement dated May 30, 2006, the Subsidiary Security Agreement dated
May 30, 2006 and the Stock Pledge Agreement dated May 30, 2006, to be supported by invoices and in an amount not to exceed $13,000. 

        All
proceedings to be taken by the Seller Parties in connection with the consummation of the transactions contemplated hereby and all certificates, instruments and other documents
required to be delivered by them to effect the transactions contemplated hereby shall be satisfactory in form and substance to Buyer. Any condition specified in this  Section 3.1 may be waived by
Buyer if such waiver is set forth in a writing duly executed by Buyer. 

        3.2    Conditions to the Seller's Obligations.    The obligation of the Seller, Powell and Mackenzie to consummate the
transactions contemplated by this Agreement is subject to the satisfaction of the following conditions at or prior to the Closing: 

        (a)   The
representations and warranties made in Article VI and  Article VI.1 hereof shall be true and correct in all material respects at and as of the
Closing Date as though then made and as though the
Closing Date was substituted for the date of this Agreement throughout such representations and warranties (without taking into account any disclosures made by Regis or Buyer pursuant to  Section 4.7 below), and Regis and Buyer shall have performed in all material respects all the covenants and agreements required to be performed
by it hereunder prior to the Closing; 

        (b)   No
suit, action or other proceeding shall be pending or threatened before any court or governmental or regulatory official, body or authority or any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge could reasonably be expected to (i) prevent the performance of this Agreement or the consummation of any of the transactions
contemplated hereby or declare unlawful any of the transactions contemplated hereby or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation,
and no such injunction, judgment, order, decree or ruling shall be in effect; 

        (c)   The
Seller Parties shall have received or obtained all third-party consents and approvals that are necessary for the consummation of the transactions contemplated
hereby, in each case on terms and conditions satisfactory to Seller and Buyer, acting reasonably (which shall be deemed not to include consents under any leases or contracts (other than (i) a
contractual obligation that would prohibit the sale of the Shares or completion of the transactions contemplated hereby, and (ii) any required consent under the Harris Bank Agreements, which
required consent may be conditioned upon the repayment (or, if Regis prefers, the guaranty by Regis) of the indebtedness under the Harris Bank Agreements within 10 days after Closing)); 

        (d)   The
parties shall have received or obtained all federal, state, local and foreign governmental and regulatory consents, approvals, licenses and authorizations that are
necessary (i) for the 

15

 

consummation
of the transactions contemplated hereby or (ii) for Buyer to own the Shares, in each case on terms and conditions satisfactory to Seller and Buyer, acting reasonably; 

        (e)   Regis
shall have executed and delivered the Consulting Agreement; and 

        (f)    At
the Closing, Regis and Buyer shall have delivered to Seller a certificate signed by Regis and Buyer, dated the date of the Closing, stating that the conditions
specified in Section 3.2 have been satisfied. 

        All
proceedings to be taken by Regis and Buyer in connection with the consummation of the transactions contemplated hereby and all documents required to be delivered by Regis and Buyer
to
effect the transactions contemplated hereby shall be satisfactory in form and substance to Seller (without any separate approval requirement by Powell or Mackenzie). Any condition specified in this  Section 3.2 may be waived if such waiver is set forth in a writing duly executed by Seller (without any separate waiver required of Powell or
Mackenzie). 

 
 

  ARTICLE IV
  COVENANTS PRIOR TO CLOSING    
    

        Each of the parties agrees as follows with respect to the period between the date of this Agreement and the Closing: 

        4.1    General.    Subject to the terms of this Agreement, each party shall use reasonable best efforts to take all
actions and do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the
conditions set forth in Article III above). Without limiting the foregoing, each of the parties shall execute and deliver all agreements and
other documents required to be delivered by or on behalf of such party or any of its Subsidiaries under Article III above. 

        4.2    Maintenance of Business.    The Company shall (and the Company shall cause its Subsidiaries to)
(a) maintain their material assets in good operating condition and repair in accordance with past practices (normal wear and tear excepted), (b) maintain insurance comparable to that in
effect on the date of the Latest Balance Sheet, (c) maintain inventory and supplies at customary and adequate operating levels consistent with past practice (except as otherwise agreed by Buyer
and Seller in writing, including in relation to inventory that the parties anticipate can be obtained by Buyer on more favourable terms following Closing) and replace in accordance with past practice
any inoperable, worn out, damaged or obsolete assets with modern assets of at least comparable quality, (d) maintain its books, accounts and records in accordance with past custom and practice
as used in the preparation of the Latest Balance Sheet and the financial statements described in Section 5.5 below and provide accruals for Taxes, obsolete inventory, vacation and other items
to the full extent required under GAAP, (e) make capital expenditures in a manner consistent with past practice (other than the purchase for cash of BeautyMetrix machines by BeautyFirst and/or
PureBeauty from Cameron Capital Technologies Inc. prior to Closing as disclosed to and agreed by Regis) and (f) maintain in full force and effect the existence of all material
Intellectual Property Rights. 

        4.3    Third-Party Notices and Consents.    The Seller Parties shall use reasonable commercial efforts to
(a) give all required notices to third parties and (b) obtain all third-party approvals in connection with the matters contemplated by this Agreement for any instrument, contract, lease,
license or other agreement requiring any such notice or consent. Buyer shall cooperate with the Seller Parties and Buyer shall use reasonable commercial efforts to assist Seller Parties in obtaining
such third-party approvals, including the provision of reasonable information to contractual counterparties. 

        4.4    Governmental Notices and Consents.    Each of the parties shall give any notices to, make any filings with, and
use reasonable best efforts to obtain, any material authorizations, consents and 

16

 

approvals
of all federal, state, local and foreign governments and governmental agencies in connection with the matters contemplated by this Agreement. 

        4.5    Operation of Business.    Except as otherwise contemplated or provided in this Agreement, the Company shall
(and the Company shall cause its Subsidiaries to) operate their business only in the usual and ordinary course of business consistent with past practice and use reasonable best efforts to preserve the
goodwill and organization of their business and the relationships with their customers, suppliers, employees and other Persons having business relations with the Company and its Subsidiaries. Without
limiting the generality of the foregoing, prior to the Closing, except as otherwise contemplated or provided in this Agreement, neither the Seller or the Company shall (and the Company shall not
permit any of its Subsidiaries to): 

        (a)   take
or omit to take any action that would require disclosure under Section 5.9 below or that would otherwise result in a breach of any of the representations,
warranties or covenants made by Seller in this Agreement; 

        (b)   take
any action or omit to take any action which act or omission would reasonably be anticipated to have a Material Adverse Effect; 

        (c)   (i)
enter into any contract out of the ordinary course of business or restricting in any material respect the conduct of its business, (ii) make any loans or
Investments (other than advances to the Company's or its Subsidiaries' employees in the ordinary course of business consistent with past custom and practice), (iii) increase the compensation,
incentive arrangements or other benefits to any officer or employee of the Company or its Subsidiaries, except for increases or bonuses made in the ordinary course of business consistent with past
custom and practice, (iv) redeem, purchase or otherwise acquire directly or indirectly any of its issued and outstanding Capital Stock, or any outstanding rights or securities exercisable or
exchangeable for or convertible into its Capital Stock, or declare or pay or make any distribution or dividend to any of its shareholders or other Persons, (v) amend its certificate of
incorporation or bylaws (or equivalent documents) or issue or agree to issue any Capital Stock or any rights or options to acquire, or securities convertible into or exchangeable for, any of its
Capital Stock, (vi) directly or indirectly engage in any transaction, arrangement or contract with any officer, director, shareholder, trustee or beneficiary of any shareholder, member, manager
or other insider or Affiliate of Seller, the Company or any of its Subsidiaries (except pursuant to existing employment agreements and existing benefit arrangements with the Company and its
Subsidiaries, in each case that have been provided or disclosed to Buyer), other than in the ordinary course of business consistent with past custom and practice as disclosed on the  Affiliated Transactions
Schedule attached hereto (including, without limitation, by repaying any amounts owing from the Company or its Subsidiaries to
Seller or its Affiliates), (vii) execute any guaranty, issue any debt, borrow any money or otherwise incur or create any Indebtedness or liability (other than liabilities in the ordinary course
of business consistent with past practice); (viii) purchase, sell, lease or dispose of any material property or assets (other than the purchase and sale of inventory and the purchase of capital
equipment in the ordinary course of business consistent with past practice); (ix) take or omit to take any action that has or would reasonably be expected to have the effect of accelerating to
pre-Closing periods sales to the trade or other customers that would otherwise be expected to occur after the Closing; (x) delay or postpone the payment of any accounts payable or
take or omit to take any action that has or would reasonably be expected to have the effect of deferring to post-Closing periods expenses or payments that would otherwise be expected to
occur prior the Closing; (xi) accelerate the collection of or discount any accounts receivable; (xii) make any capital expenditures or commitments therefor in excess of $50,000 in the
aggregate; (xiii) make any changes to its normal and customary practices regarding the solicitation, booking and fulfillment of orders or the shipment and delivery of goods; (xiv) cease
from making accruals for obsolete inventory, vacation and other customary accruals; (xv) cease from maintaining adequate levels of inventory or cease from insuring that accounts payable are
current consistent with past practice; (xvi) abstain from making payments on any Taxes, principal or interest on 

17

 

borrowed
funds and other customary expenses as they become due; (xvii) pay any amount to or transfer any asset to the Seller or any of its Affiliates; (xviii) assume, pay or satisfy any
liability or obligation of the Seller or any of its Affiliates; or (xiv) grant or take any license to any Intellectual Property Rights or transfer or encumber any Intellectual Property Rights;
or 

        (d)   enter
into any transaction, arrangement or contract with any Person except on an arm's-length basis in the ordinary course of business consistent with past custom and
practice. 

        Notwithstanding
the foregoing, nothing in this Section 4.5 shall prohibit the Company or any Seller from taking any action or
omitting to take any action as required or as expressly contemplated by this Agreement. 

        4.6    Access.    The Seller Parties shall afford, and cause its officers, managers, directors, employees, attorneys,
accountants and other agents to afford, to Buyer and its accounting, legal and other representatives and potential lenders, as well as their respective officers, employees, affiliates and other
agents, full and complete access upon request at all reasonable times and during normal business hours, upon reasonable notice, to the Company's and its Subsidiaries' personnel and to business,
financial, legal, tax, compensation and other data and information concerning the Company's and its Subsidiaries' affairs and operations. The Company shall provide information to Buyer, as and when
reasonably requested, concerning the status of the operations, finances and affairs of the Company and its Subsidiaries. Any requests by Buyer for such access shall be made solely to Steven Hudson or
Powell unless otherwise consented to by either Steven Hudson or Powell. 

        4.7    Notice of Material Developments.    Each party shall give prompt written notice to the other parties of
(i) any material variances in any of its representations or warranties contained in Articles V,  V.1, V.2, VI or VI.1 below, as the case may be,
(ii) any breach of any covenant hereunder by such party and (iii) any other material development affecting the ability of such party to consummate the transactions contemplated by this
Agreement. 

        4.8    Exclusivity.    None of the Seller Parties shall (and they shall cause their respective Affiliates,
representatives, officers, managers, employees, directors and agents not to), directly or indirectly, (i) submit, solicit, initiate, encourage or discuss any proposal or offer from any Person
(other than Buyer and its Affiliates in connection with the transactions contemplated hereby) or enter into any agreement or accept any offer relating to or consummate any (a) reorganization,
liquidation, dissolution or recapitalization of the Company or any of its Subsidiaries, (b) merger or consolidation involving the Company or any of its Subsidiaries, (c) purchase or sale
of any assets, Capital Stock (or any rights to acquire, or securities convertible into or exchangeable for, any such Capital Stock) of the Company or any of its Subsidiaries (other than the purchase
and sale of inventory and the purchase of capital equipment in the ordinary course of business consistent with past custom and practice), or (d) similar transaction or business combination
involving the Company or any of its Subsidiaries or their business or assets (each of the foregoing transactions described in clauses (a) through (d), a "Company
Transaction") or (ii) furnish any information with respect to, assist or participate in or facilitate in any other manner any effort or attempt by any Person (other than
Buyer and its Affiliates) to do or seek to do any of the foregoing. The Seller Parties agree to notify Buyer immediately if any Person makes any proposal, offer, inquiry or contact with respect to a
Company Transaction. If any of the provisions of this Section 4.8 are breached and the transactions contemplated hereby are not consummated for
any reason, the Seller Parties shall promptly reimburse Buyer and its Affiliates for all out-of-pocket fees and expenses incurred before or after the date of this Agreement by
Buyer and its Affiliates related to the transactions contemplated hereby, including fees and expenses of legal counsel, accountants and other consultants and advisors retained by Buyer and its
Affiliates in connection with the transactions contemplated hereby. The foregoing provisions are in addition to, and not in derogation of, any other remedy that Buyer and its Affiliates may have for a
breach of this Section 4.8.  

18

 

        4.9    Tax Matters.    Except as set forth on the Tax Matters
Schedule attached hereto, without the prior written consent of the Buyer, no Seller Party shall make or change any election, change an annual accounting period, adopt or change
any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to the Company or any of its Subsidiaries, surrender any right to
claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries, or take any other
similar action, or omit to take any action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent
or other action or omission would have the effect of increasing the present or future Tax liability or decreasing any present or future Tax attribute of the Company or any of its Subsidiaries. 

        4.10    Delivery of Interim Financial Statements.    The Company shall deliver to Buyer copies of BeautyFirst's
unaudited consolidated financial statements for the period ended December 26, 2007 as soon as reasonably practicable (and in any event prior to February 15, 2008). The financial
statements shall include income statements, balance sheets and cash flow statements, prepared in accordance with GAAP on a basis consistent with the Company's prior financial statements. 

        4.11    Insurance.    Sellers shall have full responsibility to maintain in effect without material modification up to
and including the Closing Date all existing policies or binders of insurance in existence at the date hereof. 

        4.12    Outside BF Interests.    Seller, the Company and its Subsidiaries shall use reasonable best efforts to cause
(a) all Capital Stock of BeautyFirst to be owned beneficially and of record by CC1 as of Closing, and (b) there to be no outstanding Options with respect to BeautyFirst as of Closing, in
each case without the Company or any of its Subsidiaries having any further obligations after Closing to the former holders of the Outside BF Interests. 

        4.13    Atlanta Office.    The Company shall assign the lease for its Atlanta offices to CCC or an Affiliate thereof
(other than the Company or a Subsidiary of the Company) at no cost to the Buyer Parties. 

 
 

  ARTICLE IV.1
  ADDITIONAL COVENANTS    
    

        4.1.1    Regis Investment.    Regis hereby commits and agrees to invest $10,000,000 in an investment fund sponsored
and managed by CCC or an Affiliate thereof, subject to the following terms: (i) the amount required to be funded by Regis prior to the first anniversary of Closing shall not exceed $7,500,000;
(ii) such investment shall be made on customary market terms, no less favourable to Regis than to any other investor in such fund, including CCC and the principals thereof; (iii) the
investment by Regis shall not exceed 35% of the aggregate investments in such fund by all investors; and (iv) at least $10,000,000 shall be invested in such fund by institutional investors. 

        4.1.2    Regis Guaranty.    Regis hereby unconditionally and irrevocably guarantees to the Seller Parties the full and
complete payment and performance of all obligations of the Buyer under this Agreement. Regis agrees that such obligations shall be primary obligations of Regis, shall not be subject to any
counterclaim, set-off, abatement, deferment or defense based upon any claim that Regis may have against any Person, and shall remain in full force and effect without regard to, and shall
not be released, discharged, limited or affected in any way by any circumstance or condition (whether or not Regis shall have any knowledge thereof), including, without limitation, any voluntary or
involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshalling of assets and liabilities or
similar events or proceedings with respect to the Buyer or any other Person. Regis unconditionally waives, to the extent permitted by law, all notices, demands, presentment and protest, and all
suretyship defenses. 

19

 

        4.1.3    Certain Company Obligations.    

        (a)   Prior
to the end of the Phase I Term (as defined in the Consulting Agreement), the Wichita condominium lease shall either be terminated, settled or assigned by
BeautyFirst to CCC or an Affiliate thereof (other than the Company or a Subsidiary of the Company), in each case at no cost to the Buyer Parties. 

        (b)   Prior
to the end of the Phase I Term (as defined in the Consulting Agreement), the three automobile leases to which BeautyFirst is a party shall either be
terminated, settled or assigned by BeautyFirst to CCC or an Affiliate thereof (other than the Company or a Subsidiary of the Company), in each case at no cost to the Buyer Parties. 

 
 

  ARTICLE V
  REPRESENTATIONS AND WARRANTIES CONCERNING
  THE COMPANY, ITS SUBSIDIARIES AND THE SELLER    
    

        As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, the Seller hereby
represents and warrants to Buyer that as of the date hereof and as of the Closing Date: 

        5.1    Corporate Organization.    The Company is a corporation duly organized, validly existing and in good standing
under the laws of its State of incorporation and is qualified to do business in every jurisdiction in which its ownership of property or conduct of business requires it to qualify, except where the
failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. The Company possesses all requisite corporate power and corporate authority necessary to own and operate
its properties, to carry on its businesses as now conducted and to carry out the transactions contemplated by this Agreement. The copies of the articles of incorporation and bylaws for the Company
which have been furnished to Buyer reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete. The minute books (containing the records of
meetings of the stockholders, the board of directors and any committees of the board of directors) and share register of the Company are correct and complete in all material respects. The Company is
not in default under or in violation of any provision of its articles of incorporation or bylaws. The attached Officers and Directors Schedule sets
forth a list all of the officers and directors of the Company. 

        5.2    Capital Stock and Related Matters; Title to Shares.    The entire authorized Capital Stock of the Company
consists of 25,000 shares of common stock, par value $0.0001 per share ("Class A Shares") and 25,000 shares of Class B
non-voting common stock, par value $0.0001 per share ("Class B Shares"), of which 14,758 Class A Shares and 1,000
Class B Shares are issued and outstanding. 14,758 Class A Shares of the Capital Stock of the Company are held beneficially and of record by the Seller, free and clear of all
Encumbrances. 500 Class B Shares of the Capital Stock of the Company are held beneficially and of record by the Powell, free and clear of all Encumbrances. 500 Class B Shares of the
Capital Stock of the Company are held beneficially and of record by Mackenzie, free and clear of all Encumbrances. At the Closing, the Seller, Powell and Mackenzie shall each sell to Buyer good and
valid title to its Shares, free and clear of all Encumbrances. The Company does not have outstanding any stock or securities convertible or exchangeable for any shares of its Capital Stock or
containing any profit participation features, nor any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its Capital
Stock or any stock appreciation rights or phantom stock plan. The Company is not subject to any option or obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares
of its Capital Stock or any warrants, options or other rights to acquire its Capital Stock. The Company has not violated any foreign, federal or state securities laws in connection with the offer,
sale or issuance of its Capital Stock. All of the outstanding shares of the Company's Capital Stock have been validly issued and are 

20

 

fully
paid and nonassessable. Except for the stockholders' agreement dated as of December 21, 2007 among the Company, the Seller, Powell and Mackenzie, there are no agreements between the
Company's shareholders with respect to the voting or transfer of the Company's Capital Stock or with respect to any other aspect of the Company's affairs. There are no bonds, debentures, notes or
other indebtedness of the Company outstanding having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which any shareholders of the
Company may vote. 

        5.3    Authorization; Noncontravention.    

        (a)   Except
for the approval by the shareholders of the Seller (which Seller will have received prior to February 20, 2008), the execution, delivery and performance of
this Agreement and all of the other agreements and instruments contemplated hereby to which any Seller Party is a party have been duly authorized by the applicable Seller Parties, and no other act
(corporate or otherwise) or other proceeding on the part of any Seller Party is necessary to authorize the execution, delivery or performance of this Agreement or the other agreements contemplated
hereby and the consummation of the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by each Seller Party and constitutes a valid and binding obligation
of such Seller Party enforceable in accordance with its terms (except as enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws
affecting the enforcement of creditors' rights and by general principles of equity), and each of the other agreements and instruments contemplated hereby to which any Seller Party is a party, when
executed and delivered by such Seller Party in accordance with the terms hereof and thereof, shall each constitute a valid and binding obligation of such Person, enforceable in accordance with its
respective terms (except as enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws affecting the enforcement of creditors' rights and by
general principles of equity). The assignments, endorsements, stock powers and other instruments of transfer delivered by Seller to Buyer at the Closing will be sufficient to transfer the Seller's
entire interest, legal and beneficial, in the Shares. Except for the approval by the shareholders of the Seller (which Seller will have received prior to February 20, 2008), Seller has, and on
the Closing Date will have, full power and authority to convey good and marketable title to all of its Shares, and upon transfer to Buyer of the certificates representing such Shares, Buyer will
receive good and marketable title to such Shares, free and clear of all Encumbrances. 

        (b)   Except
as set forth on the attached Restrictions Schedule, the execution and delivery by each Seller Party of this
Agreement and all of the other agreements and instruments contemplated hereby to which any Seller Party is a party and the fulfillment of and compliance with the respective terms hereof and thereof by
such Seller Party do not and shall not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under (whether with or without the
passage of time, the giving of notice or both), (iii) result in the creation of any Lien upon the Company's or any of its Subsidiaries' Capital Stock or assets pursuant to, (iv) give any
third party the right to modify, terminate or accelerate any obligation under, (v) result in a violation of, or (vi) require any authorization, consent, approval, exemption or other
action of or by or notice or declaration to, or filing with, any third party or any court or administrative or governmental body or agency pursuant to the Company's or any of its Subsidiaries' charter
documents, bylaws or other constituent documents, or any law, statute, rule or regulation to which the Company or any of its Subsidiaries or the Seller is subject, or any material agreement,
instrument, license, permit, order, judgment or decree to which the Company or any of the Sellers are subject; provided, that Seller makes no such representation as to whether
change-of-control consents are required under store leases or other contracts of the Company or its Subsidiaries (other than (i) a contractual obligation that would
prohibit the sale of the Shares or completion of the transactions contemplated hereby, and (ii) any required consent under the Harris Bank Agreements). No Seller Party is a party to or bound by
any written or oral agreement or understanding with respect to a Company Transaction other than this Agreement, and each such Person has terminated all discussions with third parties (other than with
Buyer and its Affiliates) regarding Company Transactions. 

21

 

  
        5.4    Subsidiaries.    The attached Subsidiary Schedule correctly
sets forth the name of each Subsidiary of the Company, the jurisdiction of its organization and the Persons owning the outstanding Capital Stock of such Subsidiary. Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization and possesses all requisite corporate power and corporate authority necessary to own its properties and to
carry on its businesses as now being conducted and is qualified to do business in every jurisdiction in which its ownership of property or the conduct of business requires it to qualify, except where
the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect. All of the Capital Stock of each Subsidiary is validly issued, fully paid and nonassessable, and,
except as set forth on the Subsidiary Schedule, all of the Capital Stock of each Subsidiary is owned by the Company or by a Subsidiary of the Company
free and clear of all Encumbrances. Neither the Company nor any of its Subsidiaries owns or holds the right to acquire any Capital Stock or any other security or interest in any other Person or has
any obligation to make any Investment in any Person. The attached Officers and Directors Schedule sets forth a list all of the officers and directors of
each of the Company's Subsidiaries. The copies of each Subsidiary's articles of incorporation and bylaws (or similar governing documents or operating agreements) which have been furnished to Buyer
reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete. 

        5.5    Financial Statements.    Attached hereto as the Financial Statements
Schedule are the following financial statements: 

        (a)   the
audited consolidated balance sheet of BeautyFirst and its Subsidiaries as of June 27, 2007, and the related statements of income and cash flows (or the
equivalent) for the fiscal year then ended, and the audited consolidated balance sheet of BeautyFirst and its Subsidiaries as of December 27, 2006, and the related statements of income and cash
flows (or the equivalent) for the fiscal year then ended; 

        (b)   the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of June 27, 2007, and the related unaudited statements of income and cash flows
(or the equivalent) for the fiscal years then ended; and 

        (c)   the
unaudited consolidated balance sheet of BeautyFirst and its Subsidiaries as of November 21, 2007 (the "Latest Balance
Sheet"), and the related unaudited statements of income and cash flows (or the equivalent) for the five-month period then ended. 

Each
of the financial statements referenced above (including in all cases the notes thereto, if any), is accurate and complete in all material respects, is consistent in all material respects with the
books and records of BeautyFirst and its Subsidiaries or the Company and its Subsidiaries, as applicable (which, in turn, are accurate and complete in all material respects), fairly presents the
financial condition of BeautyFirst and its Subsidiaries or the Company and its Subsidiaries, as applicable, as of the respective dates thereof and the operating results of BeautyFirst and its
Subsidiaries or the Company and its Subsidiaries, as applicable, for the periods covered thereby and has been prepared in accordance with GAAP consistently applied throughout the periods covered
thereby, subject in the case of the unaudited financial statements to the absence of footnote disclosures and changes resulting from normal year-end adjustments for recurring accruals
(none of which footnote disclosures or changes would, alone or in the aggregate, be materially adverse to the business, operations, assets, liabilities, financial condition, operating results, value,
cash flow or net worth of the Company and its Subsidiaries taken as a whole). 

        5.6    Accounts Receivable.    Except as set forth on the attached Accounts Receivable
Schedule, all accounts and notes receivable reflected on the Latest Balance Sheet (net of allowances for doubtful accounts as reflected thereon and as determined in accordance
with GAAP) and, to the Company's knowledge, all accounts and notes receivable that arise after the date thereof through Closing, are or shall be valid receivables arising in the ordinary course of
business and are or shall be current and 

22

 

collectible
at the aggregate recorded amount therefor (net of allowances for doubtful accounts determined in accordance with GAAP, which, in the case of receivables reflected on the Latest Balance
Sheet, are only such allowances reflected thereon). Other than the lenders under the Harris Bank Agreements, no Person has any Lien on such receivables or any part thereof, and no agreement for
deduction, free goods, discount or other deferred price or quantity adjustment has been made with respect to any such receivables. 

        5.7    Absence of Undisclosed Liabilities.    Except as set forth on the attached Liabilities
Schedule, none of the Company or any of its Subsidiaries has nor, to the knowledge of the Company, will have any obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when or by whom asserted) arising out of any transaction entered into at or prior to the date hereof, or any action or
inaction at or prior to the date hereof, or any state of facts existing at or prior to the date hereof, other than (a) liabilities reflected on the Latest Balance Sheet, (b) liabilities
and obligations which have arisen after the date of the Latest Balance Sheet in the ordinary course of business (none of which is a liability for breach of contract, breach of warranty, tort,
infringement, violation of law, claim or lawsuit), (c) obligations under (i) contracts and commitments described on the attached Contracts
Schedule, (ii) contracts and commitments entered into in the ordinary course of business consistent with past practice after the date of this Agreement in compliance
with Section 4.5 hereof, or (iii) contracts and commitments entered into in the ordinary course of
business consistent with past practice which are not required to be disclosed on the Contracts Schedule pursuant to Section 5.11 below (but not, in any
case under this clause (c), liabilities for any breach of any such contract or commitment occurring on or prior to the Closing
Date), and (d) other liabilities and obligations expressly disclosed in the other Schedules referred to in this Article V.  

        5.8    [Intentionally Deleted.]    

        5.9    Absence of Certain Developments.    Except (i) as set forth on the attached  Developments Schedule, (ii) pursuant
to the Harris Bank Agreements (iii) as set forth in the financial statements delivered pursuant to
Section 5.5(c) or (iv) as contemplated or provided in this Agreement, since June 27, 2007, none of the Company or any of its Subsidiaries has: 

        (a)   issued
any notes, bonds or other debt securities or any Capital Stock or other equity securities or any securities or rights convertible, exchangeable or exercisable
into any Capital Stock or other equity securities; 

        (b)   borrowed
any amount or incurred or become subject to any material liabilities, except current liabilities incurred in the ordinary course of business consistent with
past practice; 

        (c)   discharged
or satisfied any material Lien or paid any material obligation or liability, other than current liabilities paid in the ordinary course of business; 

        (d)   declared,
set aside or made any payment or distribution of cash or other property to any of its stockholders with respect to its Capital Stock or otherwise, or
purchased, redeemed or otherwise acquired any Capital Stock or other equity securities (including any warrants, options or other rights to acquire its Capital Stock or other equity); 

        (e)   mortgaged
or pledged any of its properties or assets or subjected them to any Lien, except for Permitted Liens and Liens pursuant to the Harris Bank Agreements; 

        (f)    sold,
assigned, transferred, leased, licensed or otherwise encumbered any of its material tangible or intangible assets, except in the ordinary course of business
consistent with past practice, or cancelled any material debts or claims; 

        (g)   sold,
assigned, transferred, leased, licensed or otherwise encumbered any material Intellectual Property Rights, disclosed any material proprietary confidential
information to any Person (other than to Buyer and its Affiliates), or abandoned or permitted to lapse any material Intellectual Property Rights; 

23

 

        (h)   made
or granted any bonus or any wage or salary increase to any employee or group of employees (except as required by pre-existing contracts described on the
attached Contracts Schedule or in the ordinary course of business consistent with past practice), or made or granted any increase in any employee
benefit plan or arrangement, or amended or terminated any existing employee benefit plan or arrangement or adopted any new employee benefit plan or arrangement; 

        (i)    suffered
any extraordinary losses or waived any rights of material value (whether or not in the ordinary course of business or consistent with past practice) in excess
of $50,000 in the aggregate; 

        (j)    made
capital expenditures or commitments therefor that aggregate in excess of $50,000; 

        (k)   delayed
or postponed the payment of any accounts payable or commissions or any other liability or obligation or agreed or negotiated with any party to extend the payment
date of any accounts payable or commissions or any other liability or obligation or accelerated the collection of (or discounted) any accounts or notes receivable; 

        (l)    made
any loans or advances to, guaranties for the benefit of, or any Investments in, any Person (other than Investments in a Subsidiary of the Company and advances to
the Company's or its Subsidiaries' employees in the ordinary course of business consistent with past practice); 

        (m)  made
any charitable contributions or pledges exceeding in the aggregate $10,000 or made any political contributions; 

        (n)   suffered
any damage, destruction or casualty loss exceeding in the aggregate $50,000, whether or not covered by insurance; 

        (o)   made
any change in any method of accounting or accounting policies or made any write-down in the value of its inventory that is material or that is other
than in the usual, regular and ordinary course of business consistent with past practice or reversed any accruals other than in the ordinary course of business consistent with past practice; 

        (p)   taken
any steps to incorporate or organize any Subsidiary; 

        (q)   amended
its articles of incorporation, by-laws or other organizational documents; 

        (r)   entered
into any agreement or arrangement prohibiting or restricting it from freely engaging in any business or otherwise restricting the conduct of its business
anywhere in the world; 

        (s)   taken
any action or failed to take any action that has had, or could reasonably be expected to have, the effect of accelerating to pre-Closing periods sales
to the trade or other customers that would otherwise be expected to occur after the Closing (including any failure to market and sell its products in normal commercial quantities and through normal
commercial channels prior to the Closing); 

        (t)    made
any changes to its normal and customary practices regarding the solicitation, booking or fulfillment of orders or the shipment and delivery of goods (other than as
agreed with Regis as to certain excess inventory); 

        (u)   entered
into any material contract other than in the ordinary course of business consistent with past practice, entered into any other material transaction, whether or
not in the ordinary course of business or consistent with past practice, or changed in any significant respect any business practice (in anticipation of the transactions contemplated hereby or
otherwise); 

        (v)   paid
any amount to or transferred any asset to the Seller or any of its Affiliates, or assumed, paid or satisfied any liability or obligation of the Seller or any of its
Affiliates; or 

        (w)  agreed,
whether orally or in writing, to do any of the foregoing. 

        5.10    Assets.    

        (a)   Except
as set forth on the attached Assets Schedule, the Company has good and marketable title to, or a valid leasehold
interest in, all properties and assets used by it, located on its premises or 

24

 

shown
on the Latest Balance Sheet or acquired after the date thereof, free and clear of all Liens (other than properties and assets disposed of for fair consideration in the ordinary course of
business since the dates of such balance sheet and except for Liens disclosed on such balance sheet (including any notes thereto) and Liens for current property taxes not yet due and payable and
Permitted Liens). The Company owns, has a valid leasehold interest in or has the valid and enforceable right to use all tangible assets necessary for the conduct of its business as presently
conducted. Except as set forth on the attached Assets Schedule, all of the Company's and its Subsidiaries', properties, equipment, machinery, fixtures,
improvements and other tangible assets (whether owned or leased) are in good condition and repair (ordinary wear and tear excepted) in all material respects and are fit for use in the ordinary course
of the Company's and such Subsidiaries' business as presently conducted. All such assets have been installed and maintained in all material respects in accordance with all applicable laws, regulations
and ordinances and in accordance with industry standards. 

        (b)   Neither
the Company nor any of its Subsidiaries owns any real property. The Leased Real Property Schedule attached hereto
contains a complete list of all real property leased or subleased by the Company or any of its Subsidiaries (individually "Leased Real Property" and
collectively, the "Leased Realty"). The Company or its Subsidiary, as applicable, has a valid leasehold interest in each Leased Real Property, subject
only to Permitted Liens. The Company has previously delivered to Buyer or its special counsel complete and accurate copies of each of the leases for the Leased Realty (the
"Realty Leases"). With respect to each Realty Lease: (i) the Realty Lease is legal, valid, binding and enforceable against the Company or its
Subsidiary, as applicable (except as enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws affecting the enforcement of creditors'
rights, and by general principles of equity) and in full force and effect; (ii) except as disclosed in the Leased Real Property Schedule, neither
the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any other party to the Realty Lease is in material breach or default, and no event has occurred which, with notice or
lapse of time or both, would constitute such a material breach or default or permit termination, modification or acceleration under the Realty Lease; (iii) the Realty Lease has not been
modified, except to the extent that such modifications are disclosed by the documents delivered to Buyer; and (iv) neither the Company nor any of its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the Realty Lease, other than pursuant to Permitted Liens. 

        5.11    Contracts and Commitments.    

        (a)   Except
as expressly contemplated by this Agreement or as set forth on the attached Contracts Schedule or, in the case of
paragraph (iv), below, the Employees Schedule, neither the Company nor any of its Subsidiaries is a party to or bound by any written or oral: 

        (i)    Contract
with any vendor involving annual consideration in the aggregate in excess of $50,000. 

        (ii)   Contract
with any customer involving annual consideration in the aggregate in excess of $50,000. 

        (iii)  pension,
profit sharing, stock option, employee stock purchase or other plan or arrangement providing for compensation (including any bonuses or other remuneration and
whether in cash or otherwise), to employees, former employees or consultants, or any other employee benefit plan or arrangement, or any collective bargaining agreement or any other contract with any
labor union, or severance agreements, programs, policies or arrangements; 

        (iv)  contract
relating to (A) loans to officers, directors or Affiliates (other than inter-company debt among the Company and a Subsidiary or between Subsidiaries of
the Company), or (B) employment of (or consulting arrangement with) any executive officer, Headquarter Staff or any other employee or consultant earning more than $50,000 per year; 

25

 

        (v)   contract
under which the Company or any of its Subsidiaries has advanced or loaned any other Person amounts in the aggregate exceeding $25,000; 

        (vi)  agreement
or indenture relating to borrowed money or other Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any material asset or group of assets
of the Company or any of its Subsidiaries; 

        (vii) Guaranty;

        (viii)  lease
or agreement under which the Company or any of its Subsidiaries is lessee of or holds or operates any property, real or personal, owned by any other party,
except for any lease of real or personal property under which the aggregate annual rental payments do not exceed $50,000 (it being agreed that any such lease disclosed on the  Leased Real Property Schedule shall also be deemed disclosed herein); 

        (ix)  lease
or agreement under which the Company or any of its Subsidiaries is lessor of or permits any third party to hold or operate any property, real or personal, owned
or controlled by the Company or any of its Subsidiaries; 

        (x)   contract
or group of related contracts with the same party or group of affiliated parties the performance of which involves consideration in the aggregate in excess of
$50,000; 

        (xi)  assignment,
license, indemnification or agreement with respect to any intangible property (including any Intellectual Property Rights) granted or made to the Company or
any of its Subsidiaries, or granted or made by the Company or any of its Subsidiaries to third parties, except licenses to the Company or any of its Subsidiaries of commercially available, unmodified,
"off the shelf" software used solely for the Company's and its Subsidiaries' own internal use for an aggregate fee, royalty or other consideration for any such software or group of related software
licenses of no more than $50,000 annually; 

        (xii) sales,
distribution, manufacturing, supply or franchise agreement (A) which involves consideration in the aggregate in excess of $50,000 annually (other than
royalties from franchisees) or (B) other than franchise agreements, which involves any exclusivity, requirements clauses or similar right or obligation of any party thereto (including without
limitation territorial exclusivity); 

        (xiii)  agreement
with a term of more than six months which is not terminable by the Company or any of its Subsidiaries upon less than thirty (30) days' notice without
penalty and involves a consideration in excess of $50,000 annually; 

        (xiv) contract
regarding voting, transfer or other arrangements related to the Company's or any Subsidiary's Capital Stock or warrants, options or other rights to acquire
any of the Company's or any Subsidiary's Capital Stock; 

        (xv) contract
or agreement regarding any material indemnification provided to or by the Company and any if its Subsidiaries, including any contract regarding any
indemnification provided with respect to Environmental and Safety Requirements; 

        (xvi) other
than franchise agreements, contract or agreement prohibiting it from freely engaging in any business or competing anywhere in the world; or 

        (xvii)  any
other agreement which is material to its operations and business prospects or involves a consideration in excess of $50,000 annually. 

        To
the extent applicable, the contracts, leases, agreements and instruments identified on the Contracts Schedule are separately identified
by type of agreement. The description of all contracts, leases,
agreements and instruments identified on the Contracts Schedule clearly identify all amendments, waivers and other modifications to such agreements. 

26

 

        (b)   All
of the contracts, leases, agreements and instruments set forth or required to be set forth on the Contracts Schedule
are valid, binding and enforceable in accordance with their respective terms against the Company or Subsidiary party thereto and, to the knowledge of the Company, the other parties thereto (except as
enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws affecting the enforcement of creditors' rights, and by general principles of
equity). Except as set forth on the Contracts Schedule, (i) each of the Company and its Subsidiaries has performed all obligations required to be
performed by it in all material respects and is not in material default under or in material breach of nor in receipt of any claim of default or breach under any contract, lease, agreement or
instrument to which the Company or any of its Subsidiaries is subject; (ii) no event has occurred which with the passage of time or the giving of notice or both would result in a material
default, material breach or event of material noncompliance by the Company or any of its Subsidiaries under any contract, lease, agreement or instrument to which the Company or any of its Subsidiaries
is subject; (iii) neither the Company nor any of its Subsidiaries has any present expectation or intention of not performing, in all material respects, all such obligations; and (iv) the
Company does not have knowledge of any material breach or anticipated material breach by the other parties to any contract, lease, agreement, instrument or commitment to which they are parties. Except
as set forth on the Contracts Schedule, there are no renegotiations of, attempts or requests to renegotiate or outstanding rights to renegotiate, any
terms of any of the agreements and instruments set forth or required to be set forth on the Contracts Schedule. 

        (c)   Buyer
or its special counsel has been supplied with a true and correct copy of each of the written instruments, plans, contracts and agreements and an accurate
description of each of the oral arrangements, contracts and agreements which are referred to on the attached Contracts Schedule, together with all
amendments, waivers or other changes thereto. 

        5.12    Intellectual Property Rights.    

        (a)   The
attached Intellectual Property Schedule contains a complete and accurate list, in all material respects, of all
(i) patented or registered Intellectual Property Rights owned or, to the Company's knowledge, used by the Company or any of its Subsidiaries, and (ii) pending patent applications and
applications for other registrations of Intellectual Property Rights filed by or on behalf of the Company or any of its Subsidiaries. The Company or one of its Subsidiaries owns and possesses all
right, title and interest to, or has the right to use pursuant to a license that is, to the knowledge of the Company, valid and enforceable, all material Intellectual Property Rights necessary for the
operation of the businesses of the Company and its Subsidiaries as presently conducted, free and clear of all Liens other than Permitted Liens. Without limiting the generality of the foregoing, the
Company or one of its Subsidiaries owns and possesses all right, title and interest in and to all material Intellectual Property Rights necessary for the operation of the businesses of the Company and
its Subsidiaries (x) created or developed by the Company's and its Subsidiaries' employees, consultants or contractors or under the direction or supervision of the Company's and its
Subsidiaries' employees, consultants or contractors relating to the businesses of the Company and its Subsidiaries or to the research or development conducted by or for the Company and its
Subsidiaries or (y) embodied in any of the Company's or its Subsidiaries past or present products or services, and no current or former employee, consultant or contractor has any valid claim of
ownership, in whole or part, to any such Intellectual Property Rights, or any valid right to use any such Intellectual Property Rights or derivative works thereof. For purposes of this  Section 5.13(a), the term "derivative work" shall have the same meaning as provided in 17 U.S.C. § 101. The Company and each
of its Subsidiaries has taken all necessary steps to maintain the existing registrations and applications for the Intellectual Property Rights which it owns. 

27

 

 

        (b)   Except as set forth on the attached Intellectual Property Schedule, (i) there have been no claims made against the
Company or any of its Subsidiaries asserting the invalidity, misuse or unenforceability of any of the Intellectual Property Rights owned or used by the Company or any of its Subsidiaries and, to the
Company's knowledge, there is no basis for any such claim, (ii) neither the Company nor any Subsidiary has received any notices of, and the Company has no knowledge of any facts which indicate
a likelihood of, any infringement or misappropriation by, or conflict with, any third party with respect to any Intellectual Property Rights (including any demand or request that the Company or any of
its Subsidiaries license any rights from a third party), (iii) the conduct of the Company's and its Subsidiaries' businesses has not infringed, misappropriated or conflicted with and does not
infringe, misappropriate or conflict with any Intellectual Property Rights of other Persons in any material respect, and (iv) to the Company's knowledge, the Intellectual Property Rights owned
by the Company or its Subsidiaries have not been infringed, misappropriated or conflicted by other Persons. The transactions contemplated by this Agreement will not have a material adverse effect on
the Company's or any of its Subsidiaries' right, title or interest in and to the Intellectual Property Rights listed on the Intellectual Property
Schedule and all of such Intellectual Property Rights shall be owned or available for use by the Company and its Subsidiaries on identical terms and conditions immediately
after the Closing other than Intellectual Property Rights relating to the name "Cameron Capital" which, subject to Section 9.12, the Company and CC1 shall cease to use from and after Closing. 

        (c)   Neither
the Company nor its Subsidiaries, nor to the Company's knowledge any of their current or former employees is in violation of any term of any employment contract,
patent disclosure agreement, non-competition agreement or any restrictive covenant relating to the employment of such person or to the use of trade secrets or the
non-disclosure of proprietary information of others. 

        (d)   The
Intellectual Property Schedule sets forth a true, correct and complete list of all software owned by a Seller Party
that was developed by or for a Seller Party and used in the business of the Company or its Subsidiaries. The Intellectual Property Schedule sets forth a
true, correct and complete list of the material software owned by a third party that is licensed by any Seller Party and used in the business of the Company or its Subsidiaries. 

        (e)   For
the purposes of this Section 5.12, references to the Company and its Subsidiaries shall exclude the Excluded Subsidiaries. 

        5.13    Litigation.    Except as set forth on the attached Litigation
Schedule, there are no (and, during the nineteen (19) months preceding the date hereof, there have not been any material) actions, suits, proceedings (including any
arbitration proceedings), orders, investigations or claims pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries (or to the Company's
knowledge, pending or threatened against or affecting any of the officers, directors or employees of the Company or any of its Subsidiaries with respect to their business activities on behalf of the
Company or its Subsidiaries), or pending or threatened by the Company or any of its Subsidiaries against any Person, at law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality (including any actions, suits, proceedings or investigations with respect to the transactions contemplated by this Agreement). Neither the Company nor any of
its Subsidiaries is subject to any arbitration proceedings under collective bargaining agreements or otherwise or any governmental investigations or inquiries; and, to the Company's knowledge, there
is no reasonable basis for any of the foregoing. The foregoing includes actions pending or threatened involving the prior employment of any of the Company's or its Subsidiaries' employees, their use
in connection with the Company's or its Subsidiaries' businesses of any information or techniques allegedly proprietary to any of their former employers or their obligations under any agreements with
prior employers. Neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree of any court or other governmental agency. There are no actions, suits, proceedings
(including any arbitration proceedings), orders, investigations or claims pending or, to Company's knowledge, threatened against or affecting Seller or the Company or any of its Subsidiaries 

28

 

in
which it is sought to restrain or prohibit or to obtain damages or other relief in connection with the transactions contemplated hereby. 

        5.14    Compliance with Laws.    Except as set forth on the attached Compliance
Schedule: 

        (a)   Each
of the Company and its Subsidiaries has materially complied and is in material compliance with all applicable laws, ordinances, codes, rules, requirements and
regulations of foreign, federal, state and local governments and all agencies thereof relating to the operation of its business and the maintenance and operation of its properties and assets. No
written notices have been received by and no claims have been filed against the Company or any of its Subsidiaries alleging a violation of any such laws, ordinances, codes, rules, requirements or
regulations, and, to the knowledge of the Company, in the past nineteen (19) months none of the Company or any of its Subsidiaries have been subject to any material adverse inspection, finding,
investigation, penalty assessment, audit or other compliance or enforcement action. Neither the Company nor any of its Subsidiaries has made any political contributions, bribes, kickback payments or
other similar payments of cash or other consideration, including payments to customers or clients or employees of customers or clients for purposes of doing business with such Persons; provided, that
Seller makes no representation as to whether the Company or its Subsidiaries made any such payments prior to June 1, 2006. 

        (b)   Each
of the Company and its Subsidiaries holds and is in material compliance with all material permits, licenses, bonds, approvals, certificates, registrations,
accreditations and other authorizations of all foreign, federal, state and local governmental agencies required for the conduct of its business and the ownership of its properties, and the attached  Permits
Schedule sets forth a list of all of such material permits, licenses, bonds, approvals, certificates, registrations, accreditations and other
authorizations. No written notices have been received by the Company or any of its Subsidiaries alleging the failure to hold any of the foregoing. All of such material permits, licenses, bonds,
approvals, accreditations, certificates, registrations and authorizations will be available for use by the Company and its Subsidiaries immediately after the Closing. 

        5.15    Environmental and Safety Matters.    Except as set forth on the attached Environmental
and Safety Matters Schedule: 

        (a)   Each
of the Company and its Subsidiaries has complied and is in compliance with all Environmental and Safety Requirements in all material respects. 

        (b)   Without
limiting the generality of the foregoing, each of the Company and its Subsidiaries has obtained and complied in all material respects with, and is in material
compliance with, all material permits, licenses and other authorizations that are required pursuant to Environmental and Safety Requirements for the occupation of its facilities and the operation of
its business. 

        (c)   Since
June 1, 2006 and, to the Company's knowledge, prior thereto, neither the Company nor any of its Subsidiaries has received any written or oral notice, report
or other information regarding any actual or alleged violation of Environmental and Safety Requirements, or any material liabilities or potential material liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to any of them or its facilities arising under Environmental and Safety Requirements. 

        (d)   To
the Company's knowledge, none of the following exists at any property or facility owned or operated by the Company or its Subsidiaries: (i) underground storage
tanks, (ii) asbestos containing material in any form or condition, (iii) materials or equipment containing polychlorinated biphenyls, or (iv) landfills, surface impoundments, or
disposal areas. 

        (e)   None
of the Company, its Subsidiaries, or, to the knowledge of the Company, their respective predecessors or Affiliates, has treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any hazardous substance, or, to the knowledge of the Company, 

29

 

owned
or operated any property or facility (and, to the knowledge of the Company, no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to
material liabilities, including any material liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees, or any investigatory,
corrective or remedial obligations, pursuant to CERCLA, the Solid Waste Disposal Act, as amended or any other Environmental and Safety Requirements. 

        (f)    Neither
the Company nor any of its Subsidiaries, or, to the knowledge of the Company, any predecessors or Affiliates of the Company or its Subsidiaries, has
manufactured, sold, marketed, installed or distributed products containing asbestos, and with respect to such entities, to the knowledge of the Company no basis in law or fact exists to support an
assertion of any claim, action or obligation with respect to any adverse consequences arising from, relating to, or based on the presence or alleged presence of asbestos or asbestos-containing
materials in any product or item manufactured, sold, marketed, installed, stored, transported, handled or distributed at any time by the Company, its Subsidiaries or, to the knowledge of the Company,
any of their respective predecessors or Affiliates, or based on the presence or alleged presence of asbestos or asbestos-containing materials at any property or facility owned, leased or operated by
the Company, its Subsidiaries or any of their respective predecessors or Affiliates. 

        (g)   The
Seller Parties have furnished to the Buyer all environmental audits, reports and other material environmental documents relating to the current and former operations
and facilities of the Company and its Subsidiaries, which are in their possession, custody or control. 

        5.16    Employees.    The attached Employees Schedule correctly sets
forth the name and current annual salary (or hourly wages, as the case may be) of each of the Company's and any of its Subsidiaries' executive officers, Headquarter Staff and any other employee
earning more than $50,000 per year, and whether any such employees are absent from active employment, including leave of absence or disability. Except as set forth on the attached  Employees Schedule,
(a) the Company and each of its Subsidiaries have complied in all material respects with all laws relating to the employment
of labor (including provisions thereof relating to wages, hours, equal opportunity, collective bargaining and the payment of social security and other Taxes), and the Company does not have any
knowledge that the Company or of any of its Subsidiaries has any material labor relations problems (including any union organization activities, threatened or actual strikes or work stoppages or
material grievances); and (b) neither the Company nor any of its Subsidiaries nor, to the Company's knowledge, any of their respective employees are subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreements relating to, or in conflict with the present business activities of the Company or any of its Subsidiaries, except for agreements between
the Company or its Subsidiaries and their present and former employees. The Employees Schedule sets forth the aggregate amount of bonuses anticipated to
be paid to the Company's and its Subsidiaries' officers required to be set out therein in respect of the twelve
months ended December 28, 2007 that have not yet been paid, and the categories of persons eligible for such bonuses. 

        5.17    Employee Benefit Plans.    

        (a)   The
attached Employee Benefits Schedule sets forth an accurate and complete list of each "employee benefit plan" (as such
term is defined in Section 3(3) of ERISA) and each other employee benefit plan, program or arrangement providing benefits to current or former employees (including any bonus plan, plan for
deferred compensation, retirement, severance, employee health or other welfare benefit plan or other arrangement), currently maintained, sponsored, or contributed to by the Company or a Subsidiary, or
with respect to which the Company or any of its Subsidiaries has any liability or potential liability. Each such item listed on the attached Employee Benefits
Schedule is referred to herein as a "Plan." For purposes of this  Section 5.17, the term "Company" includes all entities
treated as a single employer with the Company pursuant to Section 414 of the Code. 

30

 

        (b)   Neither
the Company nor any of its Subsidiaries has any obligation to contribute to (or any other liability, including current or potential withdrawal liability, with
respect to) any "multiemployer plan" (as defined in Section 3(37) of ERISA) or any employee benefit plan which is a "defined benefit plan" (as defined in Section 3(35) of ERISA), whether
or not terminated. 

        (c)   Except
as set forth on the Employee Benefits Schedule under the heading "Terminated Employee Benefits," neither the
Company nor any of its Subsidiaries has any obligation under any Plan or otherwise to provide medical, health, life insurance or other welfare-type benefits to current or future retired or
terminated employees (except for limited continued medical benefit coverage required to be provided under Section 4980B of the Code or as required under applicable state law). 

        (d)   Except
as set forth on the Employee Benefits Schedule under the heading "Profit Sharing Plans," neither the Company nor
any of its Subsidiaries maintains, contributes to or has any liability or potential liability under (or with respect to) any employee benefit plan which is a "defined contribution plan" (as defined in
Section 3(34) of ERISA), whether or not terminated. 

        (e)   With
respect to the Plans, all required payments, premiums, contributions, reimbursements or accruals for all periods ending prior to or as of the Closing shall have
been made on a timely basis or properly accrued on the Latest Balance Sheet. None of the Plans has any unfunded liabilities which are not reflected on the Latest Balance Sheet. 

        (f)    The
Plans and all related trusts, insurance contracts and funds have been maintained, funded and administered in compliance in all material respects with their terms and
with the applicable provisions of ERISA, the Code and other applicable laws. Neither the Company, any of its Subsidiaries, nor, to the Company's knowledge, any trustee or administrator of any Plan has
engaged in any transaction with respect to the Plans which would subject the Company, any Subsidiary or any trustee or administrator of the Plans, or any party dealing with any such Plan, nor do the
transactions contemplated by this Agreement constitute transactions which would subject any such party, to either a civil penalty assessed pursuant to Section 502(i) of ERISA or the tax or
penalty on prohibited transactions imposed by Section 4975 of the Code. No actions, suits, audits, investigations or claims with respect to the assets of the Plans (other than routine claims
for benefits) are pending or threatened which could result in or subject the Company or any of its Subsidiaries to any material liability and there are no circumstances which would give rise to or be
expected to give rise to any such actions, suits or claims. No liability to the Pension Benefit Guaranty Corporation or otherwise under Title IV of ERISA has been, or could reasonably be expected to
be, incurred by the Company or any of its Subsidiaries. 

        (g)   Each
of the Plans which is intended to be qualified under Section 401(a) of the Code has received a favorable determination from the Internal Revenue Service that
such plan is qualified under Section 401(a) of the Code or is entitled to rely upon an opinion or notification letter issued to the sponsor of an IRS-approved M&P or volume
submitter plan document, and, to the knowledge of the Company, there are no circumstances which would adversely affect the qualified status of any such Plan. 

        (h)   The
Company has provided Buyer with true and complete copies of all documents pursuant to which the Plans are maintained, funded and administered. 

        5.18    Insurance.    The attached Insurance Schedule contains a true
and complete list of all insurance policies to which the Company or any of its Subsidiaries is a party or which provide coverage to or for the benefit of or with respect to the Company, its
Subsidiaries or any director or employee of the Company or its Subsidiaries in his or her capacity as such (the "Insurance Policies"), indicating in
each case the type of coverage, name of the insured, the insurer, the premium, the expiration date of each policy and the amount of coverage. The attached Insurance
Schedule also describes any self-insurance or co-insurance arrangements by or affecting the Company or its Subsidiaries, including 

31

 

any
reserves established thereunder. Each Insurance Policy is in full force and effect and, other than the Directors and Officers' Insurance Policy of the Seller which currently applies to the Company
and its Subsidiaries, shall, unless otherwise elected by Buyer, remain in full force and effect in accordance with its terms immediately following the Closing. Neither the Company nor any of its
Subsidiaries is in default in any material respect with respect to its obligations under any insurance policy maintained by it. The Company and its Subsidiaries are current in all premiums or other
payments due under the Insurance Policies and have otherwise complied in all material respects with all of their obligations under each Insurance Policy. The Company has given timely notice to the
insurer of all material claims that may be insured thereby. Except as disclosed in the Insurance Schedule, to the knowledge of the Company, no Insurance
Policy provides for any retrospective premium adjustment or other experience-based liability on the part of the Company or any of its Subsidiaries. 

        5.19    Tax Matters.    

        (a)   The
Company and each Subsidiary and each Affiliated Group has timely filed all Tax Returns required to be filed by it, each such Tax Return has been prepared in
compliance with all applicable laws and regulations, and all such Tax Returns are true and accurate in all material respects. All Taxes due and payable by the Company and its Subsidiaries have been
paid, and the Company and its Subsidiaries have withheld and paid over to the appropriate taxing authority all Taxes which they are required to withhold from amounts paid or owing to any employee,
stockholder, creditor or other third party. 

        (b)   Except
as set forth on the attached Taxes Schedule: 

        (i)    none
of the Company or any of its Subsidiaries has requested or been granted an extension of the time for filing any Tax Return which has not yet been filed; 

        (ii)   none
of the Company or any of its Subsidiaries has consented to waive the relevant statute of limitations or extend the time in which any material Tax may be assessed
or collected by any taxing authority; 

        (iii)  no
deficiency or proposed adjustment which has not been settled or otherwise resolved for any amount of Tax has been proposed, asserted or assessed by any taxing
authority against the Company or any Subsidiary; 

        (iv)  there
is no action, suit, taxing authority proceeding or audit now in progress, or to the Company's knowledge, pending or threatened against or with respect to the
Company or any Subsidiary; 

        (v)   to
the knowledge of the Company, no claim has ever been made by a taxing authority in a jurisdiction where the Company or any Subsidiary does not file Tax Returns that
the Company or any such Subsidiary, respectively, is or may be subject to taxation by that jurisdiction; 

        (vi)  none
of the Company or any Subsidiary has made any election under Section 341(f) of the Code (or any corresponding provision of state, local or foreign income
Tax law); 

        (vii) none
of the Company or any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) "closing
agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date;
(C) intercompany transactions or any excess loss account described in Treasury Regulations under Code § 1502 (or any corresponding or similar provision of state, local or
foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date; 

32

 

        (viii)  none
of the Company or any of its Subsidiaries is a party to or bound by any Tax allocation or Tax sharing agreement; 

        (ix)  none
of Company or any of its Subsidiaries has been a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; 

        (x)   none
of the Company or its Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than one of which the
Company is the common parent) or (B) has any liability for the Taxes of any Person (other than the Company and its Subsidiaries) under Treasury Regulation
§ 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise; 

        (xi)  neither
the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning of Code § 280G (or any corresponding provision of state, local or foreign Tax law); and 

        (xii) No
Person (other than the Company or its Subsidiaries) has any right to or interest in any Tax refunds that may be payable at any time to the Company or its
Subsidiaries. Without limiting the generality of the foregoing, Seller confirms that no prior owner of the Company or any Subsidiary (or any of their respective assets or businesses) has any right to
receive (or to be paid with respect to receipt by the Company and its Subsidiaries of) any Tax refund that is allocated to prior periods, including those that result from net operating losses being
carried back to prior periods. 

        5.20    Brokerage and Transaction Bonuses.    Except as set forth on the attached Brokerage
Schedule, there are no claims for brokerage commissions, finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement binding upon Seller, the Company or any of its Subsidiaries and any fees, costs or other expenses of any such Person set forth on the Brokerage
Schedule will be borne solely by Seller. There are no bonuses, severance or other similar compensation (discretionary or otherwise) payable to any employee of the Company or
any of its Subsidiaries in connection with or arising out of the transactions contemplated hereby. The consummation of the transaction contemplated by this agreement will not accelerate the time of
payment or vesting of, or increase the amount of, or result in the forfeiture of compensation or benefits under any Plan. 

        5.21    Bank Accounts; Locations.    The Bank Account Schedule to be
delivered to Buyer at least 5 days prior to Closing will list, as of Closing, all of the Company's and its Subsidiaries' bank accounts (designating each authorized signatory and the level of
each signatory's authorization). All of the tangible assets and properties of the Company and its Subsidiaries are located at the locations set forth on the attached Locations
Schedule.  

        5.22    Affiliate Transactions.    Except as set forth on the attached  Affiliated Transactions Schedule, no officer, director, shareholder, employee, or Affiliate of the Company or any of its Subsidiaries or, to the
Company's knowledge, any individual related by blood, marriage or adoption to any such individual or any entity in which any such Person or individual owns any beneficial interest, is a party to any
agreement (not including employment agreements and benefit arrangements with the Company or its Subsidiaries, which need not be disclosed in the Affiliated Transactions
Schedule), contract, commitment or transaction with the Company or any of its Subsidiaries or any of the Company's material suppliers or has any interest in any assets or
property used by the Company or any of its Subsidiaries (including any Intellectual Property Rights). The attached Affiliated Transactions Schedule
contains a description of all intercompany services provided to or on behalf of the Company or any of its Subsidiaries by Seller or its Affiliates (other than the Company and its Subsidiaries) and the
costs associated therewith. 

33

 

Except
as set forth and described on the attached Affiliated Transactions Schedule, none of the assets, tangible or intangible, or properties that are
used by the Company or any of its Subsidiaries are owned by Seller or its Affiliates (other than the Company and its Subsidiaries). 

        5.23    Certain Indebtedness Matters.    Since the date of the Latest Balance Sheet and through the Closing, the
Company and its Subsidiaries have operated in the ordinary course with respect to gift cards and gift certificates. The total amount of personnel bonuses due from the Company and its Subsidiaries as
of the Closing will not exceed $335,000, of which none shall be due to Steven Hudson. 

        5.24    Disclosure.    Neither this Article V or any of the Exhibits or Schedules attached hereto nor any of
the certificates or other items prepared and supplied to Buyer or its Affiliates by or on behalf of the Company, its Subsidiaries or Seller pursuant to this Agreement contain any untrue statement of a
material fact or, to the knowledge of the Company, omit a material fact necessary to make each statement contained herein or therein, in light of the circumstances in which they were made, not
misleading. 

 
 

  ARTICLE V.1
  REPRESENTATIONS AND WARRANTIES OF STEPHEN POWELL    
    

        As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, Powell hereby
represents and warrants to Buyer that as of the date hereof and as of the Closing Date: 

        5.1.1    Title to Shares.    500 Class B Shares of the Capital Stock of the Company are held beneficially and
of record by the Powell, free and clear of all Encumbrances. At the Closing, Powell shall sell to Buyer good and valid title to all of such 500 Shares, free and clear of all Encumbrances. 

        5.1.2    Authorization.    This Agreement has been duly executed and delivered by Powell and constitutes a valid and
binding obligation of Powell enforceable against him in accordance with its terms (except as enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other
similar laws affecting the enforcement of creditors' rights and by general principles of equity). The assignments, endorsements, stock powers and other instruments of transfer delivered by Powell to
Buyer at the Closing will be sufficient to transfer his entire interest, legal and beneficial, in the 500 Shares held by him. Powell has, and on the Closing Date will have, full power and authority to
convey good and marketable title to all of the 500 Shares held by him, and upon transfer to Buyer of the certificates representing such Shares, Buyer will receive good and marketable title to such 500
Shares, free and clear of all Encumbrances. 

Powell
agrees to and shall indemnify the Buyer Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Buyer Parties for any Losses which any such Buyer Party
suffers, sustains or becomes subject to, as a result of, in connection with, relating or incidental to or by virtue of any breach of any representation or warranty in this Article V.1 to an
aggregate maximum amount of $550,000. 

34

 

 

 
 

  ARTICLE V.2
  REPRESENTATIONS AND WARRANTIES OF
  MACKENZIE LIMITED PARTNERSHIP    
    

        As a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated hereby, Mackenzie hereby
represents and warrants to Buyer that as of the date hereof and as of the Closing Date: 

        5.2.1    Formation and Organization.    Mackenzie is a limited partnership duly formed, organized, validly existing
and in good standing under the laws of its State of formation. 

        5.2.2    Title to Shares.    500 Class B Shares of the Capital Stock of the Company are held beneficially and
of record by Mackenzie, free and clear of all Encumbrances. At the Closing, Mackenzie shall sell to Buyer good and valid title to all of such 500 Shares, free and clear of all Encumbrances. 

        5.2.3    Authorization.    The execution, delivery and performance of this Agreement has been duly authorized by the
general partner of Mackenzie, and no other act (partnership or otherwise) or other proceeding is necessary to authorize the execution, delivery or performance of this Agreement and the consummation of
the transactions contemplated hereby by Mackenzie. This Agreement has been duly executed and delivered by Mackenzie and constitutes a valid and binding obligation of Mackenzie enforceable against it
in accordance with its terms (except as enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws affecting the enforcement of creditors'
rights and by general principles of equity). The assignments, endorsements, stock powers and other instruments of transfer delivered by Mackenzie to Buyer at the Closing will be sufficient to transfer
its entire interest, legal and beneficial, in the 500 Shares held by it. Mackenzie has, and on the Closing Date will have, full power and authority to convey good and marketable title to
all of the 500 Shares held by it, and upon transfer to Buyer of the certificates representing such Shares, Buyer will receive good and marketable title to such 500 Shares, free and clear of all
Encumbrances. 

Mackenzie
agrees to and shall indemnify the Buyer Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Buyer Parties for any Losses which any such Buyer Party
suffers, sustains or becomes subject to, as a result of, in connection with, relating or incidental to or by virtue of any breach of any representation or warranty in this Article V.2 to an
aggregate maximum amount of $550,000. 

 
 

  ARTICLE VI
  REPRESENTATIONS AND WARRANTIES OF REGIS    
    

        As an inducement to Seller to enter into this Agreement and consummate the transactions contemplated hereby, Regis hereby represents
and warrants to Seller that as of the date hereof and as of the Closing Date: 

        6.1    Organization and Power.    Regis is a corporation duly organized, validly existing and in good standing under
the laws of the State of Minnesota. Regis has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. 

        6.2    Authorization.    The execution, delivery and performance by Regis of this Agreement and all of the other
agreements and instruments contemplated hereby to which Regis is a party and the consummation of the transactions contemplated hereby have been duly and validly authorized by Regis, and no other
corporate act or proceeding on the part of Regis, its board of directors or stockholders is necessary to authorize the execution, delivery or performance of this Agreement and all of the other
agreements and instruments contemplated hereby to which Regis is a party and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Regis and
constitutes a valid and binding obligation of Regis, enforceable in accordance with its terms (except 

35

 

as
enforceability may be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws affecting the enforcement of creditors' rights and by general principles of
equity) and each of the other agreements and instruments contemplated hereby to which Regis is a party, when executed and delivered by Regis, in accordance with the terms hereof, shall each constitute
a valid and binding obligation of Regis, as applicable, enforceable with its respective terms (except as enforceability may be limited by laws relating to bankruptcy, insolvency,
winding-up or other similar laws affecting the enforcement of creditors' rights and by general principles of equity). 

        6.3    No Violation.    Regis is not subject to nor obligated under its articles of incorporation or
by-laws, or any applicable law, rule or regulation of any governmental authority, or any agreement, instrument, license or permit, or subject to any order, writ, injunction or decree,
which would be breached or violated by its execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. 

        6.4    Governmental Authorities and Consents.    No permit, consent, approval or authorization of, or declaration to
or filing with, any governmental or regulatory authority or any other Person is required in connection with the execution, delivery or performance of this Agreement by Regis or the consummation by
Regis of the transactions contemplated hereby. 

        6.5    Litigation.    There are no actions, suits, proceedings, orders or investigations pending or, to Regis's
knowledge, threatened against or affecting Regis, at law or in equity, or before or by any foreign, federal, state, municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect Regis's performance under this Agreement or the consummation of the transactions contemplated hereby. 

        6.6    Brokerage.    There are no claims for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Regis for which Seller would be liable. 

 
 

  ARTICLE VI.1
  REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER    
    

        As an inducement to Seller to enter into this Agreement and consummate the transactions contemplated hereby, Regis and the Buyer hereby
represent and warrant to Seller that as of the date hereof and as of the Closing Date: 

        6.1.1    Organization and Power.    Buyer is a corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. 

        6.1.2    Authorization.    The execution, delivery and performance by Buyer of this Agreement and all of the other
agreements and instruments contemplated hereby to which Buyer is a party and the consummation of the transactions contemplated hereby have been duly and validly authorized by Buyer, and no other
corporate act or proceeding on the part of Buyer, its board of directors or stockholders is necessary to authorize the execution, delivery or performance of this Agreement and all of the other
agreements and instruments contemplated hereby to which Buyer is a party and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer, enforceable in accordance with its terms (except as enforceability may be limited by laws relating to bankruptcy, insolvency,
winding-up or other similar laws affecting the enforcement of creditors' rights and by general principles of equity) and each of the other agreements and instruments contemplated hereby to
which Buyer is a party, when executed and delivered by Buyer, in accordance with the terms hereof, shall each constitute a valid and binding obligation of Buyer, as applicable, enforceable with its
respective terms (except as enforceability 

36

 

may
be limited by laws relating to bankruptcy, insolvency, winding-up or other similar laws affecting the enforcement of creditors' rights and by general principles of equity). 

        6.1.3    No Violation.    Buyer is not subject to nor obligated under its articles of incorporation or
by-laws, or any applicable law, rule or regulation of any governmental authority, or any agreement, instrument, license or permit, or subject to any order, writ, injunction or decree,
which would be breached or violated by its execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby. 

        6.1.4    Governmental Authorities and Consents.    No permit, consent, approval or authorization of, or declaration to
or filing with, any governmental or regulatory authority or any other Person is required in connection with the execution, delivery or performance of this Agreement by Buyer or the consummation by
Buyer of the transactions contemplated hereby. 

        6.1.5    Litigation.    There are no actions, suits, proceedings, orders or investigations pending or, to Buyer's
knowledge, threatened against or affecting Buyer, at law or in equity, or before or by any foreign, federal, state, municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect Buyer's performance under this Agreement or the consummation of the transactions contemplated hereby. 

        6.1.6    Brokerage.    There are no claims for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Buyer for which Seller would be liable. 

 
 

  ARTICLE VII
  TERMINATION    
    

        7.1    Termination.    This Agreement may be terminated at any time prior to the Closing only as follows: 

        (a)   by
the mutual written consent of Buyer and Seller; 

        (b)   by
Buyer if there has been a material misrepresentation or a material breach of warranty or a material breach of a covenant by any Seller Party in the representations
and warranties or covenants set forth in this Agreement or the Schedules attached hereto, which in the case of any material misrepresentation or material breach of warranty or covenant has not been
cured or waived in writing within fifteen (15) days after written notification thereof by Buyer to Seller. For the avoidance of doubt, the parties agree that disclosure after the date of this
Agreement of an exception to a representation shall not be deemed to cure a misrepresentation; 

        (c)   by
Seller if there has been a material misrepresentation or a material breach of warranty or a material breach of a covenant by Regis or Buyer in the representations and
warranties or covenants set forth in this Agreement or the Schedules hereto, which in the case of any material misrepresentation or material breach of warranty or covenant has not been cured or waived
in writing within fifteen (15) days after written notification thereof by Seller to Regis and Buyer. For the avoidance of doubt, the parties agree that disclosure after the date of this
Agreement of an exception to a representation shall not be deemed to cure a misrepresentation; or 

        (d)   by
either Buyer or Seller if the transactions contemplated hereby have not been consummated by March 31, 2008; 

provided that the party electing termination pursuant to clause (b), (c) or (d) of this  Section 7.1 is not in material breach of any of its
representations, warranties, covenants or agreements contained in this Agreement (which, in
the case of Seller, shall include any such breach by Powell and Mackenzie as well). In the event of termination by Buyer or Seller pursuant to this  Section 7.1, written notice thereof (describing
in reasonable detail the basis therefor) shall forthwith be delivered to the other parties. 

37

 

        7.2    Effect of Termination.    In the event of termination of this Agreement by Buyer or Seller as provided above,
this Agreement shall forthwith terminate and have no further force and effect, except that (a) the covenants and agreements set forth in this  Section 7.2 and Sections 8.5 (Expenses),  8.6 (Specific Performance) and 8.9 (Confidentiality) and  Article IX (Miscellaneous) shall survive such termination indefinitely and (b) nothing in  Section 7.1 or this Section 7.2 shall be deemed to release any party from any liability
for any breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel specific performance by another party of its obligations under this Agreement. 

 
 

  ARTICLE VIII
  ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING    
    

        8.1    Survival of Representations and Warranties.    The representations and warranties in this Agreement and the
Schedules and Exhibits attached hereto shall survive the Closing as follows: 

        (a)   the
representations and warranties in Section 5.19 (Tax Matters) shall terminate when the applicable statutes of
limitations with respect to the liabilities in question expire (after giving effect to any extensions or waivers thereof), plus thirty (30) days; 

        (b)   the
representations and warranties in Section 5.15 (Environmental and Safety Requirements) and  Section 5.17 (Employee Benefit Plans) shall terminate
on the seventh anniversary of the Closing Date; 

        (c)   the
representations and warranties in Section 5.1 (Corporate Organization),  Section 5.2 (Capital Stock and Related Matters; Title to Shares),
Section 5.3(a)
(Authorization), Section 5.4 (Subsidiaries), Section 5.20 (Brokerage and Transaction
Bonuses), Section 5.22 (Affiliate Transactions), Section 6.1 (Organization and Power) and  Section 6.2 (Authorization), shall not terminate; and 

        (d)   all
other representations and warranties in this Agreement shall terminate on the first anniversary of the Closing Date; 

provided that any representation or warranty in respect of which indemnity may be sought under Section 8.2  below, and the indemnity with respect thereto,
shall survive the time at which it would otherwise terminate pursuant to this Section 8.1  if notice of the inaccuracy or breach or potential inaccuracy or breach thereof giving rise to such right
or potential right of indemnity shall have been given to the party
against whom such indemnity may be sought prior to such time (regardless of when the Losses in respect thereof may actually be incurred). The representations and warranties in this Agreement and the
Schedules and Exhibits attached hereto or in any writing delivered by any party to another party in connection with this Agreement shall survive for the periods set forth in
this Section 8.1. 

        8.2    Indemnification.    

        (a)    Indemnification by Seller.    Seller agrees to and shall indemnify the Buyer Parties and save and hold each of
them harmless against and pay on behalf of or reimburse such Buyer Parties for any Losses which any such Buyer Party suffers, sustains or becomes subject to, as a result of, in connection with,
relating or incidental to or by virtue of: (i) any breach by Seller of any representation or warranty made by Seller in this Agreement or any of the Schedules attached hereto, or in any of the
certificates furnished by the Seller pursuant to this Agreement; (ii) any breach of any covenant or agreement by any Seller Party under this Agreement or any of the Schedules attached hereto,
or in any of the certificates furnished by the Seller pursuant to this Agreement; or (iii) the Excluded Subsidiaries and the transactions pursuant to which their assets and liabilities were
transferred to and/or assumed by CC Newco (including but not limited to Tax liabilities). 

38

 

        (b)    Indemnification by Buyer.    Buyer agrees to and shall indemnify Seller and its Affiliates, employees, agents,
partners, representatives, successors and permitted assigns ("Seller Group Members") and hold them harmless against any Losses which any such Seller
Group Member suffers, sustains or becomes subject to, as the result of, in connection with, relating or incidental to or by virtue of the breach by Buyer or Regis of any representation, warranty,
covenant or agreement made by Buyer or Regis in this Agreement, any of the Schedules attached hereto or any of the certificates furnished by Buyer or Regis pursuant to this Agreement. 

        (c)    Manner of Payment.    Any indemnification of the Seller Group Members pursuant to this  Section 8.2 shall be effected by
wire transfer of immediately available funds from Buyer to an account designated by the applicable Seller Group
Member, as the case may be, within ten (10) days after the determination thereof. Any indemnification of the Buyer Parties pursuant to this  Section 8.2 shall be made solely as provided in
Section 8.2(g);  provided, that in connection with any such indemnification (i) with respect to any Specified Representation and Warranty, or
(ii) under
Sections 8.2(a)(ii) or  8.2(a)(iii), the Buyer may require such payment to be made by wire transfer of immediately available funds from Seller to an
account designated by the
applicable Buyer Party, as the case may be, within ten (10) days after the determination thereof Any such indemnification payments shall include interest at the Applicable Rate calculated on
the basis of the actual number of days elapsed over 360, from the date any such Loss is suffered or sustained to the date of payment. 

        (d)    Defense of Third-Party Claims.    Any Person making a claim for indemnification under this  Section 8.2 (an
"Indemnitee") shall notify the indemnifying party (an
"Indemnitor") of the claim in writing promptly after receiving written notice of any action, lawsuit, proceeding, investigation or other claim against
it (if by a third party), describing the claim, the amount thereof (if known and quantifiable) and the basis thereof; provided, that the failure to so
notify an Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent that (and only to the extent that) the Indemnitor has been materially prejudiced thereby. Any
Indemnitor shall be entitled to participate in the defense of such action, lawsuit, proceeding, investigation or other claim giving rise to an Indemnitee's claim for indemnification at such
Indemnitor's expense, and at its option (subject to the limitations set forth below) shall be entitled to assume the defense thereof by appointing a nationally recognized and reputable counsel
reasonably acceptable to the Indemnitee to be the lead counsel in connection with such defense; provided, that, prior to the Indemnitor assuming control
of such defense it shall first (i) verify to the Indemnitee in writing that such Indemnitor shall be fully responsible (with no reservation of any rights) for all liabilities and obligations
relating to such claim for indemnification and that (without regard to any dollar or source limitations otherwise set forth herein) it shall provide full indemnification (whether or not otherwise
required hereunder) to the Indemnitee with respect to such action, lawsuit, proceeding, investigation or other claim giving rise to such claim for indemnification hereunder and (ii) enter into
an agreement with the Indemnitee in form and substance satisfactory to the Indemnitee which agreement unconditionally guarantees the payment and performance of any liability or obligation which may
arise with respect to such action, lawsuit, proceeding, investigation or facts giving rise to such claim for indemnification hereunder; and provided,  further, that: 

        (i)    the
Indemnitee shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose;  provided, that the fees and expenses of such separate counsel shall be
borne by the Indemnitee (other than any fees and expenses of such separate
counsel that are incurred prior to the date the Indemnitor effectively assumes control of such defense which, notwithstanding the foregoing, shall be borne by the Indemnitor, and except that the
Indemnitor shall pay all of the fees and expenses of such separate counsel if the Indemnitee 

39

 

has
been advised by counsel that a reasonable likelihood exists of a conflict of interest between the Indemnitor and the Indemnitee); 

        (ii)   the
Indemnitor shall not be entitled to assume control of such defense (unless otherwise agreed to in writing by the Indemnitee) and shall pay the fees and expenses of
counsel retained by the Indemnitee if (1) the claim for indemnification relates to or arises in connection with any criminal or quasi-criminal proceeding, action, indictment, allegation or
investigation; (2) the Indemnitee reasonably believes an adverse determination with respect to the action, lawsuit, investigation, proceeding or other claim giving rise to such claim for
indemnification would be detrimental to or injure the Indemnitee's
reputation or future business prospects; (3) the claim seeks an injunction or equitable relief against the Indemnitee; (4) the Indemnitee has been advised by counsel that a reasonable
likelihood exists of a conflict of interest between the Indemnitor and the Indemnitee; (5) upon petition by the Indemnitee, the appropriate court rules that the Indemnitor failed or is failing
to vigorously prosecute or defend such claim or (6) the Indemnitee reasonably believes that the Loss relating to the claim could exceed the maximum amount that such Indemnitee could then be
entitled and expected to recover under the applicable provisions of Section 8.2; and 

        (iii)  if
the Indemnitor shall control the defense of any such claim, the Indemnitor shall obtain the prior written consent of the Indemnitee before entering into any
settlement of a claim or ceasing to defend such claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief will be imposed against the Indemnitee or if
such settlement does not expressly and unconditionally release the Indemnitee from all liabilities and obligations with respect to such claim, without prejudice. 

        (e)    Direct Claims.    Notwithstanding anything herein to the contrary, any claim by an Indemnitee for
indemnification not involving a third party claim may be asserted by giving the Indemnitor written notice thereof. If the Indemnitor does not notify the Indemnitee within thirty (30) calendar
days following its receipt of such notice that the Indemnitor disputes its liability to the Indemnitee, such claim specified by the Indemnitee in such notice shall be conclusively deemed an obligation
of the Indemnitor hereunder, and the Indemnitor will pay the amount of such Losses to the Indemnitee on demand. Any disputes with respect to any claim under this  Section 8.2(e) shall be resolved by
arbitration in the manner provided in Section 9.11
below. 

        (f)    Certain Waivers; etc.    Each of Seller, Powell and Mackenzie hereby agrees that it shall not (and shall cause
its Affiliates not to) make any claim for indemnification against Buyer, the Company, its Subsidiaries or any of their respective Affiliates by reason of the fact that Seller, Powell or Mackenzie or
any Affiliate of them is or was a shareholder, member, director, manager, officer, employee or agent of the Company or its Subsidiaries or is or was serving at the request of the Company, its
Subsidiaries or any of its Affiliates as a partner, manager, trustee, director, officer, employee or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement or otherwise) with respect to any action, suit,
proceeding, complaint, claim or demand brought by any of the Buyer Parties pursuant to this Agreement or applicable law or otherwise, and each of Seller, Powell and Mackenzie (on its own behalf and on
behalf of its Affiliates) hereby acknowledges and agrees that it shall not have any claim or right to contribution or indemnity from the Company or its Subsidiaries with respect to any amounts paid by
it pursuant to this Agreement or otherwise. Effective upon the Closing, each of Seller, Powell and Mackenzie (on its own behalf and on behalf of its Affiliates) hereby irrevocably waives, releases and
discharges the Company and its Subsidiaries from any and all liabilities and obligations to it of any kind or nature whatsoever, whether in its capacity as a shareholder, manager, member, officer or
director of the Company or its Subsidiaries or otherwise (including in respect of any rights of contribution or indemnification), 

40

 

in
each case whether absolute or contingent, liquidated or unliquidated, known or unknown, and whether arising under any agreement or understanding (but not any claims, liabilities or obligations
arising under this Agreement or any of the other agreements executed and delivered by Buyer in connection herewith) or otherwise at law or equity, and each of Seller, Powell and Mackenzie agrees that
it shall not (and that it shall cause its Affiliates not to) seek to recover any amounts in connection therewith or thereunder from the Company or its Subsidiaries. In no event shall the Company or
its Subsidiaries have any liability whatsoever to Seller, Powell or Mackenzie (or any of their Affiliates) for breaches of the representations, warranties, agreements or covenants of any Seller Party
hereunder, and no Seller Party shall (and shall cause its Affiliates not to) in any event seek contribution from the Company or its Subsidiaries in respect of any payments required to be made by
Seller pursuant to this Agreement. 

        (g)    Certain Limits on Indemnification for Seller Representations.    Seller shall not have any liability (or Buyer
any recourse) under Section 8.2(a)(i) above (other than with respect to the representations and warranties contained in  Section 5.1 (Corporate
Organization), Section 5.2 (Capital Stock and Related Matters;
Title to Shares), Section 5.3(a) (Authorization), Section 5.4 (Subsidiaries),  Section 5.20
(Brokerage and Transaction Bonuses), and Section 5.22 (Affiliate
Transactions) (collectively, the "Specified Representations and Warranties")), in each case other than (A) as Buyer may obtain from the Escrow
Funds (as defined in the Escrow Agreement) in the Escrow Account (as defined in the Escrow Agreement), and (B) as may be recovered by reducing amounts payable to CC Newco under the Consulting
Agreement as contemplated by the Consulting Agreement. Notwithstanding the foregoing, nothing in this Agreement (including this Section 8.2(g))
shall limit or restrict any of the Buyer Parties' right to maintain or recover any amounts in connection with any action or claim based upon fraud. 

        (h)    Treatment of Indemnification Payments.    All indemnification payments under this  Section 8.2 (including those
recovered by offset against amounts payable by Buyer under the Consulting Agreement) shall be deemed adjustments to
the Purchase Price set forth in Section 2.3(a) above. Notwithstanding anything
herein to the contrary, no investigation or knowledge of any party, whenever undertaken or however obtained, shall limit such party's right to indemnification hereunder in any manner. 

        (i)    Guaranty.    CCC hereby unconditionally and irrevocably guarantees to Buyer the full and complete payment when
due of all amounts payable by Seller to Buyer or any Buyer Party under (A) Section 8.2(a)(i) but only with respect to the Specified
Representations and Warranties, and (B) Section 8.2(a)(iii). CCC agrees that this guaranty is a present and continuing guaranty of payment
and not of collectibility. CCC agrees that such obligations shall be primary obligations of CCC, shall not be subject to any counterclaim, set-off, abatement, deferment or defense based
upon any claim that CCC may have against any Person, and shall remain in full force and effect without regard to, and shall not be released, discharged, limited or affected in any way by any
circumstance or condition (whether or not CCC shall have any knowledge thereof), including, without limitation, any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement,
readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshalling of assets and liabilities or similar events or proceedings with respect to Seller or any
other Person. CCC unconditionally waives, to the extent permitted by law, all notices, demands, presentment and protest, and all suretyship defenses. 

41

 

 

        8.3    Mutual Assistance.    Buyer and the Seller Parties agree that they will mutually cooperate in the
expeditious
filing of all notices, reports and other filings with any federal, state, local or foreign governmental authority required to be submitted jointly by such Persons in connection with the execution and
delivery of this Agreement and/or the other agreements contemplated hereby and the consummation of the transactions contemplated hereby or thereby. 

        8.4    Press Release and Announcements.    Unless required by law (in which case each of the Buyer and Seller agree to
use reasonable efforts to consult with the other party prior to any such disclosure as to the form and content of such disclosure), after the date hereof and through and including the Closing Date, no
press releases, announcements to the employees, customers or suppliers of the Company or any of its Subsidiaries or other releases of information related to this Agreement or the transactions
contemplated hereby will be issued or released without the consent of Buyer and Seller; provided, that (i) the Buyer or Regis may issue a press release announcing this transaction following the
execution of this Agreement in substantially the form previously provided by Buyer to Seller (the "Initial Release"), and may thereafter discuss and
distribute the contents of such Initial Release and other information about the transactions contemplated herein as it deems reasonably necessary in the course of its business, and
(ii) following the issuance of the Initial Release the Seller, the Company and/or BeautyFirst may issue its own press release announcing this transaction, in form agreed by the Buyer and the
Seller, acting reasonably, and may thereafter discuss and distribute the contents of such press release and other information about the transactions contemplated herein reasonably necessary in the
course of their relations with shareholders, employees, customers and suppliers. After the Closing, Buyer may issue any such releases of information without the consent of any other party hereto. 

        8.5    Expenses.    Except as otherwise provided herein, Regis and Buyer shall pay all of their own and all of their
Affiliates' fees, costs and expenses (including fees, costs and expenses of legal counsel, accountants, investment bankers, brokers or other representatives and consultants and appraisal fees, costs
and expenses) incurred in connection with the negotiation of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby. The Seller
(and/or the Company if paid prior to Closing) shall pay all of its own and all of their Affiliates and all of the Company's and its Subsidiaries' fees, costs and expenses (including fees, costs and
expenses of legal counsel, accountants, investment bankers, brokers or other representatives and consultants and appraisal fees, costs and expenses) incurred in connection with the negotiation of this
Agreement, the
performance of their respective obligations hereunder and the consummation of the transactions contemplated hereby. 

        8.6    Specific Performance.    Each party acknowledges and agrees that the other parties would be damaged irreparably
in the event any of the provisions of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each party agrees that the other parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted
in any court in the United States or in any state having jurisdiction over the parties and the matter in addition to any other remedy to which they may be entitled pursuant hereto. 

        8.7    Further Assurances.    In the event that at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties hereto will take such further action (including the execution and delivery of such further instruments and documents) as any
other party hereto reasonably may request. Seller Parties acknowledge and agree that, from and after the Closing, Buyer will be entitled to possession of, and Seller Parties shall deliver to Buyer,
all documents, books, records (including Tax records), agreements and financial data of any sort relating to the Company and its Subsidiaries. 

        8.8    Confidentiality.    Each Seller Party agrees not to disclose or use at any time (and shall cause each of its
Affiliates not to use or disclose at any time) any Confidential Information. Each Seller Party 

42

 

further
agrees to take all commercially reasonable steps (and to cause each of its Affiliates to take all commercially reasonable steps) to safeguard such Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft. In the event any Seller Party or any of its respective Affiliates is required by law to disclose any Confidential Information, such Seller Party
shall promptly notify Buyer in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure, and all Seller Parties shall cooperate with
Buyer and the Company to preserve the confidentiality of such information consistent with applicable law. 

        8.9    Tax Matters.    The following provisions shall govern the allocation of responsibility as between Buyer and the
Seller Parties for certain tax matters following the Closing Date: 

        (a)    Tax Indemnification.    The Seller Parties shall jointly and severally indemnify the Company, its Subsidiaries,
and Buyer and hold them harmless from and against (without duplication), any loss, claim, liability, expense, or other damage attributable to (i) all Taxes (or the non-payment
thereof) of the Company and its Subsidiaries for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but
does not end on) the Closing Date ("Pre-Closing Tax Period"), (ii) all Taxes of any member of an affiliated, consolidated, combined
or unitary group of which the Company or any of its
Subsidiaries (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation § 1.1502-6 or any
analogous or similar state, local, or foreign law or regulation, and (iii) any and all Taxes of any person (other than the Company and its Subsidiaries) imposed on the Company or any of its
Subsidiaries as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing (other than, in each
case, commodity or sales taxes in relation to current accounts payable and property, social security, unemployment, disability, payroll or employee or other withholding Taxes, in each case that are
not in arrears (nor paid later than in past general practice) and were accrued in the ordinary course). 

        (b)    Tax Periods Ending on or Before the Closing Date.    Buyer shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns for the Company and its Subsidiaries for all periods ending on or prior to the Closing Date which are filed after the Closing Date. All such Tax Returns shall be
prepared in accordance with past practice to the extent allowable by law insofar as they relate to the Company. Buyer shall provide Seller reasonable time to review and comment on each such Tax Return
prior to filing. Buyer shall consider any such comments from Seller and shall discuss any disagreements with Seller in good faith. If Buyer then files the Tax Return without accepting one or more
comments from Seller, Seller shall have up to 30 days after it becomes aware of such filing to submit a formal objection and request for arbitration under Section 9.11 below (in which
case the arbitration shall address only the disputed Tax position and its impact on the obligations of the parties under this Agreement, as neither the Seller nor the arbitrator shall have the right
to dictate any revision or amendment to any Tax Return). The Seller Parties shall reimburse Buyer and the Company for Taxes of Sellers and the Company with respect to such periods within fifteen
(15) days prior to any payment by Buyer or the Company of such Taxes. 

        (c)    Tax Periods Beginning Before and Ending After the Closing Date.    Buyer shall prepare or cause to be prepared
and file or cause to be filed any Tax Returns of the Company and its Subsidiaries for Tax periods which begin before the Closing Date and end after the Closing Date ("Straddle
Tax Returns"). Buyer shall provide Seller reasonable time to review and comment on each such Tax Return prior to filing. Buyer shall consider any such comments from Seller and
shall discuss any disagreements with Seller in good faith. If Buyer then files the Tax Return without accepting one or more comments from Seller, Seller shall have up to 30 days after it
becomes aware of such filing to submit a formal objection and request for arbitration under Section 9.11 below (in which case the arbitration shall address only the disputed Tax position and
its impact on the obligations of the parties under this Agreement, as neither the Seller nor the arbitrator shall 

43

 

have
the right to dictate any revision or amendment to any Tax Return). Any portion of any Tax (other than commodity or sales taxes in relation to current trade payables and social security,
unemployment, disability, payroll or employee or other withholding Taxes, in each case that are not in arrears (nor paid later than in past general practice) and were accrued in the ordinary course)
which must be paid in connection with the filing of a Straddle Tax Return, to the extent attributable to the portion of the period ending on or before the Closing Date, shall be referred to herein as
"Pre-Closing Straddle Taxes." The Seller Parties shall pay to Buyer an amount equal to the Pre-Closing Straddle Taxes due with
any Straddle Tax Returns at least ten (10) days before Buyer is required to cause to be paid the related Tax liability. Pre-Closing Straddle Taxes shall be calculated as though the
taxable year of the Company terminated as of the close of business on the Closing Date; provided,  however, that in the case of a tax not based on income,
receipts, proceeds, profits or similar items, Pre-Closing Straddle Taxes shall be
equal to the amount of tax for the taxable period multiplied by a fraction, the numerator of which shall be the number of days from the beginning of the taxable period through the Closing Date and the
denominator of which shall be the number of days in the taxable period. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior
practice of the Company. 

        (d)    Cooperation on Tax Matters.    The parties shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns pursuant to this Section 8.9 and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include signing any Tax Return, amended Tax Returns, claims or other documents necessary to settle any Tax controversy, the retention and (upon the other
party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided hereunder. Buyer and Seller Parties further agree, upon request, to provide the other party with all information that either
Party may be required to report pursuant to Code § 6043 and all Treasury Regulations promulgated thereunder. The Buyer shall control (and have the right to settle and resolve) all
tax audits occurring after Closing with respect to the Company and its Subsidiaries, regardless of the periods under audit. 

        (e)    Certain Taxes and Fees.    All transfer, documentary, sales, use, stamp, registration and other such Taxes, and
all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this
Agreement shall be paid by Seller when due, and Seller will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges. 

        (f)    Tax-Sharing Agreements.    All tax-sharing agreements or similar agreements with
respect to or involving the Company and its Subsidiaries, if any, shall be terminated as of the Closing Date and, after the Closing Date, the Company and its Subsidiaries shall not be bound thereby or
have any liability thereunder. 

        (g)    Source of Payments.    In any case where the Seller or Seller Parties are required to pay any amount under this
Section 8.9, such amounts shall be paid (and Buyer Parties shall have recourse) only (A) from the Escrow Funds (as defined in the Escrow Agreement) in the Escrow Account (as defined in
the Escrow Agreement), and (B) by reducing amounts payable to CC Newco under the Consulting Agreement as contemplated by the Consulting Agreement. 

44

 
 
 

  ARTICLE IX
  MISCELLANEOUS    
    

        9.1    Amendment and Waiver.    This Agreement may be amended only by a writing executed by all parties hereto. Any
provision of this Agreement may be waived (i) in the case of a waiver by any Seller Party, only if such waiver is set forth in a writing executed by Seller, and (ii) in the case of a
waiver by Buyer, only if such waiver is set forth in a writing executed by Buyer. No course of dealing between or among any Persons having any interest in this Agreement shall be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. 

        9.2    Notices.    All notices, demands and other communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when personally delivered or sent by telecopy (with hard copy to follow), (ii) one business
day following the day when deposited with a reputable and established overnight express courier (charges prepaid), or (iii) five days following mailing by certified or registered mail, postage
prepaid and return receipt
requested. Unless another address is specified in writing, notices, demands and communications to any Seller Party and Buyer shall be sent to the addresses indicated below: 

Notices to any Seller Party:

Cameron
Capital Investments Inc.

330 Bay Street, Suite 312

Toronto, ON M5H 2S2 

Telephone:
(416) 304-0771

Telecopy: (416) 868-9256 

with a copy to (which shall not constitute notice to any Seller Party):

Blake,
Cassels & Graydon LLP

Box 25, Commerce Court West

199 Bay Street

Toronto, ON M5L 1A9

Attention: David Toswell

Telephone: (416) 863-4246

Telecopy: (416) 863-2653 

Notices to Regis or Buyer:

c/o
Regis Corporation

7201 Metro Boulevard

Minneapolis, MN 55439

Attention: Paul D. Finkelstein

Telephone: (952) 947-7777

Telecopy: (952) 947-7901 

with a copy to (which shall not constitute notice to Regis or Buyer):

Regis
Corporation

7201 Metro Boulevard

Minneapolis, MN 55439

Attention: Eric A. Bakken

Telephone: (952) 918-4755

Telecopy: (952) 918-4770 

45

 

        9.3    Successors and Assigns.    This Agreement and all of the covenants and agreements contained herein and rights,
interests or obligations hereunder, by or on behalf of any of the parties hereto, shall bind and inure to the benefit of the respective heirs, successors and assigns of the parties hereto whether so
expressed or not; provided, that neither this Agreement nor any of the covenants and agreements herein or rights, interests or obligations hereunder may
be assigned or delegated by any Seller Party prior to or after the Closing without the prior written consent of Buyer. Buyer may assign its rights and obligations pursuant to this Agreement, in whole
or in part, in connection with any disposition or transfer of all or any portion of the Company or any of its Subsidiaries or their respective businesses or assets in any form of transaction without
the consent of any of the other parties hereto. Buyer and, following the Closing, the Company and its Subsidiaries may assign any or all of its rights pursuant to this Agreement, including its rights
to indemnification, to any of their respective lenders as collateral security. 

        9.4    Severability.    Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 

        9.5    Interpretation.    The headings and captions used in this Agreement, in any Schedule or Exhibit hereto, in the
table of contents or in any index hereto are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any
provision of this Agreement or any Schedule or Exhibit hereto, and all provisions of this Agreement and the Schedules and Exhibits hereto shall be enforced and construed as if no caption or heading
had been used herein or therein. Any capitalized terms used in any Schedule or Exhibit attached hereto and not otherwise defined therein shall have the meanings set forth in this Agreement. Each
defined term used in this Agreement shall have a comparable meaning when used in its plural or singular form. The use of the word "including" (or definitions thereof) herein shall mean "including
without limitation" and, unless the context otherwise required, "neither," "nor," "any," "either" and "or" shall not be exclusive. The parties hereto intend that each representation, warranty and
covenant contained herein shall have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another
representation,
warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party has not breached shall not detract from or mitigate the fact that such
party is in breach of the first representation, warranty or covenant. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Agreement. 

        9.6    No Third-Party Beneficiaries.    Nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person other than the parties hereto and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement, such third parties
specifically including employees and creditors of the Company and its Subsidiaries. 

        9.7    Complete Agreement.    This Agreement and the agreements and documents referred to herein contain the entire
agreement and understanding among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings whether written or oral, relating to such subject matter
in any way. 

        9.8    Counterparts.    This Agreement may be executed in one or more counterparts (including by means of telecopied
or electronically transmitted signature pages), all of which taken together shall constitute one and the same instrument. 

46

 

        9.9    Delivery by Facsimile.    This Agreement and any signed agreement or instrument entered into in connection with
this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. 

        9.10    Governing Law.    All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal law of the State of Minnesota without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Minnesota or any
other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Minnesota. 

        9.11    Arbitration.    All disputes between the parties relating to (i) this Agreement; (ii) the
transaction contemplated thereby; or (iii) negotiations leading up to execution of this Agreement shall be resolved by arbitration in Minneapolis, Minnesota, pursuant to the rules of the
American Arbitration Association then in effect. The arbitrators shall have the power to award costs, including reasonable attorneys' fees, as they deem appropriate. Notwithstanding the foregoing,
Buyer shall have the right to seek injunctive relief in a court of competent jurisdiction with respect to the Non-Competition Agreement. 

        9.12    Name of the Company and CC1.    Within 15 days of the Closing, Buyer shall cause the Company and CC1 to
change their name to a name that does not include the words "Cameron Capital" and shall cease use of the Cameron Capital name. 

        9.13    Certain Existing Agreements.    The parties agree that, upon the consummation of the Closing, all of the
following agreements shall be deemed terminated and of no further force or effect: Stockholders' Agreement dated as of May 19, 2006 between CC1, the Company and the Buyer; Put/Call Agreement
dated as of May 19, 2006 between the Company, CC1 and the Buyer; and letter agreement dated May 19, 2006 among Buyer, Hair Club Group, Inc. and Cameron Capital Corporation
regarding hair therapy arrangements (collectively, the "Existing Agreements"). Furthermore, the parties hereto hereby consent to the sale and purchase
of the Shares pursuant to the terms and conditions of this Agreement pursuant to any provisions of the Existing Agreements that require any such consent. 

        9.14    Schedules.    Nothing in any schedule attached hereto shall be adequate to disclose an exception to a
representation or warranty made in this Agreement unless such schedule identifies the exception with particularity and describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be adequate to disclose an exception to a representation or warranty made in this
Agreement, unless the representation or warranty has to do with the existence of the document or other item itself. No exceptions to any representations or warranties disclosed on one schedule shall
constitute an exception to any other representations or warranties made in this Agreement unless (i) the exception is disclosed as provided herein on each such other applicable schedule, or
(ii) the applicability of such exception to such other schedule(s) is reasonably apparent on its face. 

        IN
WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement on the date first written above. 

					
	
	 	REGIS
	
	 	 REGIS CORPORATION

	
	 	 By:
	 	 /s/ Paul D. Finkelstein

	
	 	Name:	 	Paul D. Finkelstein
	
	 	Title:	 	 Chairman of the Board of Directors,

President and Chief Executive Officer

47

 

	
	 	 BUYER

	
	 	 TRADE SECRET, INC.

	
	 	 By:
	 	 /s/ Paul D. Finkelstein

	
	 	Name:	 	Paul D. Finkelstein
	
	 	Title:	 	 Chairman of the Board of Directors, President and Chief Executive Officer
	
	 	 CAMERON CAPITAL INVESTMENTS INC.

	
	 	 By:
	 	 /s/ Steven K. Hudson

	
	 	Name:	 	Steven K. Hudson
	
	 	Title:	 	 Chairman and Secretary
	
	 	 CAMERON CAPITAL INC.

	
	 	 By:
	 	 /s/ Steven K. Hudson

	
	 	Name:	 	Steven K. Hudson
	
	 	Title:	 	 Chairman and Secretary
	
	 	 /s/ Stephen W. Powell

 Stephen W. Powell
	
	 	 MACKENZIE LIMITED PARTNERSHIP

	
	 	 By:
	 	 /s/ Duncan Robinson

	
	 	Name:	 	Duncan Robinson
	
	 	Title:	 	 Executive Vice President
	
	 	 CAMERON CAPITAL CORPORATION

	
	 	 By:
	 	 /s/ Steven K. Hudson

	
	 	Name:	 	Steven K. Hudson
	
	 	Title:	 	 Chairman and Secretary

48

QuickLinks

Exhibit 10(z)

STOCK PURCHASE AGREEMENT

ARTICLE I CERTAIN DEFINITIONS

ARTICLE II PURCHASE AND SALE OF THE SHARES

ARTICLE III CONDITIONS TO CLOSING

ARTICLE IV COVENANTS PRIOR TO CLOSING

ARTICLE IV.1 ADDITIONAL COVENANTS

ARTICLE V REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY, ITS SUBSIDIARIES AND THE SELLER

ARTICLE V.1 REPRESENTATIONS AND WARRANTIES OF STEPHEN POWELL

ARTICLE V.2 REPRESENTATIONS AND WARRANTIES OF MACKENZIE LIMITED PARTNERSHIP

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF REGIS

ARTICLE VI.1 REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER

ARTICLE VII TERMINATION

ARTICLE VIII ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING

ARTICLE IX MISCELLANEOUSQuickLinks
 -- Click here to rapidly navigate through this document

 
 

  Exhibit 10(aa)    
    

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT  

 Dated as of July 12, 2007  

 among  

 REGIS CORPORATION,  

 VARIOUS FINANCIAL INSTITUTIONS,  

 JPMORGAN CHASE BANK, N.A.

as Administrative Agent, Swing Line Lender and Issuer,  

 BANK OF AMERICA, N.A.,

as Syndication Agent,  

 and  

 LASALLE BANK NATIONAL ASSOCIATION,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., CHICAGO BRANCH,

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Documentation Agents  

 Arranged by

J.P. MORGAN SECURITIES INC.

and

BANC OF AMERICA SECURITIES LLC

Joint Lead Arrangers and Joint Bookrunners  

 

 

 
 

  TABLE OF CONTENTS    
    

							
	 
	 	 
	 	Page 	 
	 	 	ARTICLE I

DEFINITIONS	 	 	 	 
	

1.01	

 	

Certain Defined Terms	

 	

 	

1	

 
	

1.02	
 	

Other Interpretive Provisions	
 	
 	

16	
 
	

1.03	
 	

Accounting Principles	
 	
 	

17	
 
	

1.04	
 	

Currency Equivalents Generally	
 	
 	

17	
 
	

 	
 	

ARTICLE II

THE CREDITS	
 	
 	

 	
 
	

2.01	
 	

Amounts and Terms of Commitments	
 	
 	

17	
 
	

2.02	
 	

Loan Accounts	
 	
 	

18	
 
	

2.03	
 	

Procedure for Borrowing	
 	
 	

18	
 
	

2.04	
 	

Conversion and Continuation Elections	
 	
 	

19	
 
	

2.05	
 	

The Swing Line Loans	
 	
 	

20	
 
	

2.06	
 	

Utilization of Commitments in Offshore Currencies	
 	
 	

22	
 
	

2.07	
 	

Voluntary Termination or Reduction of Revolving Loan Commitments	
 	
 	

24	
 
	

2.08	
 	

Prepayments	
 	
 	

24	
 
	

2.09	
 	

Repayment	
 	
 	

25	
 
	

2.10	
 	

Interest	
 	
 	

25	
 
	

2.11	
 	

Fees	
 	
 	

25	
 
	

2.12	
 	

Computation of Fees and Interest	
 	
 	

26	
 
	

2.13	
 	

Payments by the Company	
 	
 	

26	
 
	

2.14	
 	

Payments by the Lenders to the Administrative Agent	
 	
 	

27	
 
	

2.15	
 	

Sharing of Payments, Etc	
 	
 	

27	
 
	

2.16	
 	

Subsidiary Guaranty	
 	
 	

28	
 
	

2.17	
 	

Increase in Commitments; Additional Lenders	
 	
 	

28	
 
	

 	
 	

ARTICLE III

THE LETTERS OF CREDIT	
 	
 	

 	
 
	

3.01	
 	

The Letter of Credit Subfacility	
 	
 	

29	
 
	

3.02	
 	

Issuance, Amendment and Renewal of Letters of Credit	
 	
 	

30	
 
	

3.03	
 	

Risk Participations, Drawings and Reimbursements	
 	
 	

31	
 
	

3.04	
 	

Repayment of Participations	
 	
 	

32	
 
	

3.05	
 	

Role of the Issuers	
 	
 	

33	
 
	

3.06	
 	

Obligations Absolute	
 	
 	

33	
 

i

 

							
	 
	 	 
	 	Page 	 
	3.07	 	Cash Collateral Pledge	 	 	34	 
	

3.08	

 	

Letter of Credit Fees	

 	

 	

34	

 
	

3.09	
 	

UCP; ISP	
 	
 	

35	
 
	

 	
 	

ARTICLE IV

TAXES, YIELD PROTECTION AND ILLEGALITY	
 	
 	

 	
 
	

4.01	
 	

Taxes	
 	
 	

35	
 
	

4.02	
 	

Illegality	
 	
 	

36	
 
	

4.03	
 	

Increased Costs and Reduction of Return	
 	
 	

36	
 
	

4.04	
 	

Funding Losses	
 	
 	

37	
 
	

4.05	
 	

Inability to Determine Rates	
 	
 	

37	
 
	

4.06	
 	

Reserves on Offshore Rate Loans	
 	
 	

38	
 
	

4.07	
 	

Certificates of Lenders	
 	
 	

38	
 
	

4.08	
 	

Substitution of Lenders	
 	
 	

38	
 
	

4.09	
 	

Survival	
 	
 	

38	
 
	

 	
 	

ARTICLE V

CONDITIONS PRECEDENT	
 	
 	

 	
 
	

5.01	
 	

Conditions to Effectiveness	
 	
 	

38	
 
	

5.02	
 	

Conditions to All Credit Extensions	
 	
 	

40	
 
	

 	
 	

ARTICLE VI

REPRESENTATIONS AND WARRANTIES	
 	
 	

 	
 
	

6.01	
 	

Existence and Power	
 	
 	

40	
 
	

6.02	
 	

Authorization; No Contravention	
 	
 	

40	
 
	

6.03	
 	

Governmental Authorization	
 	
 	

41	
 
	

6.04	
 	

Binding Effect	
 	
 	

41	
 
	

6.05	
 	

Litigation	
 	
 	

41	
 
	

6.06	
 	

No Default	
 	
 	

41	
 
	

6.07	
 	

ERISA Compliance	
 	
 	

41	
 
	

6.08	
 	

Use of Proceeds; Margin Regulations	
 	
 	

42	
 
	

6.09	
 	

Title to Properties	
 	
 	

42	
 
	

6.10	
 	

Taxes	
 	
 	

42	
 
	

6.11	
 	

Financial Condition	
 	
 	

42	
 
	

6.12	
 	

Environmental Matters	
 	
 	

42	
 
	

6.13	
 	

Labor Relations	
 	
 	

43	
 
	

6.14	
 	

Regulated Entities	
 	
 	

43	
 

ii

 

							
	 
	 	 
	 	Page 	 
	6.15	 	No Burdensome Restrictions	 	 	43	 
	

6.16	

 	

Copyrights, Patents, Trademarks and Licenses, etc	

 	

 	

43	

 
	

6.17	
 	

Subsidiaries	
 	
 	

43	
 
	

6.18	
 	

Insurance	
 	
 	

43	
 
	

6.19	
 	

Swap Obligations	
 	
 	

43	
 
	

6.20	
 	

Solvency	
 	
 	

44	
 
	

6.21	
 	

Full Disclosure	
 	
 	

44	
 
	

 	
 	

ARTICLE VII

AFFIRMATIVE COVENANTS	
 	
 	

 	
 
	

7.01	
 	

Financial Statements	
 	
 	

44	
 
	

7.02	
 	

Certificates; Other Information	
 	
 	

44	
 
	

7.03	
 	

Notices	
 	
 	

45	
 
	

7.04	
 	

Preservation of Existence, Etc	
 	
 	

46	
 
	

7.05	
 	

Maintenance of Property	
 	
 	

46	
 
	

7.06	
 	

Insurance	
 	
 	

46	
 
	

7.07	
 	

Payment of Obligations	
 	
 	

46	
 
	

7.08	
 	

Compliance with Laws	
 	
 	

47	
 
	

7.09	
 	

Compliance with ERISA	
 	
 	

47	
 
	

7.10	
 	

Inspection of Property and Books and Records	
 	
 	

47	
 
	

7.11	
 	

Environmental Laws	
 	
 	

47	
 
	

7.12	
 	

Use of Proceeds	
 	
 	

48	
 
	

7.13	
 	

Further Assurances	
 	
 	

48	
 
	

7.14	
 	

Guaranties	
 	
 	

48	
 
	

 	
 	

ARTICLE VIII

NEGATIVE COVENANTS	
 	
 	

 	
 
	

8.01	
 	

Limitation on Liens	
 	
 	

49	
 
	

8.02	
 	

Disposition of Assets	
 	
 	

49	
 
	

8.03	
 	

Consolidations and Mergers	
 	
 	

50	
 
	

8.04	
 	

Loans and Investments	
 	
 	

50	
 
	

8.05	
 	

Limitation on Indebtedness	
 	
 	

51	
 
	

8.06	
 	

Transactions with Affiliates	
 	
 	

52	
 
	

8.07	
 	

Margin Regulations	
 	
 	

52	
 
	

8.08	
 	

Contingent Obligations	
 	
 	

52	
 
	

8.09	
 	

Restrictive Agreements	
 	
 	

52	
 

iii

 

							
	 
	 	 
	 	Page 	 
	8.10	 	ERISA	 	 	52	 
	

8.11	

 	

Change in Business	

 	

 	

53	

 
	

8.12	
 	

Accounting Changes	
 	
 	

53	
 
	

8.13	
 	

Amendments to Charter	
 	
 	

53	
 
	

8.14	
 	

Leverage Ratio	
 	
 	

53	
 
	

8.15	
 	

Fixed Charge Coverage Ratio	
 	
 	

53	
 
	

8.16	
 	

Minimum Net Worth	
 	
 	

53	
 
	

8.17	
 	

Most Favored Lender Status	
 	
 	

53	
 
	

 	
 	

ARTICLE IX

EVENTS OF DEFAULT	
 	
 	

 	
 
	

9.01	
 	

Event of Default	
 	
 	

53	
 
	

9.02	
 	

Remedies	
 	
 	

55	
 
	

9.03	
 	

Rights Not Exclusive	
 	
 	

56	
 
	

 	
 	

ARTICLE X

THE ADMINISTRATIVE AGENT	
 	
 	

 	
 
	

10.01	
 	

Appointment and Authorization	
 	
 	

56	
 
	

10.02	
 	

Liability	
 	
 	

57	
 
	

10.03	
 	

Reliance by Administrative Agent	
 	
 	

57	
 
	

10.04	
 	

Delegation of Duties	
 	
 	

57	
 
	

10.05	
 	

Resignation by Administrative Agent	
 	
 	

58	
 
	

10.06	
 	

Independent Credit Decision	
 	
 	

58	
 
	

10.07	
 	

Notice of Default	
 	
 	

58	
 
	

10.08	
 	

Indemnification of Administrative Agent	
 	
 	

58	
 
	

10.09	
 	

Guaranty Matters	
 	
 	

59	
 
	

10.10	
 	

Co-Agents	
 	
 	

59	
 
	

 	
 	

ARTICLE XI

MISCELLANEOUS	
 	
 	

 	
 
	

11.01	
 	

Amendments and Waivers	
 	
 	

59	
 
	

11.02	
 	

Notices	
 	
 	

60	
 
	

11.03	
 	

No Waiver; Cumulative Remedies	
 	
 	

60	
 
	

11.04	
 	

Costs and Expenses	
 	
 	

61	
 
	

11.05	
 	

Company Indemnification	
 	
 	

61	
 
	

11.06	
 	

Marshalling; Payments Set Aside	
 	
 	

61	
 
	

11.07	
 	

Successors and Assigns	
 	
 	

62	
 

iv

 

							
	 
	 	 
	 	Page 	 
	11.08	 	Assignments, Participations, etc	 	 	62	 
	

11.09	

 	

Confidentiality	

 	

 	

63	

 
	

11.10	
 	

Set-off	
 	
 	

64	
 
	

11.11	
 	

Automatic Debits of Fees	
 	
 	

64	
 
	

11.12	
 	

Notification of Addresses, Lending Offices, Etc	
 	
 	

64	
 
	

11.13	
 	

Counterparts	
 	
 	

65	
 
	

11.14	
 	

Severability	
 	
 	

65	
 
	

11.15	
 	

No Third Parties Benefited	
 	
 	

65	
 
	

11.16	
 	

GOVERNING LAW AND JURISDICTION	
 	
 	

65	
 
	

11.17	
 	

WAIVER OF JURY TRIAL	
 	
 	

66	
 
	

11.18	
 	

Judgment	
 	
 	

66	
 
	

11.19	
 	

Entire Agreement	
 	
 	

66	
 
	

11.20	
 	

Euro Currency	
 	
 	

66	
 
	

11.21	
 	

Effect of Amendment and Restatement	
 	
 	

67	
 
	

11.22	
 	

Amendment to Private Shelf Agreement	
 	
 	

67	
 
	

11.23	
 	

USA PATRIOT Act Notice	
 	
 	

67	
 

Regis
Corporation 

					
	SCHEDULES	 	 	 	 
	 	 	Schedule 1.01(a)	 	Pricing Schedule
	 	 	Schedule 1.01(b)	 	Existing Letters of Credit
	 	 	Schedule 2.01	 	Commitments and Pro Rata Shares
	 	 	Schedule 6.11	 	Financial Condition
	 	 	Schedule 6.12	 	Environmental Matters
	 	 	Schedule 6.17	 	Capitalization; Subsidiaries and Minority Interests
	 	 	Schedule 7.14	 	Empire Joint Venture Subsidiaries
	 	 	Schedule 8.01	 	Permitted Liens
	 	 	Schedule 8.04	 	Investments
	 	 	Schedule 8.05	 	Permitted Indebtedness
	 	 	Schedule 8.08	 	Contingent Obligations
	 	 	Schedule 11.02	 	Administrative Agent's Payment Office; Certain Addresses for Notices
	

EXHIBITS	
 	

 	
 	

 
	

 	
 	

Exhibit A	
 	

Form of Notice of Borrowing/Conversion/Continuation
	 	 	Exhibit B	 	Form of Compliance Certificate
	 	 	Exhibit C	 	Form of Assignment and Acceptance
	 	 	Exhibit D	 	Form of Subsidiary Guaranty

v

 

 
 

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT    
    

        This FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is entered into as
of July 12, 2007 among Regis Corporation, a Minnesota corporation (the "Company"), the several financial institutions from time to time party to
this Agreement (collectively, the "Lenders", and individually each a "Lender") and JPMorgan Chase Bank,
N.A. ("JPMorgan"), as administrative agent for the Lenders (together with any successor thereto in such capacity, the
"Administrative Agent"). 

        WHEREAS,
the Lenders are willing to extend commitments to make loans to, and issue or participate in letters of credit for the account of, the Company on the terms and conditions set
forth herein. 

        NOW,
THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows: 

 
 

  ARTICLE I    
    
    DEFINITIONS    
    

        1.01    Certain Defined Terms.    The following terms have the following meanings: 

        "Acquired Person"—see the definition of "EBITDA". 

        "Acquisition" means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the Company or the Subsidiary is the surviving entity. 

        "Additional Default" means any provision contained in any document or instrument creating or evidencing Indebtedness of the Company or any
Subsidiary that permits the holder or holders of Indebtedness to accelerate (with the passage of time or giving of notice or both) the maturity thereof or otherwise requires the Company or any
Subsidiary to purchase such Indebtedness prior to the stated maturity thereof and that either (i) is similar to Defaults and Events of Default hereunder (or the related definitions in this  Article I), but contains one or more percentages, amounts or formulas that is more restrictive or has a shorter grace period than those set forth
herein or is more beneficial to the holders of such other Indebtedness (and such provision shall be deemed an Additional Default only to the extent that it is more restrictive, has a shorter period or
is more beneficial) or (ii) is different from the subject matter of the Defaults and Events of Default hereunder (or the related definitions in this  Article I). 

        "Additional Financial Covenant" means any financial covenant applicable to the Company or any Subsidiary (regardless of whether such
provision is labeled or otherwise characterized as a financial covenant), the subject matter of which either (i) is similar to that of the covenants in  Sections 8.14 through 8.16 (or the related definitions in this  Article I), but contains one or more percentages, amounts or formulas that is more restrictive, or more favorable to the
Persons entitled to the
benefits thereof, than those set forth herein or more beneficial to the holder or holders of the Indebtedness created or evidenced by the document in which such covenant or similar restriction is
contained (and such covenant or similar restriction shall be deemed an Additional Financial Covenant only to the extent
that it is more restrictive or more beneficial) or (ii) is a financial covenant that is different from the subject matter of the covenants in  Sections 8.14 through 8.16. 

1

 

        "Administrative Agent"—see the preamble. 

        "Administrative Agent's Payment Office" means (a) in respect of payments in Dollars, the address for payments set forth on  Schedule 11.02 or such other address
as the Administrative Agent may from time to time specify, and (b) in the case of payments in any
Offshore Currency, such address as the Administrative Agent may from time to time specify in accordance with Section 11.02. 

        "Administrative Questionnaire" means an administrative questionnaire in a form supplied by the Administrative Agent. 

        "Additional Lender" has the meaning specified in Section 2.17. 

        "Additional Offshore Currency" has the meaning specified in subsection 2.06(b). 

        "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. 

        "Agent Fee Letter" has the meaning specified in subsection 2.11(a). 

        "Aggregate Commitment" means the aggregate Commitments of the Lenders. 

        "Agreement"—see the preamble. 

        "Applicable Currency" means, as to any particular payment or Loan, Dollars or the Offshore Currency in which it is denominated or payable. 

        "Applicable Facility Fee Percentage"—see Schedule 1.01(a). 

        "Applicable Margin"—see Schedule 1.01(a). 

        "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. 

        "Arranger" means each of JPMSI and Banc of America Securities LLC in its capacity as a joint lead arranger and joint bookrunner
hereunder, and "Arrangers" means both of them. 

        "Asset Disposition" has the meaning specified in Section 8.02. 

        "Assignee" has the meaning specified in subsection 11.08(a). 

        "Associated Costs Rate" means, for any Offshore Currency Loan for any Interest Period, a percentage rate per annum as determined on the
first day of such Interest Period by the Administrative Agent or the Swing Line Lender as reflecting the cost, loss or difference in return which would be suffered or incurred by a Lender as a result
of (a) funding (at the Offshore Rate and on a match funded basis) any special deposit or cash ratio deposit required to be placed with the Bank of England and/or the Financial Services
Authority (or any other authority which replaces any of their respective functions) and/or (b) any charge imposed by the Bank of England and/or the Financial Services Authority (or any other
authority which replaces any of their respective functions). 

        "Attorney Costs" means and includes all reasonable fees and disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel. 

        "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C. §101, et
seq.). 

2

 

        "Base Rate" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. 

        "Base Rate Loan" means a Loan or an L/C Advance that bears interest based on the Base Rate. 

        "Borrowing" means a borrowing hereunder consisting of Revolving Loans of the same Type made to the Company on the same day by the Lenders
under Article II and, in the case of Offshore Rate Loans, having the same Interest Period. The making of a Swing Line Loan shall not constitute a
Borrowing. 

        "Borrowing Date" means any date on which a Borrowing occurs under Section 2.03. 

        "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Chicago, Illinois or New York, New
York are authorized or required by law to close, and (a) with respect to disbursements and payments in Dollars, a day on which dealings are carried on in the applicable offshore Dollar
interbank market and (b) with respect to disbursements and payments in and calculations pertaining to any Offshore Currency Loan, a day on which commercial banks in London are open and dealings
in the relevant Offshore Currency are carried on in the applicable offshore foreign exchange interbank market in which disbursement of or payment in such Offshore Currency will be made or received
hereunder. 

        "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. 

        "Capital Lease" has the meaning specified in the definition of "Capital Lease Obligations". 

        "Capital Lease Obligations" means all monetary obligations of the Company or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital lease (a "Capital Lease"). 

        "Capital Stock" means (a) in the case of a corporation, corporate stock, (b) in the case of an association or business
entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person. 

        "Cash Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent,
the applicable Issuer and the Lenders, as additional collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and such Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term shall have corresponding meanings. The Company hereby grants the Administrative
Agent, for the benefit of the Administrative Agent, the Issuers and the Lenders, a security interest in all such cash and deposit account balances. Cash collateral shall be maintained in blocked
deposit accounts at JPMorgan. The Administrative Agent shall invest any and all available funds deposited in such deposit accounts, within 10 Business Days after the date the relevant funds become
available, in securities issued or fully guaranteed or insured by the United States Government or any agency thereof backed by the full faith and credit of the United States having maturities of three
months from the date of acquisition thereof (collectively, "Governmental Obligations"). The Company hereby acknowledges and agrees that the
Administrative Agent shall not have any liability with respect to, and the Company hereby indemnifies the 

3

 

Administrative
Agent against, any loss resulting from the acquisition of Governmental Obligations, and the Administrative Agent shall not have any obligation to monitor the trading activity of any
Governmental Obligation on and after the acquisition thereof for the purpose of obtaining the highest possible return with respect thereto, the Administrative Agent's responsibility being limited to
acquiring Governmental Obligations. 

        "Cash Equivalents" means: 

        (a)   securities
issued or fully guaranteed or insured by the United States Government or any agency thereof and (i) backed by the full faith and credit of the United
States or such other countries where the Company or its Subsidiaries have operations, (ii) purchased in the ordinary course of business consistent with past practices and (iii) having
maturities of not more than twelve months from the date of acquisition; 

        (b)   certificates
of deposit, time deposits, Eurodollar time deposits, repurchase agreements, reverse repurchase agreements and bankers' acceptances, having in each case a
term of not more than twelve months, issued by any Lender, or by any U.S. commercial bank or non-U.S. commercial bank in the ordinary course of business consistent with past practices
having combined capital and surplus of not less than $100,000,000 whose short term securities are rated at least A-1 by Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc. ("S&P") and P-1 by Moody's Investors Service, Inc.
("Moody's"); and 

        (c)   commercial
paper of an issuer rated at least A-1 by S&P or P-1 by Moody's and in either case having a tenor of not more than three months. 

        "CERCLA" has the meaning specified in the definition of "Environmental Laws." 

        "Change of Control" means (a) any Person or any two or more Persons acting in concert acquiring beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act), directly or indirectly, of capital stock of the Company (or other securities convertible
into such capital stock) representing 20% or more of the combined voting power of all capital stock of the Company entitled to vote in the election of directors, other than capital stock having such
power only by reason of the happening of a contingency; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Company's
board of directors (together with any new directors whose election by the Company's board of directors or whose nomination for election by the Company's stockholders was approved by a vote of at least
a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any
reasons other than death or disability to constitute a majority of the directors then in office. 

        "Code" means the Internal Revenue Code of 1986. 

        "Commitment" has the meaning specified in Section 2.01. 

        "Commitment Increase" has the meaning specified in Section 2.17. 

        "Company"—see the preamble. 

        "Compliance Certificate" means a certificate substantially in the form of  Exhibit B. 

        "Computation Date" has the meaning specified in subsection 2.06(a). 

        "Contingent Obligation" means, as to any Person, any direct or indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for the payment or 

4

 

discharge
of any such primary obligation, or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any materials, supplies or other property from, or to obtain the services of, another Person if the relevant contract
or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever performed or tendered; or (d) in respect of any Swap Contract. The amount of any Contingent Obligation,
(x) in the case of Guaranty Obligations, shall be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof, (y) in the case of Contingent Obligations in respect of Swap Contracts, shall be deemed equal to
the aggregate Swap Termination Value of such Swap Contracts, and (z) in the case of other Contingent Obligations shall be deemed equal to the maximum reasonably anticipated liability in respect
thereof. 

        "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. 

        "Conversion/Continuation Date" means any date on which, under Section 2.04, the
Company (a) converts Loans of one Type to another Type, or (b) continues as Loans of the same Type, but with a new Interest Period, Loans having Interest Periods expiring on such date. 

        "Credit Extension" means (a) the making of any Loan and (b) the Issuance of any Letter of Credit. 

        "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default. 

        "Default Rate"—see Section 2.10. 

        "Designated Offshore Currency" means Euros, pounds sterling and Canadian Dollars. 

        "Dollar Equivalent" means, at any time, (a) as to any amount denominated in Dollars, the amount thereof at such time, and
(b) as to any amount denominated in an Offshore Currency, the equivalent amount in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate for the purchase
of Dollars with such Offshore Currency on the most recent Computation Date provided for in subsection 2.06(a). 

        "Dollars", "dollars" and "$" each mean
lawful money of the United States. 

        "Domestic Subsidiary" means any Subsidiary of the Company that is organized under the laws of the United States or any state thereof. 

        "EBITDA" means, for any period, for the Company and its Subsidiaries on a consolidated basis, determined in accordance with GAAP, the sum
of (a) net income (or net loss) for such period, excluding any extraordinary non-cash gains or losses during such period (provided
that the net income of any Person that is not a Subsidiary of the Company shall be included in the consolidated net income of the Company only to the extent of the amount of cash dividends or
distributions paid by such Person to the Company or to a consolidated Subsidiary of the Company), plus (b) to the extent included in the
determination of such net income (or net loss), (i) all amounts treated as expenses for depreciation 

5

 

  
(including, without duplication, non-cash gains and losses upon the closing and abandonment of any non-franchised store locations) and interest and the amortization of
intangibles of any kind, plus (ii) all taxes paid or accrued and unpaid on or measured by income,  plus (iii) non-cash impairment charges arising
in connection with any Joint Venture  plus (c) without duplication, the amount of any other charge in respect of non-recurring expenses arising in connection with
Acquisitions, to the extent approved by the Administrative Agent and the Required Lenders; provided that if the Company or any Subsidiary acquires a
Person (an "Acquired Person") in an Acquisition in such period, then all of the Acquired Person's EBITDA (calculated for such Person as set forth above
without giving effect to clause (c)) for the four fiscal quarters then ended shall be added to EBITDA, and if the Company or any Subsidiary sells
all or substantially all of the stock or assets of any Subsidiary in any such period, then the EBITDA of such Subsidiary (calculated for such Person as set forth above without giving effect to  clause (c)) shall be deducted from EBITDA. 

        "EBITDAR" means, for any period, for the Company and its Subsidiaries on a consolidated basis, determined in accordance with GAAP, the sum
of (a) EBITDA for such period, minus (b) any Acquired Person's EBITDA added to the determination of EBITDA for the four fiscal quarters
then ended pursuant to the proviso set forth in the definition of EBITDA, plus (c) the EBITDA of any Subsidiary deducted from the determination
of EBITDA for the four fiscal quarters then ended pursuant to the proviso set forth in the definition of EBITDA, plus (d) all Rental Expense for
such period. 

        "Effective Amount" means (a) with respect to any Loan on any date, the aggregate outstanding principal Dollar Equivalent amount
thereof after giving effect to any Borrowing, prepayment or repayment of Loans occurring on such date and any Swing Line Loan made on such date; and (b) with respect to any outstanding L/C
Obligations on any date, the Dollar Equivalent amount of such L/C Obligations on such date after giving effect to any Issuance occurring on such date and any other change in the aggregate amount of
the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letter of Credit or any reduction in the maximum amount available for drawing
under any Letter of Credit taking effect on such date. 

        "Effective Date" means the date on which all conditions precedent set forth in  Section 5.01 are satisfied or waived by all Lenders (or, in the case of  subsection 5.01(e), waived by the Person entitled to receive such payment).
 

        "Eligible Assignee" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000,  provided that
such bank is acting through a branch or agency located in the United States; (c) a Person that is primarily engaged in the business
of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a Lender is a
Subsidiary, (d) an Approved Fund and (e) any other Person that has been approved in writing as an Eligible Assignee by the Company (prior to the occurrence and continuance of an Event of
Default) and the Administrative Agent. 

        "Empire Joint Venture" means the Joint Venture between the Company and Empire Beauty School Inc. known as "Empire Education
Group, Inc." 

        "Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage,
natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), investigation, cleanup, removal, remedial or response 

6

 

costs,
restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon the presence, placement, discharge, emission or release (including intentional
and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental, placements, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in, or from any property, whether or not owned by the Company or any Subsidiary or taken as collateral, or in connection with any operations of the Company. 

        "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to environmental,
health, safety and land use matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean
Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, and the Emergency Planning
and Community Right-to-Know Act. 

        "Environmental Permits" has the meaning specified in subsection 6.12(b). 

        "ERISA" means the Employee Retirement Income Security Act of 1974. 

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

        "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Company or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which the Company or such ERISA Affiliate was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company
or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability to the PBGC under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the
Company or any ERISA Affiliate. 

        "Euro" means the single currency of participating member states of the European Monetary Union. 

        "Eurodollar Reserve Percentage" has the meaning specified in the definition of "Offshore Rate". 

        "Event of Default" means any event or circumstance specified in Section 9.01. 

        "Exchange Act" means the Securities Exchange Act of 1934. 

        "Existing Credit Agreement" means the Third Amended and Restated Credit Agreement dated as of April 7, 2005 among the Company,
various financial institutions and Bank of America, N.A., as administrative agent. 

        "Existing Letters of Credit" means the outstanding letters of credit previously issued under the Existing Credit Agreement and set forth
on Schedule 1.01(b). 

        "Federal Funds 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 

7

 

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. 

        "Fixed Charges" means, with respect to the Company and its Subsidiaries on a consolidated basis, as of any date of determination,
(a) interest expense paid or accrued on outstanding Indebtedness for the period of four fiscal quarters ending on the date of determination, and (b) Rental Expense paid or accrued in
such period. 

        "Foreign Subsidiary" means any Subsidiary of the Company other than a Domestic Subsidiary 

        "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal
functions. 

        "Funded Debt" of any Person means, without duplication, all Indebtedness of such Person. 

        "Further Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts payable or paid pursuant to  Section 4.01.

        "FX Trading Office" means the Chicago office of JPMorgan, or such other office of JPMorgan as the Administrative Agent may designate from
time to time. 

        "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. 

        "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. 

        "Guarantor" means any Subsidiary of the Company from time to time party to the Subsidiary Guaranty in accordance with  Section 7.14. 

        "Guaranty Obligation" has the meaning specified in the definition of "Contingent Obligation." 

        "Hazardous Materials" means all those substances that are regulated by, or which may form the basis of liability or a standard of conduct
under, any Environmental Law, including any substance identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance,
hazardous material, or toxic substance, or petroleum or petroleum-derived substance or waste. 

        "Honor Date" has the meaning specified in subsection 3.03(b). 

        "Indebtedness" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations
issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business on ordinary terms); (c) all
reimbursement or payment obligations with respect to Surety Instruments and all L/C Obligations; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title
retention agreement, or 

8

 

incurred
as financing, in either case with respect to property acquired by such Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all Capital Lease Obligations; (g) the principal balance outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product to which such Person is a party, where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with GAAP; (h) all indebtedness referred to in clauses (a) through  (g) above
secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (i) all Guaranty
Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through  (h) above. For all purposes of this
Agreement, the Indebtedness of any Person shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a general partner or a joint venturer or a member and as to which such Person is or may become directly liable. 

        "Indemnified Liabilities" has the meaning specified in Section 11.05. 

        "Indemnified Person" has the meaning specified in Section 11.05. 

        "Independent Auditor" has the meaning specified in subsection 7.01(a). 

        "Insolvency Proceeding" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before
any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any
general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or similar arrangement in respect of its creditors generally or any substantial portion of its
creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. 

        "Interest Payment Date" means (a) as to any Offshore Rate Loan, the last day of each Interest Period applicable to such Loan and
the date of any payment (including any prepayment) in full of such Loan
under Section 2.08, (b) as to any Base Rate Loan, the last day of each calendar quarter and the date of any payment (including any
prepayment) in full of all Loans hereunder, and (c) as to any Swing Line Loan denominated in an Offshore Currency, on the date of any payment (including any prepayment) of such Loan;  provided that
if any Interest Period for an Offshore Rate Loan exceeds three months, the date that falls three months after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date. 

        "Interest Period" means, as to any Offshore Rate Loan, the period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Loan, and ending on the date seven days or one, two, three or six months thereafter as selected by the
Company in its Notice of Borrowing; 

provided that: 

        (a)   if
any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of
such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; 

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

        (c)   no
Interest Period for any Loan shall extend beyond the Termination Date. 

9

 

        "Investments" has the meaning specified in Section 8.04. 

        "IRS" means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code. 

        "Issuance Date" has the meaning specified in subsection 3.01(a). 

        "Issue" means, with respect to any Letter of Credit, to issue or to extend the expiry of, or to renew or increase the amount of, such
Letter of Credit; and the terms "Issued," "Issuing" and
"Issuance" have corresponding meanings. 

        "Issuer" means (a) LaSalle, with respect to the Existing Letters of Credit and (b) JPMorgan, in its capacity as issuer of
each other Letter of Credit, together with any replacement letter of credit issuer arising under subsection 10.01(b). 

        "Joint Venture" means the Empire Joint Venture and any other single-purpose corporation, partnership, limited liability company, joint
venture or other similar legal arrangement (whether created by contract or conducted through a separate legal entity) now or hereafter formed by the Company or any of its Subsidiaries with another
Person in order to conduct a common venture or enterprise with such Person. 

        "JPMorgan"—see the preamble. 

        "JPMSI" means J.P. Morgan Securities Inc. 

        "Judgment Currency" has the meaning specified in Section 11.18. 

        "LaSalle" means LaSalle Bank National Association. 

        "L/C Advance" means each Lender's participation in any L/C Borrowing in accordance with its Pro Rata Share. 

        "L/C Amendment Application" means an application form for amendment of outstanding letters of credit as shall at any time be in use by the
applicable Issuer, as such Issuer shall request. 

        "L/C Application" means an application form for issuances of letters of credit as shall at any time be in use by the applicable Issuer, as
such Issuer shall request. 

        "L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on
the date when made or converted into a Borrowing of Loans pursuant to subsection 3.03(d). 

        "L/C Commitment" means the commitment of the Issuers to Issue and/or maintain, and the commitment of the Lenders severally to participate
in, Letters of Credit from time to time Issued or outstanding under Article III, in an aggregate amount not to exceed $150,000,000 on any date;  provided that the L/C Commitment is a part of the Aggregate Commitment, rather than a separate, independent commitment.
 

        "L/C Obligations" means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding,  plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C Borrowings. 

        "L/C-Related Documents" means the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other
document relating to any Letter of Credit, including any standard form documents used by the applicable Issuer for letter of credit issuances. 

        "Lead Agents" means, collectively, the Administrative Agent, the Syndication Agent and the Arrangers, and "Lead
Agent" means any of them. 

10

 

        "Lender" has the meaning specified in the introductory clause hereto. References to the "Lenders" shall include each financial institution
acting as an Issuer and the Swing Line Lender; for purposes of clarification only, to the extent such Person may have any rights or obligations in addition to those of the Lenders due to its status as
an Issuer or as Swing Line Lender, respectively, its status as such will be specifically referenced. 

        "Lending Office" means, as to any Lender, the office or offices, branches, subsidiaries or affiliates of such Lender specified as its
applicable lending office in such Lender's Administrative Questionnaire, or such other office or offices, branches, subsidiaries or affiliates as such Lender may from time to time notify the Company
and the Administrative Agent. 

        "Letters of Credit" means (a) each Existing Letter of Credit, and (b) any standby or commercial letter of credit Issued by
JPMorgan pursuant to Article III on or after the date of this Agreement. 

        "Leverage Ratio" means, as of any date of determination, the ratio of (a) all Funded Debt of the Company and its Subsidiaries
determined on a consolidated basis as of such date to (b) EBITDA for the period of four fiscal quarters ending on such date. 

        "Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the Uniform Commercial Code or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a lessor under an operating lease. 

        "Loan" means an extension of credit by a Lender to the Company under Article II or  Article III in the form of a
Revolving Loan, Swing Line Loan or L/C Advance. 

        "Loan Documents" means this Agreement, each Note, the Agent Fee Letter, the L/C-Related Documents, the Subsidiary Guaranty,
the Rate Swap Documents and all other documents delivered to the Administrative Agent or any Lender in connection herewith. 

        "Loan Parties" means, collectively, the Company and each Guarantor, and "Loan Party" means
any of them. 

        "Margin Stock" means "margin stock" as such term is defined in Regulation T, U or X of the FRB. 

        "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business,
assets, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Company or the Company and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of the Company or any Subsidiary to perform under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any Loan Document to which it is a party. 

        "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making or is obligated to make
contributions or, during the preceding three calendar years, has made, or has been obligated to make, contributions. 

        "Net Worth" means the consolidated shareholders' equity of the Company and its Subsidiaries as determined in accordance with GAAP. 

11

 

  
        "Note" means a promissory note executed by the Company in favor of a Lender pursuant to  subsection 2.02(b). 

        "Note Agreements" means, collectively, (a) the Amended and Restated Private Shelf Agreement dated as of October 3, 2000
between the Company and the purchasers named therein, (b) the Note Purchase Agreement dated as of March 1, 2002 between the Company and the purchasers named therein and (c) the
Master Note Purchase Agreement dated as of March 15, 2005 between the Company and the purchasers named therein. 

        "Notice of Borrowing" means a Notice of Borrowing/Conversion/Continuation in substantially the form of  Exhibit A. 

        "Obligations" means all advances, debts, liabilities, obligations, covenants and duties arising under any Loan Document owing by the
Company or any Subsidiary to any Lender, the Administrative Agent or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to
become due or now existing or hereafter arising. 

        "Offshore Currency" means at any time any Additional Offshore Currency and any Designated Offshore Currency. 

        "Offshore Currency Loan" means any Offshore Rate Loan denominated in an Offshore Currency. 

        "Offshore Currency Loan Sublimit" means $25,000,000. 

        "Offshore Rate" means, for any Interest Period, with respect to Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/100th of 1%) determined by the Administrative Agent as follows: 

			
	Offshore Rate =	 	LIBO Rate
	 	 	 
	 	 	1.00—Eurodollar Reserve Percentage

        Where,

        "Eurodollar Reserve Percentage" means for any day during any Interest Period, the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the FRB to which any Lender is subject for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the FRB), which reserve percentages shall include those imposed pursuant to such Regulation D; provided
that (i) Offshore Rate Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or any comparable regulation and (ii) the Eurodollar Reserve Percentage shall be adjusted automatically on
and as of the effective date of any change in any such reserve percentage; and 

        "LIBO Rate" means, with respect to any Offshore Rate Loan for any Interest Period, the rate appearing on the Reuters BBA LIBOR Rates
page 3750 (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 (or, in the case of an Offshore Rate Loan denominated in pounds sterling, on the
first day of such Interest Period), as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then
the "LIBO Rate" with respect to such Offshore Rate Loan 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 

12

 

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 (or, in the case of an Offshore Rate Loan denominated in pounds sterling, on the first day of such Interest Period). 

        The
Offshore Rate shall be adjusted automatically as to all Offshore Rate Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. 

        "Offshore Rate Loan" means a Revolving Loan that bears interest based on the Offshore Rate and may be an Offshore Currency Loan or a Loan
denominated in Dollars. 

        "Organization Documents" means, for any Person, the certificate or articles of formation and the bylaws or similar governing documents of
such Person, any certificate of determination or instrument relating to the rights of preferred equityholders of such Person, any rights or similar agreement with respect to the equityholders of such
Person, and all applicable resolutions of the board of directors or similar governing body (or any committee thereof) of such Person. 

        "Other Taxes" means any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan
Documents. 

        "Overnight Rate" means, for any day, the rate of interest per annum at which overnight deposits in the relevant Applicable Currency, in
the amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by JPMorgan's London Branch to major banks in the London or other
applicable offshore interbank market. 

        "Participant" has the meaning specified in subsection 11.08(e). 

        "PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under
ERISA. 

        "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which the Company or any
ERISA Affiliate sponsors, maintains, or to which it makes, is making or is obligated to make contributions, or otherwise has any liability, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years. 

        "Permitted Acquisitions" has the meaning specified in Section 8.04. 

        "Permitted Liens" has the meaning specified in Section 8.01. 

        "Permitted Swap Obligations" means all obligations (contingent or otherwise) of the Company existing or arising under Swap Contracts,
provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by the Company in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets held or reasonably anticipated by such Person, or changes in the value of securities issued by the Company in conjunction with a
securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view", and (b) such Swap Contracts do not contain any provision
exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party (i.e; such Swap Contracts do not elect the "first method" of
calculating a termination payment) under the 1992 Master ISDA Agreement. 

        "Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority. 

13

 

        "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which the Company or any ERISA Affiliate sponsors or
maintains or to which the Company or any ERISA Affiliate makes, is making or is obligated to make contributions or otherwise has any liability and includes any Pension Plan. 

        "Prime Rate" means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank as its prime rate in effect
at its office located at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. 

        "Pro Rata Share" means, as to any Lender, (a) at any time at which the Aggregate Commitment remains outstanding, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Lender's Commitment divided by the Aggregate Commitment, and (b) after the termination of the
Aggregate Commitment, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of the Effective Amount of such Lender's outstanding Loans (including such
Lender's ratable share of outstanding Swing Line Loans and L/C Obligations) divided by the aggregate Effective Amount of the outstanding Loans and L/C Obligations of all of the Lenders. 

        "Rate Swap Documents" means, collectively, all Swap Contracts entered into between the Company and any Lender or any Affiliate of a Lender
in respect of any portion of the Obligations. 

        "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. 

        "Rental Expense" means, for any period, the sum of (a) all store rental payments, (b) all common area maintenance payments
and (c) all real estate taxes paid by the Company and its Subsidiaries, in each case, with respect to non-franchised store locations. 

        "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. 

        "Required Lenders" means at any time Lenders then holding more than 50% of the Aggregate Commitment (or if the Aggregate Commitment has
been terminated, then the Effective Amount of outstanding Revolving Loans and Swing Line Loans, plus the Effective Amount of L/C Obligations). 

        "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which the Person or any of its property is subject. 

        "Responsible Officer" means the chief financial officer of the Company or any other officer having substantially the same authority and
responsibility. 

        "Revolving Loan" has the meaning specified in Section 2.01. 

        "Same Day Funds" means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with
respect to disbursements and payments in an Offshore Currency, same day or other funds as may be determined by the Administrative Agent to be customary in the place of disbursement or payment for the
settlement of international banking transactions in the relevant Offshore Currency. 

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

14

 

        "Solvent" means, when used with respect to a Person, that (a) the fair saleable value of the assets of such Person is in excess of
the total amount of the present value of its liabilities (including for purposes of this definition all liabilities (including loss reserves as determined by such Person), whether or not reflected on
a balance sheet prepared in accordance with GAAP and whether direct or indirect, fixed or contingent, secured or unsecured, disputed or undisputed), (b) such Person is able to pay its debts or
obligations in the ordinary course as they mature and (c) such Person does not have unreasonably small capital to carry out its business as conducted and as proposed to be conducted.
"Solvency" shall have a correlative meaning. 

        "Specified Acquisition Debt" means Indebtedness of a Person that was the subject of an Acquisition by the Company or any Subsidiary in an
aggregate amount not to exceed $10,000,000 at any one time outstanding that (a) remains outstanding no more than 90 days after the date on which such Acquisition was consummated,
(b) is the subject of a default under the terms thereof solely as a result of the consummation of such Acquisition, and (c) has not been accelerated or otherwise become immediately
repayable and in respect of which the lenders thereof have not exercised any available remedies. 

        "Spot Rate" for a currency means the rate quoted by JPMorgan as the spot rate for the purchase by JPMorgan of such currency with another
currency through its FX Trading Office at approximately 11:00 a.m. (London time) on the date two Business Days prior to the date as of which the foreign exchange computation is made. 

        "Subsidiary" of a Person means any corporation, association, partnership, limited liability company, joint venture (excluding, in the case
of the Company or a Subsidiary, any Joint Venture) or other business entity the accounts of which would be consolidated with those of such Person in such Person's consolidated financial statements if
such financial statements were prepared in accordance with GAAP as of such date. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the
Company. 

        "Subsidiary Guaranty" means the Guaranty dated as of the Effective Date by certain of the Subsidiaries in favor of the Administrative
Agent and the Lenders, substantially in the form attached hereto as Exhibit D. 

        "Surety Instruments" means all letters of credit (including standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, performance bonds, surety bonds and similar instruments. 

        "Swap Contract" means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the
foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 

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

        "Swing Line Commitment" means at any time, the obligation of the Swing Line Lender to make Swing Line Loans pursuant to  Section 2.05. 

15

 

 

        "Swing Line Lender" means JPMorgan, in its capacity as the provider of Swing Line Loans. 

        "Swing Line Loan" means a Loan made by the Swing Line Lender. 

        "Syndication Agent" means Bank of America, N.A. in its capacity as syndication agent for the Lenders hereunder. 

        "Taxes" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent, respectively, taxes imposed on or measured by its net income by the jurisdiction
(or any political subdivision thereof) under the laws of which such Lender or the Administrative Agent, as the case may be, is organized or maintains a Lending Office. 

        "Termination Date" means the earlier to occur of: 

	(a)
	July 12,
2012; and

	(b)
	the
date on which the Aggregate Commitment terminates in accordance with the provisions of this Agreement. 

        A
"Type" of Loan means its status as either a Base Rate Loan or an Offshore Rate Loan. 

        "Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. 

        "United States" and "U.S." each means the United States of America. 

        "Wholly-Owned" means any corporation, association, partnership, limited liability company, joint venture or other business entity in which
(other than directors' qualifying shares or other immaterial local ownership required by law) 100% of the equity interests of each class having ordinary voting power, and 100% of the equity interests
of every other class, in each case, at the time as of which any determination is being made, is owned, beneficially and of record, by the Company, or by one or more of the other Wholly-Owned
Subsidiaries, or both. 

        1.02    Other Interpretive Provisions.    (a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms. 

        (b)   The
words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection,
Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. 

        (c)   (i)
The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. 

        (ii)   The
term "including" is not limiting and means "including without limitation." 

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

        (iv)  The
term "property" includes any kind of property or asset, real, personal or mixed, tangible or intangible. 

        (d)   Unless
otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include
all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, (ii) references
to any statute or regulation are to 

16

 

be
construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such statute or regulation and (iii) any reference to a
particular time means such time in Chicago, Illinois. 

        (e)   The
captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. 

        (f)    This
Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests
and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided, any reference to any act of the Administrative Agent or the Lenders by
way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole discretion". 

        (g)   This
Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Administrative Agent, the Company and the other
parties, and are the products of all parties. Accordingly, they shall not be construed against the Lenders or the Administrative Agent merely because of the Lenders' or the Administrative Agent's
involvement in their preparation. 

        1.03    Accounting Principles.    (a) Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. 

        (b)   References
herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company. 

        (c)   If
any change in GAAP occurs after the date of this Agreement and such change results in a material variation in the method of calculation of financial covenants or
other terms of this Agreement, then the Company, the Administrative Agent and the Lenders agree to amend such provisions of this Agreement so as to equitably reflect such change so that the criteria
for evaluating the Company's financial condition will be the same after such change as if such change had not occurred. 

        1.04    Currency Equivalents Generally.    For all purposes of this Agreement (but not for purposes of the preparation
of any financial statements delivered pursuant hereto), the equivalent in any Offshore Currency or other currency of an amount in Dollars, and the equivalent in Dollars of an amount in any Offshore
Currency or other currency, shall be determined at the Spot Rate. 

 
 

  ARTICLE II    
    
    THE CREDITS    
    

        2.01    Amounts and Terms of Commitments.    Each Lender severally agrees, on the terms and conditions set forth
herein, to make loans to the Company denominated in Dollars or in an Offshore Currency (each such loan, a "Revolving Loan") from time to time on any
Business Day during the period from the Effective Date to the Termination Date, in an aggregate principal Dollar Equivalent amount not to exceed at any time outstanding the amount set forth opposite
such Lender's name on Schedule 2.01 (such amount, as the same may be reduced under Section 2.07  or as a result of one or more assignments
under Section 11.08, such Lender's
"Commitment"); provided that, after giving effect to any Borrowing of Revolving Loans, the Effective
Amount of all outstanding Loans and of all L/C Obligations, shall not at any time exceed the Aggregate Commitment; provided further, that the Effective
Amount of the Revolving Loans of any Lender plus the participation of such Lender in the Dollar Equivalent of the Effective Amount of all L/C Obligations and such Lender's Pro Rata Share of the
Effective Amount of any outstanding Swing Line Loans shall not at any time exceed such Lender's Commitment; and provided further, that after giving
effect to any Borrowing of Offshore Currency Loans, the sum of the Effective Amount of all outstanding Offshore Currency Loans plus the Effective 

17

 

Amount
of all outstanding Swing Line Loans denominated in Additional Offshore Currencies shall not exceed the Offshore Currency Loan Sublimit. Within the limits of each Revolving Lender's Commitment,
and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.01, prepay under Section 2.08 and reborrow under
this Section 2.01.  

        2.02    Loan Accounts.    (a) The Loans made by each Lender and the Letters of Credit Issued
by the Issuers shall be evidenced by one or more accounts or records maintained by such Lender or Issuer, as the case may be, in the ordinary course of business. The accounts or records maintained by
the Administrative Agent, each Issuer and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Company and the Letters of Credit Issued for the
account of the Company, and the interest and payments thereon. Any failure so to record or any error
in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Loans or any Letter of Credit. 

        (b)   Upon
the request of any Lender made through the Administrative Agent, the Loans made by such Lender may be evidenced by a Note, instead of or in addition to loan
accounts. Each such Lender shall record on the schedule annexed to its Note the date, amount and maturity of each Loan made by it and the amount and Applicable Currency of each payment of principal
made by the Company with respect thereto. Each such Lender is irrevocably authorized by the Company to make such recordation on its Note, and each Lender's record shall be conclusive absent manifest
error; provided that the failure of a Lender to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under such Lender's Note. 

        2.03    Procedure for Borrowing.    (a) Each Borrowing (other than an L/C Advance) shall be made upon the Company's
irrevocable notice delivered to the Administrative Agent in the form of a Notice of Borrowing (which notice must be received by the Administrative Agent prior to 12:00 noon (i) three Business
Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans denominated in Dollars, (ii) four Business Days prior to the requested Borrowing Date, in the case of Offshore
Currency Loans, and (iii) on the requested Borrowing Date, in the case of Base Rate Loans), specifying: 

        (A)  the
amount of such Borrowing, which shall be in an aggregate minimum amount of (1) in the case of a Borrowing of Base Rate Loans, $500,000 or any multiple of
$100,000 in excess thereof, (2) in the case of a Borrowing of Offshore Rate Loans denominated in Dollars, $1,000,000 or any multiple of $500,000, and (3) in the case of Offshore Currency
Loans, $1,000,000 or any multiple of 500,000 units of the Applicable Currency in excess thereof; 

        (B)  the
requested Borrowing Date, which shall be a Business Day; 

        (C)  the
Type of Loans comprising such Borrowing and in the case of an Offshore Rate Loan, the Applicable Currency; 

        (D)  with
respect to Offshore Rate Loans, the duration of the Interest Period applicable to such Loans included in such notice;  provided that if such Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing comprised of Offshore Rate Loans, such
Interest Period shall be one month; and 

        (E)  wire
instructions pursuant to which the proceeds of such Borrowing are to be disbursed. 

        (b)   The
Administrative Agent will promptly notify each Lender of its receipt of any Notice of Borrowing and of the amount of such Lender's Pro Rata Share of that Borrowing. 

        (c)   Each
Lender will make the amount of its Pro Rata Share of each Borrowing available to the Administrative Agent for the account of the Company at the Administrative
Agent's Payment Office on the Borrowing Date requested by the Company in Same Day Funds and in the requested currency (i) in the case of a Borrowing comprised of Loans in Dollars, by
2:00 p.m., and (ii) in the case of a 

18

 

Borrowing
comprised of Offshore Currency Loans, by such time as the Administrative Agent may specify. The aggregate of the amounts made available to the Administrative Agent by the Lenders will
promptly thereafter be made available to the Company pursuant to the wire instructions set forth in the applicable Notice of Borrowing in like funds as received by the Administrative Agent. 

        (d)   After
giving effect to any Borrowing or any conversion or continuation of Loans pursuant to Section 2.04, unless
the Administrative Agent shall otherwise consent, there may not be more than 10 different Interest Periods in effect. 

        (e)   The
Company hereby authorizes the Lenders and the Administrative Agent to accept Notices of Borrowing based on telephonic notices made by any Person that the
Administrative Agent or any Lender in good faith believes to be acting on behalf of the Company. The Company agrees to deliver promptly to the Administrative Agent a written confirmation of each
telephonic notice, signed by a Responsible Officer or an authorized designee. If the written confirmation differs in any material respect from the action taken by the Administrative Agent and the
Lenders, the records of the Administrative Agent and the Lenders shall govern absent manifest error. 

        2.04    Conversion and Continuation Elections.    (a) The Company may, upon irrevocable notice to the Administrative
Agent in accordance with subsection 2.04(b): 

        (i)    elect,
as of any Business Day, in the case of Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of Offshore Rate Loans, to convert
Loans (or any part thereof in an amount not less than $500,000 or that is in an integral multiple of $100,000 in excess thereof) into Loans of any other Type; or 

        (ii)   elect
as of the last day of the applicable Interest Period, to continue Offshore Rate Loans having Interest Periods expiring on such day (or any part thereof in an
amount not less than $500,000, or that is in an integral multiple of $100,000 in excess thereof); 

provided that if at any time the aggregate amount of Offshore Rate Loans denominated in Dollars in respect of any Borrowing is reduced, by payment,
prepayment, or conversion of part thereof to be less than $500,000, such Offshore Rate Loans denominated in Dollars shall automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into, Offshore Rate Loans shall terminate. 

        (b)   The
Company shall deliver a Notice of Borrowing to be received by the Administrative Agent not later than 12:00 noon at least (i) three Business Days in advance
of the applicable Conversion/Continuation Date, if the relevant Loans are to be converted into or continued as Offshore Rate Loans in Dollars, (ii) four Business Days in advance of the
Conversion/Continuation Date, if the relevant Loans are to be converted into or continued as Offshore Currency Loans, and (iii) on the Conversion/Continuation Date, if the relevant Loans are to
be converted into Base Rate Loans, specifying: 

        (A)  the
proposed Conversion/Continuation Date; 

        (B)  the
aggregate amount of Loans to be converted or continued; 

        (C)  the
Type of Loans resulting from the proposed conversion or continuation and in the case of an Offshore Rate Loan, the Applicable Currency; and 

        (D)  other
than in the case of conversions into Base Rate Loans, the duration of the requested Interest Period. 

        (c)   If
upon the expiration of any Interest Period applicable to Offshore Rate Loans denominated in Dollars, the Company has failed to timely select a new Interest Period to
be applicable to such Offshore Rate Loans, or if any Default or Event of Default then exists, the Company shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period. If the Company has failed to select a new Interest Period to be 

19

 

applicable
to Offshore Currency Loans prior to the fourth Business Day in advance of the expiration date of the current Interest Period applicable thereto as provided in  subsection 2.04(b), or if any Default
or Event of Default shall then exist, subject to the provisions of  subsection 2.06(d), the Company shall be deemed to have elected to continue such Offshore Currency Loans for a one-month Interest
Period. 

        (d)   The
Administrative Agent will promptly notify each Lender of its receipt of a Notice of Borrowing, or, if no timely notice is provided by the Company, the Administrative
Agent will promptly notify each Lender of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of
the Loans, with respect to which the notice was given, held by each Lender. 

        (e)   Unless
the Required Lenders otherwise consent, during the existence of a Default or Event of Default, the Company may not elect to have a Loan in Dollars converted into
or continued as an Offshore Rate Loan in Dollars, or an Offshore Currency Loan continued on the basis of an Interest Period exceeding one month. 

        (f)    The
Company hereby authorizes the Lenders and the Administrative Agent to accept Notices of Conversion/Continuation based on telephonic notices made by any Person the
Administrative Agent or any Lender in good faith believes to be acting on behalf of the Company. The Company agrees to deliver promptly to the Administrative Agent a written confirmation of each
telephonic notice, signed by a Responsible Officer. If the written confirmation differs in any material respect from the action taken by the Administrative Agent and the Lenders, the records of the
Administrative Agent and the Lenders shall govern absent manifest error. 

        2.05    The Swing Line Loans.    (a) Subject to the terms and conditions hereof, the Swing Line Lender agrees to make
Swing Line Loans to the Company denominated in Dollars or in an Offshore Currency from time to time prior to the Termination Date in an aggregate principal amount at any one time outstanding not to
exceed a Dollar Equivalent of $20,000,000; provided that (i) after giving effect to any Swing Line Loan, the Effective Amount of all Revolving
Loans, Swing Line Loans and L/C Obligations at such time shall not exceed the Aggregate Commitment at such time, (ii) the Swing Line Lender shall not be required to make a Swing Line Loan to
refinance an outstanding Swing Line Loan, (iii) the Effective Amount of all outstanding Offshore Currency Loans plus the Effective Amount of all outstanding Swing Line Loans denominated in
Offshore Currencies shall not exceed the Offshore Currency Loan Sublimit and (iv) notwithstanding Section 2.01, the aggregate amount of
the Revolving Loans and Swing Line Loans of the Swing Line Lender, plus the participation of the Swing Line Lender in the Dollar Equivalent of the Effective Amount of all L/C Obligations, may exceed
JPMorgan's Commitment so long as the condition set forth in the previous proviso is satisfied. Prior to the Termination Date, the Company may use the Swing Line Commitment by borrowing, prepaying the
Swing Line Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. All Swing Line Loans denominated in Dollars shall bear interest at the Base Rate and
shall not be entitled to be converted into Loans that bear interest at any other rate. Each Swing Line Loan denominated in an Offshore Currency shall bear interest at a rate separately agreed to by
the Company and the Swing Line Lender; provided that upon the purchase by the Lenders of participating interests in such Swing Line Loan pursuant to  clause (e)
 below, such Swing Line Loan shall be redenominated in Dollars on the basis of the Spot Rate and shall thereafter bear interest at the
Base Rate. 

        (b)   The
Company may borrow under the Swing Line Commitment on any Business Day until the Termination Date; provided that the
Company shall give the Swing Line Lender irrevocable written notice signed by a Responsible Officer or an authorized designee (which notice must be received by the Swing Line Lender prior to
(i) 2:00 p.m. on the requested borrowing date, in the case of a Swing Line Loan denominated in Dollars, or (ii) 10:30 a.m. three Business Days prior to the requested
borrowing date, in the case of a Swing Line Loan denominated in an Offshore Currency (or, in each case, such 

20

 

other
time as the Swing Line Lender and the Company may agree)) with a copy to the Administrative Agent specifying the amount of the requested Swing Line Loan, which shall be in a minimum amount of
$250,000 and an integral multiple of (x) if denominated in Dollars, $250,000, or (y) if denominated in an Offshore Currency, 250,000 units of such currency. The proceeds of the Swing
Line Loan will be made available by the Swing Line Lender to the Company in immediately available funds at the office of the Swing Line Lender by 4:00 p.m. on the requested date of borrowing.
The Company may, at any time and from time to time on any Business Day, prepay the Swing Line Loans, in whole or in part, without premium or penalty, by notifying the Swing Line Lender, prior to
3:00 p.m. (A) in the case of a Swing Line Loan denominated in Dollars, on the date of prepayment, and (B) in the case of a Swing Line Loan denominated in an Offshore Currency,
three Business Days prior to the date of prepayment, of the date, amount and currency of prepayment, with a copy to the Administrative Agent. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein. Partial prepayments shall be in a minimum amount of $250,000 and an integral multiple of (1) if denominated in Dollars, $250,000,
and (2) if denominated in an Offshore Currency, 250,000 units of such currency. 

        (c)   If
any Swing Line Loan shall remain outstanding at 11:00 a.m. on the earlier of (i) the 15th day following the date of such Swing Line
Loan and (ii) the last day of a calendar month following the date of such Swing Line Loan (so long as such day is at least two Business Days after such Swingline Loan is made), and if by such
time on such earlier day the Administrative Agent shall have received neither (x) a Notice of Borrowing delivered by the Company pursuant to  Section 2.03 requesting that Revolving Loans be
made pursuant to Section 2.01 on the
immediately succeeding Business Day in an amount at least equal to the principal amount of such Swing Line Loan nor (y) any other notice satisfactory to the Administrative Agent indicating the
Company's intent to repay such Swing Line Loan on or before the immediately succeeding Business Day with funds obtained from other sources, then on such Business Day the Swing Line Lender shall (and
on any Business Day the Swing Line Lender in its sole discretion may), on behalf of the Company (which hereby irrevocably directs the Swing Line Lender to act on its behalf) request the Administrative
Agent to notify each Lender to make a Revolving Loan that is (A) in an amount equal to such Lender's Pro Rata Share of the amount of such Swing Line Loan and (B) denominated in the
Applicable Currency of such Swing Line Loan; provided that, if such Swing Line Loan is denominated in an Additional Offshore Currency for which a
Borrowing of Revolving Loans would be unavailable pursuant to Section 2.06(c), such Swing Line Loan shall be redenominated in Dollars on the
basis of the Spot Rate prior to the making of such Revolving Loans by the Lenders. Unless any of the events described in subsection 9.01(f) or  (g)
shall have occurred with respect to the Company (in which event the procedures of clause (e)
of this Section 2.05 shall apply) each Lender shall make the proceeds of its Revolving Loan available to the Administrative Agent for the account
of the Swing Line Lender at the Administrative Agent's Payment Office in immediately available funds prior to 1:00 p.m. on the Business Day next succeeding the date such notice is given. The
proceeds of such Revolving Loans shall be immediately applied to repay the outstanding Swing Line Loans. Effective on the day such Revolving Loans are made, the portion of the Swing Line Loans so paid
shall no longer be outstanding as Swing Line Loans. The Company shall pay to the Swing Line Lender in the Applicable Currency, promptly following the Swing Line Lender's demand, the amount of its
outstanding Swing Line Loans to the extent amounts received from the Lenders are not sufficient to repay in full such outstanding Swing Line Loans. 

        (d)   Notwithstanding
anything herein to the contrary, the Swing Line Lender (i) shall not be obligated to make any Swing Line Loan if the conditions set forth in  Article V have not been satisfied and
(ii) shall not make any requested Swing Line Loan if, prior to 3:00 p.m. on the date of such
requested Swing Line Loan, it has received a written notice from the Administrative Agent or any Lender directing it not to make further Swing Line Loans because one or more of the conditions
specified in Article V are not then satisfied. 

21

 

        (e)   If
prior to the making of a Revolving Loan required to be made pursuant to subsection 2.05(c) an Event of Default
described in subsection 9.01(f) or 9.01(g) shall have occurred and be continuing with respect to
the Company, each Lender will, on the date such Revolving Loan was to have been made pursuant to the notice described in subsection 2.05(b),
purchase a participating interest in each outstanding Swing Line Loans in an amount equal to its Pro Rata Share of the Effective Amount of such Swing Line Loan;  provided that, if such Swing Line Loan is
denominated in an Additional Offshore Currency that would be unavailable for a Borrowing of Revolving Loans
pursuant to Section 2.06(c), such Swing Line Loan shall be redenominated in Dollars on the basis of the Spot Rate immediately prior to such
purchase. Each Lender will immediately transfer to the Administrative Agent for the benefit of the Swing Line Lender the amount of its participation in immediately available funds in the Applicable
Currency. 

        (f)    Whenever,
at any time after a Lender has purchased a participating interest in a Swing Line Loan, the Swing Line Lender receives any payment on account thereof, the
Swing Line Lender will distribute to the Administrative Agent for delivery to each Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating interest was outstanding and funded) and in the Applicable Currency; provided that
in the event that such payment received by the Swing Line Lender is required to be returned, such Lender will return to the Administrative Agent for delivery to the Swing Line Lender any portion
thereof previously distributed by the Swing Line Lender to it. 

        (g)   Each
Lender's obligation to make the Revolving Loans referred to in subsection 2.05(c) and to purchase
participating interests pursuant to subsection 2.05(e) shall be absolute and unconditional and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or other right which such Lender or the Company may have against the Swing Line Lender, the Company or any other Person
for any reason whatsoever, (ii) the occurrence or continuance of a Default or an Event of Default, (iii) any adverse change in the condition (financial or otherwise) of the Company,
(iv) any breach of this Agreement or any other Loan Document by the Company, any Subsidiary or any other Lender or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing. 

        2.06    Utilization of Commitments in Offshore Currencies.    

        (a)   The
Administrative Agent will determine the Dollar Equivalent amount with respect to any (i) Borrowing comprised of Offshore Currency Loans as of the requested
Borrowing Date, (ii) Swing Line Loan denominated in an Offshore Currency, (iii) outstanding Offshore Currency Loans and outstanding Swing Line Loans denominated in Offshore Currencies as
of the last Business Day of each calendar quarter and (iv) outstanding Offshore Currency Loans and outstanding Swing Line Loans denominated in Offshore Currencies as of any redenomination date
pursuant to this Section 2.06 or Section 4.05 (each such date under  clauses (i) through
(iv), a "Computation Date").
Upon receipt of any Notice of Borrowing, the Administrative Agent will promptly notify each Revolving Lender thereof and of the amount of such Lender's Pro Rata Share of the applicable Borrowing. In
the case of a Borrowing comprised of Offshore Currency Loans, the related Notice of Borrowing will provide the approximate amount of each Lender's Pro Rata Share of such Borrowing, and the
Administrative Agent will, upon the determination of the Dollar Equivalent amount of the Borrowing as specified in such Notice of Borrowing, promptly notify each Lender of the exact amount of such
Lender's Pro Rata Share of such Borrowing. 

        (b)   The
Company shall be entitled to request that Revolving Loans hereunder also be permitted to be made in any other lawful currency constituting a eurocurrency (excluding
Dollars), in addition to the eurocurrencies specified in the definition of "Designated Offshore Currency", that in the opinion of the Required Lenders is at such time freely traded in the offshore
interbank foreign exchange markets and is freely transferable and freely convertible into Dollars (an "Additional Offshore Currency"). The 

22

 

Company
shall deliver to the Administrative Agent any request for designation of an Additional Offshore Currency in accordance with  Section 11.02, to be received by the Administrative Agent not later than
11:00 a.m. at least ten Business Days in advance of the date of
any Borrowing hereunder proposed to be made in such Additional Offshore Currency. Upon receipt of any such request the Administrative Agent will promptly notify the Lenders thereof, and each Lender
will use its best efforts to respond to such request within two Business Days of receipt thereof and any failure to respond in such time period shall be deemed to be a rejection thereof. Each Lender
may grant or accept such request in its sole discretion. The Administrative Agent will promptly notify the Company of the acceptance or rejection of any such request. 

        (c)   In
the case of a proposed Borrowing comprised of Loans denominated in an Additional Offshore Currency, the Lenders shall be under no obligation to make Offshore Currency
Loans in the requested Additional Offshore Currency as part of such Borrowing if the Administrative Agent has received notice from any Lender by 2:00 p.m. four Business Days prior to the day of
such Borrowing that such Lender cannot provide Loans in the requested Additional Offshore Currency, in which event the Administrative Agent will give notice to the Company and the Lenders no later
than 9:30 a.m. on the third Business Day prior to the requested date of such Borrowing that the Borrowing in the requested Additional Offshore Currency is not then available to all Lenders. If
the Administrative Agent shall have so notified the Company that any such Borrowing in a requested Additional Offshore Currency is not then available, the Company may, by notice to the Administrative
Agent not later than 10:30 a.m. three Business Days prior to the requested date of such Borrowing, withdraw the Notice of Borrowing relating to such requested Borrowing. If, prior to such time,
the Company withdraws such Notice of Borrowing, the Borrowing requested therein shall not occur and the Administrative Agent will promptly so notify each Lender. If, prior to such time, the Company
does not withdraw such Notice of Borrowing and does not request the making of a Swing Line Loan in such Additional Offshore Currency, the Administrative Agent will promptly so notify each Lender and
such Notice of Borrowing shall be deemed to be a Notice of Borrowing that requests a Borrowing comprised of Base Rate Loans in an aggregate amount equal to the amount of the originally requested
Borrowing as expressed in Dollars in such Notice of Borrowing, and in such notice by the Administrative Agent to each Lender the Administrative Agent will state such aggregate amount of such Borrowing
in Dollars and such Lender's Pro Rata Share thereof. 

        (d)   In
the case of a proposed continuation of Offshore Currency Loans for an additional Interest Period pursuant to  Section 2.04, the Lenders shall be under no obligation to continue such Offshore
Currency Loans if the Administrative Agent has received notice
from any of the Lenders by 4:00 p.m. three Business Days prior to the day of such continuation that such Lender cannot continue to provide Loans in the Offshore Currency, in which event the
Administrative Agent will give notice to the Company not later than 9:00 a.m. on the second Business Day prior to the requested date of such continuation that the continuation of such Offshore
Currency Loans in the Offshore Currency is not then available, and notice thereof also will be given promptly by the Administrative Agent to the Lenders. If the Administrative Agent shall have so
notified the Company that any such continuation of Offshore Currency Loans is not then available, any Notice of Borrowing with respect thereto shall be deemed withdrawn and such Offshore Currency
Loans shall be redenominated into Base Rate Loans in Dollars with effect from the last day of the Interest Period with respect to any such Offshore Currency Loans. The Administrative Agent will
promptly notify the Company and the Lenders of any such redenomination and in such notice by the Administrative Agent to each Lender the Administrative Agent will state the aggregate Dollar Equivalent
amount of the redenominated Offshore Currency Loans as of the Computation Date with respect thereto and such Lender's Pro Rata Share thereof. 

        (e)   Notwithstanding
anything herein to the contrary, during the existence of a Default or an Event of Default, upon the request of the Required Lenders, all or any part of
any outstanding Offshore Currency Loans shall be redenominated and converted into Base Rate Loans in Dollars with 

23

 

effect
from the last day of the Interest Period with respect to any such Offshore Currency Loans. The Administrative Agent will promptly notify the Company of any such redenomination and conversion
request. 

        2.07    Voluntary Termination or Reduction of Revolving Loan Commitments.    (a) The Company may, upon not less than
five Business Days' prior notice to the Administrative Agent, terminate the Commitments, or permanently reduce the Commitments by an aggregate minimum amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof; unless, after giving effect thereto and to any prepayments of Loans made on the effective date thereof, (a) the
then outstanding Dollar Equivalent Effective Amount of all Revolving Loans, Swing Line Loans and L/C Obligations together would exceed the amount of the Aggregate Commitment then in effect,
(b) the Effective Amount of all L/C Obligations then outstanding would exceed the L/C Commitment or (c) the sum of the Effective Amount of all outstanding Offshore Currency Loans and the
Effective Amount of all outstanding Swing Line Loans would exceed the Offshore Currency Loan Sublimit. Once reduced in accordance with this Section, the Commitments may not be increased. Any reduction
of the Commitments shall be applied to each Lender according to its Pro Rata Share. If and to the extent specified by the Company in the notice to the Administrative Agent, some or all of the
reduction in the Aggregate Commitment shall be applied to reduce the L/C Commitment and/or the Offshore Currency Loan Sublimit. All accrued commitment fees and letter of credit fees to, but not
including, the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. 

        (b)   At
no time shall the Swing Line Commitment exceed the Aggregate Commitment, and any reduction of the Aggregate Commitment which reduces the Aggregate Commitment below
the then-current amount of the Swing Line Commitment shall result in an automatic corresponding reduction of the Swing Line Commitment to the amount of the Aggregate Commitment, as so
reduced, without any action on the part of the Swing Line Lender. At no time shall the Swing Line Commitment exceed the Commitment of the Swing Line Lender, and any reduction of the Aggregate
Commitment which reduces the Commitment of the Swing Line Lender below the then-current amount of the Swing Line Commitment shall result in an automatic corresponding reduction of the
Swing Line Commitment to the amount of the Commitment of the Swing Line Lender, as so reduced, without any action on the part of the Swing Line Lender. 

        2.08    Prepayments.    (a) Subject to Section 4.04, the
Company may, at any time or from time to time, upon not less than four Business Days' irrevocable notice to the Administrative Agent in the case of Offshore Rate Loans, and not later than 12:00 noon
on the prepayment date, in the case of Base Rate Loans, prepay Revolving Loans ratably among the Lenders in whole or in part, in minimum Dollar Equivalent amounts of $500,000 or any Dollar Equivalent
multiple of $100,000 in excess thereof. Such notice of prepayment shall specify the date and amount of such prepayment and whether such prepayment is of Base Rate Loans or Offshore Rate Loans, or any
combination thereof, and the Applicable Currency. Such notice shall not thereafter be revocable by the Company and the Administrative Agent will promptly notify each Lender of its receipt of any such
notice, and of such Lender's Pro Rata Share of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein, together, in the case of Offshore Rate Loans, with accrued interest to each such date on the amount prepaid and any amounts required pursuant
to Section 4.04. 

        (b)   Subject
to Section 4.04, if on any Computation Date the Administrative Agent shall have determined that the Dollar
Equivalent Effective Amount of all Loans then outstanding exceeds the combined Commitments of the Lenders by more than $250,000 due to a change in applicable rates of exchange between Dollars and the
Offshore Currency, then the Administrative Agent may and at the direction of the Required Lenders shall give notice to the Company that a prepayment is required under this Section, and the Company
agrees thereupon to promptly (but in no event later than three 

24

 

Business
Days following receipt of such notice) make prepayments of Loans such that, after giving effect to all such prepayments, the Effective Amount of all Loans plus the Effective Amount of L/C
Obligations does not exceed the combined Commitments. 

        (c)   Subject
to Section 4.04, if on any date the Effective Amount of all Revolving Loans and Swing Line Loans then
outstanding plus the Effective Amount of all L/C Obligations exceeds the Aggregate Commitment, the Company shall immediately, and without notice or demand, prepay the outstanding principal amount of
the Revolving Loans and L/C Advances by an amount equal to the applicable excess. 

        2.09    Repayment.    The Company shall repay to the Lenders on the Termination Date the aggregate principal amount of
Loans outstanding on such date. 

        2.10    Interest.    (a) Each Revolving Loan shall bear interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to (i) the Offshore Rate or the Base Rate, as the case may be (and subject to the Company's right to convert to other Types of Loans under  Section 2.04), plus (ii) in the case of Offshore Rate Loans, (x) the Applicable
Margin and (y) if such Loans are Offshore Currency Loans, the Associated Costs Rate, if applicable. 

        (b)   Interest
on each Loan shall be paid in arrears on each Interest Payment Date. During the existence of any Event of Default, interest on all Loans shall be paid on demand
of the Administrative Agent (or the Administrative Agent at the request or with the consent of the Required Lenders). 

        (c)   Notwithstanding
subsection 2.10(a), while any Event of Default under  subsection 9.01(a) exists, after acceleration or, upon request of the Required Lenders
during the existence of any other Event of Default, the
Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the amount of all outstanding Obligations, at a rate per annum (the
"Default Rate") which is determined by adding 2% per annum to the applicable interest rate otherwise then in effect for such Obligations;  provided that on
and after the expiration of any Interest Period applicable to any Offshore Rate Loan outstanding on the date of occurrence of such
Event of Default or acceleration, the principal amount of such Loan shall, during the continuation of such Event of Default or after acceleration, bear interest at a rate per annum equal to the Base
Rate plus the Applicable Margin plus 2%. The Administrative Agent will use reasonable efforts to give the Company notice of the imposition of the Default Rate;  provided that the failure of the
Administrative Agent to give such notice shall not affect the Company's obligations to pay the Default Rate.
 

        (d)   Anything
herein to the contrary notwithstanding, the obligations of the Company to any Lender hereunder shall be subject to the limitation that payments of interest
shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by such Lender would be contrary to
the provisions of any law applicable to such Lender limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Lender, and in such event the Company shall
pay such Lender interest at the highest rate permitted by applicable law. 

        2.11    Fees.    In addition to certain fees described in Section 3.08: 

        (a)   Agent's and JPMSI's Fees.    The Company shall pay such fees to the Administrative Agent and JPMSI as are
required by the letter agreement between the Company, the Administrative Agent and JPMSI dated June 6, 2007 (the "Agent Fee Letter"). 

        (b)   Facility Fees.    The Company shall pay to the Administrative Agent for the account of each Lender a facility
fee on the average daily amount of such Lender's Commitment (regardless of usage), computed on a quarterly basis in arrears on the last Business Day of each calendar quarter, equal to the Applicable
Facility Fee Percentage. For purposes of calculating utilization under this subsection, the Commitments shall be deemed used to the extent of the Effective Amount of Revolving Loans then 

25

 

outstanding  plus the Effective Amount of L/C Obligations then outstanding, and shall not be deemed used by a Lender's Pro Rata Share of Swing Line
Loans. Such facility fee shall accrue from the Effective Date to the Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, commencing on
September 30, 2007, through the Termination Date, with the final payment to be made on the Termination Date; provided that, in connection with
any reduction or termination of Commitments under Section 2.07 or an increase of Commitments under  Section 2.17, the accrued facility fee
calculated for the period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date. The facility fees provided in this
subsection shall accrue at all times after the above-mentioned commencement date, including at any time during which one or more conditions in  Article V are not met. 

        2.12    Computation of Fees and Interest.    (a) All computations of interest for Base Rate Loans when the Base Rate
is determined by the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365/366-day year);  provided that computations of interest for
Offshore Currency Loans will be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed if that is the market standard for the applicable Offshore Currency. Interest and fees shall accrue during each period during which interest or such fees are computed from the
first day thereof to the last day thereof. 

        (b)   For
purposes of determining utilization of each Lender's Commitment in order to calculate the facility fees due under  subsection 2.11(b) and whether or not utilization-based additions to the Base Rate
and the Applicable Margin are applicable, the amount of any
outstanding Revolving Loan which is an Offshore Currency Loan on any date shall be determined based upon the Dollar Equivalent amount as of the most recent Computation Date with respect to such
Offshore Currency Loan. 

        (c)   Each
determination of an interest rate or a Dollar Equivalent amount by the Administrative Agent shall be conclusive and binding on the Company and the Lenders in the
absence of manifest error. The Administrative Agent will, at the request of the Company or any Lender, deliver to the Company or such Lender, as the case may be, a statement showing the quotations
used by the Administrative Agent in determining any interest rate or Dollar Equivalent amount. 

        2.13    Payments by the Company.    

        (a)   All
payments to be made by the Company shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments
by the Company shall be made to the Administrative Agent for the account of the Lenders at the Administrative Agent's Payment Office, and, with respect to principal of, interest on, and any other
amounts relating to, any Offshore Currency Loan, shall be made in the Offshore Currency in which such Loan is denominated or payable, and, with respect to all other amounts payable hereunder, shall be
made in Dollars. Such payments shall be made in Same Day Funds, and (i) in the case of Offshore Currency payments, no later than such time on the dates specified herein as may be determined by
the Administrative Agent to be necessary for such payment to be credited on such date in accordance with normal banking procedures in the place of payment, and (ii) in the case of any Dollar
payments, no later than 11:00 a.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as expressly
provided herein) of such principal, interest, fees or other amounts, in like funds as received. Any payment which is received by the Administrative Agent later than 11:00 a.m. or later than the
time specified by the Administrative Agent as provided in clause (i) above (in the case of Offshore Currency payments), shall be deemed to have
been received on the following Business Day and any applicable interest or fee shall continue to accrue. 

26

 

 

        (b)   Subject to the provisions set forth in the definition of "Interest Period" herein, whenever any payment is due on a day other than a Business Day, such payment shall be
made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. 

        (c)   Unless
the Administrative Agent receives notice from the Company prior to the date on which any payment is due to the Lenders that the Company will not make such payment
in full as and when required, the Administrative Agent may assume that the Company has made such payment in full to the Administrative Agent on such date in Same Day Funds and the Administrative Agent
may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Company
has not made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand such amount distributed to such Lender, together with interest thereon at
the Federal Funds Rate or, in the case of a payment in an Offshore Currency, the Overnight Rate, for each day from the date such amount is distributed to such Lender until the date repaid. 

        2.14    Payments by the Lenders to the Administrative Agent.    (a) Unless the Administrative Agent receives notice
from a Lender on or prior to the Effective Date or, with respect to any Borrowing after the Effective Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to the Administrative Agent for the account of the Company the amount of that Lender's Pro Rata Share of the Borrowing, the Administrative Agent may
assume that each Lender has made such amount available to the Administrative Agent in Same Day Funds on the Borrowing Date and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Administrative Agent in
Same Day Funds and the Administrative Agent in such circumstance has made available to the Company such amount, that Lender shall on the Business Day following such Borrowing Date make such amount
available to the Administrative Agent, together with interest at the Federal Funds Rate, or, in the case of a payment in an Offshore Currency, the Overnight Rate, for each day during such period,
together with any overdraft or similar costs incurred by the Administrative Agent as the result of the failure of such Lender to make such funds available to the Administrative Agent. A notice of the
Administrative Agent submitted to any Lender with respect to amounts owing under this  subsection (a) shall be conclusive absent manifest error. If such amount is so made available, such payment to
the Administrative Agent shall
constitute such Lender's Revolving Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Administrative Agent on the Business Day following the
Borrowing Date, the Administrative Agent will notify the Company of such failure to fund and, upon demand by the Administrative Agent, the Company shall pay such amount to the Administrative Agent for
the Administrative Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the
Loans comprising such Borrowing. 

        (b)   The
failure of any Lender to make any Loan on any Borrowing Date shall not relieve any other Lender of any obligation hereunder to make a Loan on such Borrowing Date,
but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on any Borrowing Date. 

        2.15    Sharing of Payments, Etc.    If, other than as expressly provided elsewhere herein, any Lender shall obtain on
account of the Revolving Loans made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder), such Lender shall immediately (a) notify the Administrative Agent of such fact and (b) purchase from the other Lenders such participations in the Revolving
Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment pro rata with each of them; provided that if all or
any portion of such excess payment is thereafter 

27

 

recovered
from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an
amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Company agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to  Section 11.10) with respect to such
participation as fully as if such Lender were the direct creditor of the Company in the amount of such
participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case
notify the Lenders following any such purchases or repayments. 

        2.16    Subsidiary Guaranty.    All obligations of the Company under this Agreement and all other Loan Documents shall
be unconditionally guaranteed by the Guarantors pursuant to the Subsidiary Guaranty. 

        2.17    Increase in Commitments; Additional Lenders.    (a) The Company may, upon at least 10 Business Days' notice to
the Administrative Agent (of which notice the Administrative Agent shall promptly provide a copy to the Lenders); provided that the Company has not
previously terminated all or any portion of the Commitments pursuant to Section 2.07 hereof; and  provided, further, that before and after
giving effect to the Commitment Increase (as defined below) no Event of Default has occurred and is continuing or would result therefrom, propose to increase the Commitments (the aggregate amount of
any such increase, the "Commitment Increase"), to be allocated among the Lenders in a manner mutually acceptable to the Company and the Administrative
Agent. Each requested Commitment Increase shall be in an aggregate minimum amount of $25,000,000 or any multiple of $1,000,000 in excess thereof;  provided that (i) the Company shall not be
permitted to make more than one request for a Commitment Increase during any fiscal year of the
Company and (ii) the aggregate amount of all such increases shall not exceed $150,000,000. 

        (b)   The
Company, with the consent of the Administrative Agent (which shall not be unreasonably withheld or delayed prior to the occurrence and continuance of an Event of
Default or a Default), but without the consent of any other Lenders, may designate one or more other banks or other financial institutions (which may be, but need not be, one or more of the existing
Lenders; and for greater certainty, no existing Lender shall have any obligation to increase its Commitment) which at the time agree in the case of any such bank or financial institution that is an
existing Lender to increase its applicable Commitment and, in the case of any other such bank or financial institution (each an "Additional Lender"), to
become a party to this Agreement. The sum of the increases in the Commitments of the existing Lenders pursuant to this subsection (b) plus the
Commitments of the Additional Lenders shall not in the aggregate exceed the amount of the Commitment Increase. 

        (c)   An
increase in the Commitments pursuant to this Section 2.17 shall become effective upon the receipt by the
Administrative Agent of an agreement in form and substance satisfactory to the Administrative Agent signed by the Company, by each Additional Lender and by each other Lender whose Commitment is to be
increased, setting forth the new Commitments of such Lenders and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and
provisions hereof, together with such evidence of appropriate corporate authorization on the part of the Company with respect to the Commitment Increase as the Administrative Agent may reasonably
request, if any. 

        (d)   Upon
the effectiveness of a Commitment Increase pursuant to this Section 2.17, the Commitment amounts set forth on  Schedule 2.01 shall be deemed
amended, reflecting the increases of the Commitments of existing Lenders and the addition of the new Commitments of
the Additional 

28

 

Lenders,
if any. Concurrently with the effectiveness of such increase and any additional extension of credit in connection therewith, each Lender shall fund its Pro Rata Share of the outstanding
Revolving Loans, Swing Loans and overdue L/C Obligations relating to L/C Advances, if any, to the Administrative Agent, so that after giving effect thereto each Lender, including the Additional
Lenders, if any, holds its Pro Rata Share of the outstanding Revolving Loans, Swing Loans and L/C Obligations relating to each Loan to which it is a party, and the Company shall pay to each Lender all
amounts due under Article IV hereof as a result of any prepayment of any outstanding Offshore Rate Loans resulting from any Lender's funding of
Loans previously funded by other Lenders. 

 
 

  ARTICLE III    
    
    THE LETTERS OF CREDIT    
    

        3.01    The Letter of Credit Subfacility.    (a) On the terms and conditions set forth herein (i) each Issuer
agrees, (A) from time to time on any Business Day, during the period from the Effective Date to the day which is five days prior to the Termination Date, to issue Letters of Credit for the
account of the Company and to amend or renew Letters of Credit previously issued by it, in accordance with subsections 3.02(c) and  3.02(d), and
(B) to honor drafts under the Letters of Credit; and (ii) the Lenders severally agree to participate in Letters of Credit
Issued for the account of the Company; provided that (x) no Issuer shall be obligated to Issue, and no Lender shall be obligated to participate
in, any Letter of Credit if as of the date of Issuance of such Letter of Credit (the "Issuance Date") (1) the Effective Amount of all L/C
Obligations plus the Effective Amount of all Revolving Loans and of all Swing Line Loans exceeds the Aggregate Commitment, (2) the participation of any Lender in the Effective Amount of all L/C
Obligations plus the Effective Amount of the Revolving Loans of such Lender and such Lender's Pro Rata Share of any outstanding Swing Line Loans exceeds such Lender's Commitment or (3) the
Effective Amount of L/C Obligations exceeds the L/C Commitment and (y) no Existing Letter of Credit may be renewed past the expiry date thereof in effect on the Effective Date. Within the
foregoing limits, and subject to the other terms and conditions hereof, the Company's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, the Company may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed. 

        (b)   No
Issuer is under any obligation to, and no Issuer shall, Issue any Letter of Credit if: 

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

        (ii)   such
Issuer has received written notice from any Revolving Lender, the Administrative Agent or the Company, on or prior to the Business Day prior to the requested date
of Issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article V is not then satisfied; 

        (iii)  the
expiry date of any requested Letter of Credit is (A) subject to subsection 3.02(d), more than one
year after the date of Issuance, unless the Required Lenders have approved such expiry date in writing, or (B) after the date which is five days prior to the Termination Date, unless all of the
Lenders have approved such expiry date in writing; 

29

 

        (iv)  any
requested Letter of Credit does not provide for drafts, or is not otherwise in form and substance acceptable to such Issuer, or the Issuance of a Letter of Credit
shall violate any applicable policies of such Issuer; or 

        (v)   such
Letter of Credit is in a face amount less than $25,000, unless such amount is approved by the Administrative Agent and such Issuer, or is to be denominated in a
currency other than Dollars. 

        3.02    Issuance, Amendment and Renewal of Letters of Credit.    (a) Each Letter of Credit shall be issued upon the
irrevocable written request of the Company received by the applicable Issuer (with a copy sent by the Company to the Administrative Agent) at least three days (or such shorter time as such Issuer may
agree in a particular instance in its sole discretion) prior to the proposed date of issuance. Each such request for issuance of a Letter of Credit shall be by facsimile, confirmed immediately in an
original writing, in the form of an L/C Application (or such other form as shall be acceptable to the applicable Issuer), and shall specify in form and detail satisfactory to such Issuer:
(i) the proposed date of issuance of the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry date of the Letter of
Credit; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vii) such other matters as such Issuer may require. 

        (b)   At
least two Business Days prior to the Issuance of any Letter of Credit (or such shorter time as the Administrative Agent may agree in a particular instance in its sole
discretion), the applicable Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of the L/C Application or L/C Amendment
Application from the Company and, if not, such Issuer will provide the Administrative Agent with a copy thereof. Unless the applicable Issuer has received notice on or before the Business Day
immediately preceding the date such Issuer is to issue a requested Letter of Credit from the Administrative Agent (A) directing such Issuer not to issue such Letter of Credit because such
issuance is not then permitted under subsection 3.01(a) as a result of the limitations set forth in  clauses (1) through (3) thereof or  subsection 3.01(b)(ii); or (B) that one or more conditions specified in Article V
are not then satisfied; then, subject to the terms and conditions hereof, such Issuer shall, on the requested date, Issue a Letter of Credit for the account of the Company in accordance with such
Issuer's usual and customary business practices. 

        (c)   From
time to time while a Letter of Credit is outstanding and prior to the Termination Date, the applicable Issuer will, upon the written request of the Company received
by such Issuer (with a copy sent by the Company to the Administrative Agent) at least three days (or such shorter time as such Issuer may agree in a particular instance in its sole discretion) prior
to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by facsimile, confirmed immediately in an original
writing, made in the form of an L/C Amendment Application and shall specify in form and detail satisfactory to the applicable Issuer: (i) the Letter of Credit to be amended; (ii) the
proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other matters as such Issuer may require. No
Issuer shall be under any obligation to amend any Letter of Credit if: (A) such Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms
of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed amendment to the Letter of Credit. The Administrative Agent will promptly notify the Lenders
of the receipt by it of any L/C Application or L/C Amendment Application. 

        (d)   The
Issuers and the Lenders agree that, while a Letter of Credit is outstanding and prior to the Termination Date, at the option of the Company and upon the written
request of the Company received by the applicable Issuer (with a copy sent by the Company to the Administrative Agent) at 

30

 

least
five days (or such shorter time as such Issuer may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, such Issuer shall be entitled to
authorize the automatic renewal of any Letter of Credit issued by it; provided that any such automatic renewal Letter of Credit must permit the Issuer
to prevent any such extension at least once in each 12-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day in each such 12-month period to be agreed upon at the time such Letter of Credit is issued. Each such request for renewal of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail satisfactory to the applicable Issuer: (i) the Letter of Credit
to be renewed; (ii) the proposed date of notification of renewal of such Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of such Letter of Credit; and
(iv) such other matters as such Issuer may require. No Issuer shall be under any obligation so to renew any Letter of Credit if: (A) such Issuer would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form under the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the
Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from the applicable Issuer that such Letter of
Credit shall not be renewed, and if at the time of renewal such Issuer would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this  subsection 3.02(d) upon
the request of the Company but such Issuer shall not have received any L/C Amendment Application from the Company with
respect to such renewal or other written direction by the Company with respect thereto, such Issuer shall nonetheless be permitted to allow such Letter of Credit to renew, and the Company and the
Lenders hereby authorize such renewal, and, accordingly, such Issuer shall be deemed to have received an L/C Amendment Application from the Company requesting such renewal. 

        (e)   Each
Issuer may, at its election (or as required by the Administrative Agent (or the Administrative Agent at the direction of the Required Lenders)), deliver any notices
of termination or other communications to any applicable Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order
to cause the expiry date of such Letter of Credit to be a date not later than the date which is five days prior to the Termination Date. 

        (f)    This
Agreement shall control in the event of any conflict with any L/C-Related Document (other than any Letter of Credit). 

        (g)   Each
Issuer will also deliver to the Administrative Agent, concurrently or promptly following its delivery of a Letter of Credit, or amendment to or renewal of a Letter
of Credit, to an advising bank or a beneficiary, a true and complete copy of each such Letter of Credit or amendment to or renewal of a Letter of Credit. 

        3.03    Risk Participations, Drawings and Reimbursements.    (a) Immediately upon the Issuance of each Letter of
Credit (or, in the case of an Existing Letter of Credit, on the Effective Date), each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable
Issuer a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) the Pro Rata Share of such Lender, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of Section 2.01, each Issuance of a
Letter of Credit shall be deemed to utilize the Commitment of each Lender by an amount equal to the amount of such participation. 

        (b)   In
the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable Issuer will promptly notify the Company. The
Company shall reimburse the applicable Issuer prior to 11:00 a.m. on each date that any amount is paid by such Issuer under any Letter of Credit (each such date, an
"Honor Date"), in an amount equal to the amount so 

31

 

paid
by such Issuer. In the event the Company fails to reimburse the applicable Issuer the full amount of any drawing under any Letter of Credit by 11:00 a.m. on the Honor Date, such Issuer
will promptly notify the Administrative Agent, and the Administrative Agent will promptly notify each Lender thereof, and the Company shall be deemed to have requested that Base Rate Loans in an
amount equal to such unreimbursed amount be made by the Revolving Lenders to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the
Aggregate Commitment and subject to the conditions set forth in Section 5.02. Any notice given by an Issuer or the Administrative Agent pursuant
to this subsection 3.03(b) may be oral if immediately confirmed in writing (including by facsimile);  provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such notice. 

        (c)   Each
Revolving Lender shall upon any notice pursuant to subsection 3.03(b) make available to the Administrative
Agent for the account of the relevant Issuer an amount in Dollars and in immediately available funds equal to its Pro Rata Share of the amount of the drawing, whereupon the participating Lenders shall
(subject to subsection 3.03(d)) each be deemed to have made a Revolving Loan consisting of a Base Rate Loan to the Company in that amount. If any
Lender so notified fails to make available to the Administrative Agent for the account of the applicable Issuer the amount of such Lender's Pro Rata Share of the amount of the drawing by no later than
12:00 noon on the Honor Date, then interest shall accrue on such Lender's obligation to make such payment, from the Honor Date to the date such Lender makes such payment, at a rate per annum equal to
the Federal Funds Rate in effect from time to time during such period. The Administrative Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Administrative Agent
to give any such notice on the Honor Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligations under this  Section 3.03
once notice has been provided. 

        (d)   With
respect to any unreimbursed drawing that is not converted into Revolving Loans consisting of Base Rate Loans to the Company in whole or in part, because of the
Company's failure to satisfy the conditions set forth in Section 5.02 or for any other reason, the Company shall be deemed to have incurred from
the applicable Issuer an L/C Borrowing in the Dollar Equivalent of the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest
at a rate per annum equal to the Base Rate plus 2.0% per annum, and each Lender's payment to such Issuer pursuant to subsection 3.03(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this  Section 3.03.

        (e)   Each
Lender's obligation in accordance with this Agreement to make the Revolving Loans or L/C Advances, as contemplated by this  Section 3.03, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the applicable
Issuer and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against such Issuer, the
Company or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default or a Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing; provided that each Lender's obligation to make Revolving Loans under this  Section 3.03 is subject to the conditions set forth in Section 5.02. 

        3.04    Repayment of Participations.    (a) Upon (and only upon) receipt by the Administrative Agent for the account
of an Issuer of immediately available funds from the Company (i) in reimbursement of any payment made by such Issuer under the Letter of Credit with respect to which any Lender has paid the
Administrative Agent for the account of such Issuer for such Lender's participation in the Letter of Credit pursuant to Section 3.03 or
(ii) in payment of interest thereon, the Administrative Agent will promptly pay to each Lender, in the same funds as those received by the Administrative Agent for the account of such Issuer,
the amount of such Lender's Pro Rata Share of such funds, and 

32

 

such
Issuer shall receive the amount of the Pro Rata Share of such funds of any Lender that did not so pay the Administrative Agent for the account of such Issuer. 

        (b)   If
the Administrative Agent or an Issuer is required at any time to return to the Company, or to a trustee, receiver, liquidator, custodian, or any official in any
Insolvency Proceeding, any portion of the payments made by the Company to the Administrative Agent for the account of such Issuer pursuant to  subsection 3.04(a) in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of the
Administrative Agent, forthwith return to the Administrative Agent or such Issuer the amount of its Pro Rata Share of any amounts so returned by the Administrative Agent or such Issuer plus interest
thereon from the date such demand is made to the date such amounts are returned by such Lender to the Administrative Agent or such Issuer, at a rate per annum equal to the Federal Funds Rate in effect
from time to time. 

        3.05    Role of the Issuers.    (a) Each Lender and the Company agree that, in paying any drawing under a Letter of
Credit, the applicable Issuer shall not have any responsibility to obtain any document (other than any documents expressly required by the Letter of Credit) or to ascertain or inquire as to the
validity or accuracy of any such document or the authority of the Person executing or delivering any such document. 

        (b)   None
of the Administrative Agent, any Related Party thereof, or any of the respective correspondents, participants or assignees of an Issuer shall be liable to any
Lender for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document. 

        (c)   The
Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit;  provided that this assumption is not intended to, and shall
not, preclude the Company's pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. Neither the Administrative Agent nor any Related Party thereof, nor any of the respective correspondents, participants or assignees of an
Issuer, shall be liable or responsible for any of the matters described in clauses (i) through  (vii) of Section 3.06; provided that, anything in
such clauses to the contrary notwithstanding, that the Company may have a claim against an Issuer, and such Issuer may be liable to the Company, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by such Issuer's willful misconduct or gross negligence or such Issuer's willful failure
to pay under any Letter of Credit after the presentation to it by the beneficiary of a document strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) an Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) no Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 

        3.06    Obligations Absolute.    The obligations of the Company under this Agreement and any L/C-Related
Document to reimburse the applicable Issuer for a drawing under a Letter
of Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into Revolving Loans, shall be unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all circumstances, including the following: 

        (i)    any
lack of validity or enforceability of this Agreement or any L/C-Related Document; 

33

 

        (ii)   any
change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of any Letter of Credit or any
other amendment or waiver of or any consent to departure from any L/C-Related Document; 

        (iii)  the
existence of any claim, recoupment, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), such Issuer or any other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated transaction; 

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

        (v)   any
error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuer; 

        (vi)  any
payment by such Issuer under any Letter of Credit against presentation of a document that does not strictly comply with the terms of any Letter of Credit; or any
payment made by such Issuer under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any Insolvency Proceeding; 

        (vii) any
exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for
all or any of the obligations of the Company in respect of any Letter of Credit; or 

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

        3.07    Cash Collateral Pledge.    Upon (i) the request of the Administrative Agent or the Required Lenders,
(A) if any Event of Default has occurred and is continuing, or (B) if, as of the Termination Date, any Letters of Credit may for any reason remain outstanding and partially or wholly
undrawn, or (ii) the termination of the Aggregate Commitment, then the Company shall immediately Cash Collateralize the L/C Obligations in an amount equal to such L/C Obligations. 

        3.08    Letter of Credit Fees.    (a) The Company shall pay to the Administrative Agent for the account of each of the
Lenders a letter of credit fee with respect to the Letters of Credit equal to the Applicable Margin times the average daily maximum amount available to be drawn of the outstanding Letters of Credit,
computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon Letters of Credit outstanding for that quarter as calculated by the Administrative Agent. Such
letter of credit fees shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such
quarterly date to occur after the Effective Date, through the Termination Date (or such later date upon which the outstanding Letters of Credit shall expire), with the final payment to be made on the
Termination Date (or such later expiration date). 

        (b)   The
Company shall pay to the applicable Issuer, for its sole account, a letter of credit fronting fee for each Letter of Credit Issued by such Issuer equal to 0.125% per
annum of the face amount (or increased or decreased face amount, as the case may be) of such Letter of Credit. Such Letter of Credit fronting fee shall be due and payable quarterly in arrears on the
last Business Day of each 

34

 

calendar
quarter during which such Letter of Credit is outstanding, commencing on the first such quarterly date to occur after such Letter of Credit is Issued, through the Termination Date (or such
later date upon which such Letter of Credit shall expire), with the final payment to be made on the Termination Date (or such later expiration date). 

        (c)   The
Company shall pay to the applicable Issuer, for its sole account, from time to time on demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of such Issuer relating to letters of credit as from time to time in effect. 

        3.09    UCP; ISP.    The Uniform Customs and Practice for Documentary Credits as published by the International
Chamber of Commerce most recently at the time of issuance of any commercial Letter of Credit shall (unless otherwise expressly provided in such Letter of Credit) apply to such Letter of Credit, and
the International Standby Practices as published by the International Chamber of Commerce most recently at the time of issuance of any standby Letter of Credit shall (unless otherwise expressly
provided in such Letter of Credit) apply to such Letter of Credit. 

 
 

  ARTICLE IV    
    
    TAXES, YIELD PROTECTION AND ILLEGALITY    
    

        4.01    Taxes.    (a) Any and all payments by the Company to each Lender or the Administrative Agent under this
Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Company shall pay all Further Taxes and Other Taxes. 

        (b)   If
the Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to any Lender or
the Administrative Agent, then: 

        (i)    the
sum payable shall be increased as necessary so that, after making all required deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section), such Lender or the Administrative Agent, as the case may be, receives and retains an amount equal to the sum it would have received and retained had no
such deductions or withholdings been made; 

        (ii)   the
Company shall make such deductions and withholdings; 

        (iii)  the
Company shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and 

        (iv)  the
Company shall also pay to each Lender (or the Administrative Agent for the account of such Lender) or the Administrative Agent, at the time interest is paid,
Further Taxes in the amount that the
respective Lender specifies as necessary to preserve the after-tax yield such Lender would have received if such Taxes, Other Taxes or Further Taxes had not been imposed. 

        (c)   The
Company agrees to indemnify and hold harmless each Lender and the Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes and
(iii) Further Taxes in the amount that Lender or the Administrative Agent specifies as necessary to preserve the after-tax yield such Lender or Administrative Agent would have
received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date the applicable Lender
or the Administrative Agent makes written demand therefor. 

        (d)   Within
30 days after the date of any payment by the Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Lender or the Administrative
Agent the original or a 

35

 

certified
copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to such Lender or the Administrative Agent. 

        (e)   If
the Company is required to pay any amount to any Lender pursuant to subsection (b) or  (c) of this Section, then such Lender shall use reasonable
efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its
Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue, if such change in the sole judgment of such Lender is not otherwise disadvantageous to such
Lender. 

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

        4.02    Illegality.    (a) If any Lender determines that the introduction of any Requirement of Law, or any change in
any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make Offshore Rate Loans, then, on notice thereof by such Lender to the Company through the Administrative Agent, any obligation of such
Lender to make Offshore Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist. 

        (b)   If
a Lender determines that it is unlawful to maintain any Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact and demand from such Lender
(with a copy to the Administrative Agent), prepay in full such Offshore Rate Loans of such Lender then outstanding, together with interest accrued thereon and amounts required under  Section 4.04,
either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such Offshore Rate Loans to
such day, or immediately, if such Lender may not lawfully continue to maintain such Offshore Rate Loan. If the Company is required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Lender, in the amount of such repayment, a Base Rate Loan. 

        (c)   If
the obligation of any Lender to make or maintain Offshore Rate Loans has been so terminated or suspended, the Company may elect, by giving notice to such Lender
through the Administrative Agent that all Loans which would otherwise be made by such Lender as Offshore Rate Loans shall be instead Base Rate Loans. 

        (d)   Before
giving any notice to the Administrative Agent under this Section, the affected Lender shall designate a different Lending Office with respect to its Offshore Rate
Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of such Lender, be illegal or otherwise disadvantageous to such Lender. 

        4.03    Increased Costs and Reduction of Return.    (a) If any Lender determines that, due to either (i) the
introduction of or any change in or in the interpretation of any law or regulation after the Effective Date or (ii) the compliance by such Lender with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Offshore
Rate Loans or participating in Letters of Credit, or, in the case of an Issuer, any increase in the cost to such Issuer of agreeing to issue, issuing or maintaining any Letter of Credit or of agreeing
to make or making, funding or maintaining any unpaid drawing under any Letter of Credit, then the 

36

 

Company
shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Administrative Agent), pay to the Administrative Agent for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such increased costs. 

        (b)   If
any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation after the Effective Date, (ii) any change in any Capital
Adequacy Regulation after the Effective Date, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation after the Effective Date by any central bank or other
Governmental Authority charged with the interpretation or administration thereof or (iv) compliance by such Lender (or its Lending Office) or any corporation controlling such Lender with any
Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and (taking into
consideration such Lender's or such corporation's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Lender to the Company through the Administrative Agent, the Company shall pay to such
Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such increase. 

        4.04    Funding Losses.    The Company shall reimburse each Lender and hold each Lender harmless from any loss or
expense which such Lender may sustain or incur as a consequence of: 

        (a)   the
failure of the Company to make on a timely basis any payment of principal of any Offshore Rate Loan; 

        (b)   the
failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a similar notice; 

        (c)   the
failure of the Company to make any prepayment in accordance with any notice delivered under Section 2.08; 

        (d)   any
payment (including after acceleration thereof) of an Offshore Rate Loan on a day that is not the last day of the relevant Interest Period (including in connection
with the syndication of the Commitments); and 

        (e)   the
automatic conversion under Section 2.04 of any Offshore Rate Loan to a Base Rate Loan on a day that is not the
last day of the relevant Interest Period; 

including
any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or from fees payable to terminate the deposits from which
such funds were obtained. For purposes of calculating amounts payable by the Company to the Lenders under this Section and under  subsection 4.03(a), each Offshore Rate Loan made by a Lender (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBO Rate used in determining the Offshore Rate for such Offshore Rate Loan by a
matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded. 

        4.05    Inability to Determine Rates.    If the Administrative Agent determines that for any reason adequate and
reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant to  subsection 2.11(a)
 for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the
cost to the Lenders of funding such Loan, the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain Offshore Rate
Loans hereunder shall be suspended until the Administrative Agent revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Borrowing then submitted by it. If
the Company does not revoke such notice, the 

37

 

Lenders
shall make, convert or continue the Loans, as requested by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made as, converted
into or continued as, as the case may be, Base Rate Loans instead of Offshore Rate Loans. 

        4.06    Reserves on Offshore Rate Loans.    The Company shall pay to each Lender, as long as such Lender shall be
required under regulations of the FRB to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), other than reserve requirements included in the calculation of the Offshore Rate, additional costs on the unpaid principal
amount of each Offshore Rate Loan to the Company equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall
be conclusive), payable on each date on which interest is payable on such Loan, provided the Company shall have received at least 15 days' prior written notice (with a copy to the
Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be
payable 15 days from receipt of such notice. 

        4.07    Certificates of Lenders.    Any Lender claiming reimbursement or compensation under this  Article IV shall deliver to
the Company (with a copy to the Administrative Agent) a certificate setting forth in reasonable detail the amount
payable to such Lender hereunder, and such certificate shall be conclusive and binding on the Company in the absence of manifest error. 

        4.08    Substitution of Lenders.    Upon the receipt by the Company from any Lender (an
"Affected Lender") of a claim for compensation under Section 4.03 or  Section 4.06, of notice that
it cannot make Offshore Rate Loans under Section 4.02, or of
a claim for Taxes or Further Taxes under Section 4.01, then the Administrative Agent, at the Company's direction, shall: (i) request the
Affected Lender to use good faith efforts to obtain a replacement bank or financial institution satisfactory to the Company to acquire and assume all or a ratable part of all of such Affected Lender's
Loans and Commitment at the face amount thereof (a "Replacement Lender"); (ii) request one more of the other Lenders to acquire and assume all or
part of such Affected Lender's Loans and Commitment; or (iii) designate a
Replacement Lender. Any such designation of a Replacement Lender under clause (i) or (iii) shall
be subject to the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld). Any transfer of Loans and Commitments shall be accompanied by the payment of any
amounts due to the Affected Lender under Sections 4.01, 4.03,  4.04 (calculated as if the assigned Loans
were prepaid on the date of assignment) and 4.06 and shall be
made in accordance with Section 11.08; provided that the processing fee referenced in  Section 11.08(a) shall not be required to be paid. 

        4.09    Survival.    The agreements and obligations of the Company in this  Article IV shall survive the payment of all other
Obligations, and the Company will have no obligation to pay any amount hereunder unless a
demand is made within 180 days after the date upon which the Administrative Agent's or the applicable Lender's right to reimbursement arises. 

 
 

  ARTICLE V    
    
    CONDITIONS PRECEDENT    
    

        5.01    Conditions to Effectiveness.    The effectiveness of this Agreement is subject to the condition that the
Administrative Agent shall have received all of the following, in form and substance 

38

 

satisfactory
to the Administrative Agent and each Lender, and (in the case of any document listed below) in sufficient copies for each Lender: 

        (a)    Credit Agreement.    This Agreement executed by each party thereto; 

        (b)    Resolutions; Incumbency.    

        (i)    Copies
of the resolutions of the board of directors of each Loan Party authorizing the transactions contemplated hereby, certified as of the Effective Date by the
Secretary or an Assistant Secretary of such Loan Party; and 

        (ii)   A
certificate of the Secretary or Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to
execute, deliver and perform, as applicable, this Agreement and all other Loan Documents to be delivered by it hereunder; 

        (c)    Organization Documents; Good Standing.    Each of the following documents: 

        (i)    the
articles or certificate of incorporation and the bylaws of each Loan Party as in effect on the Effective Date, certified as of the Effective Date by the Secretary or
Assistant Secretary of such Loan Party; and 

        (ii)   a
good standing certificate or certificate of status for each Loan Party from the Secretary of State (or similar, applicable Governmental Authority) of its state of
incorporation and each other state where it is qualified to do business and the failure to be so qualified could reasonably be expected to have a material adverse effect on the business or financial
condition of such Loan Party; 

        (d)    Legal Opinion.    An opinion of Bell, Boyd & Lloyd LLP, counsel to the Company and the
Guarantors, addressed to the Administrative Agent and the Lenders. 

        (e)    Payment of Fees.    Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to
the extent then due and payable on the Effective Date, together with Attorney Costs of JPMorgan to the extent invoiced prior to or on the Effective Date, plus such additional amounts of Attorney Costs
as shall constitute JPMorgan's reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and JPMorgan); including any such costs, fees and expenses arising under or referenced in Sections 2.11  and 11.04;  

        (f)    Certificate.    A certificate signed by a Responsible Officer, dated as of the
Effective Date, stating that: 

        (i)    the
representations and warranties contained in Article VI are true and correct on and as of such date, as though
made on and as of such date; 

        (ii)   no
Default or Event of Default exists or would result from the Credit Extension; and 

        (iii)  there
has not occurred since June 30, 2006 any event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect; 

        (g)    Subsidiary Guaranty.    A Subsidiary Guaranty executed by each Guarantor as of the Effective Date; 

        (h)    Repayment of Prior Indebtedness.    All outstanding Indebtedness of the Company or any Subsidiary not specified
on Schedule 8.05 or otherwise permitted by Section 8.05 shall have been paid in full and
all commitments to create such Indebtedness, all guaranties supporting such Indebtedness and all Liens securing such Indebtedness shall have been terminated; and 

        (i)    Other Documents.    Such other approvals, opinions, documents or materials as the Administrative Agent or any
Lender may request. 

39

 

 

        5.02    Conditions to All Credit Extensions.    The obligation of each Lender to make any Revolving Loan to be made
by
it (including its initial Revolving Loan) and the obligation of each Issuer to Issue any Letter of Credit (including the initial Letter of Credit) is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Issuance Date: 

        (a)    Notice, Application.    The Administrative Agent shall have received a Notice of Borrowing or in the case of
any Issuance of any Letter of Credit, the applicable Issuer and the Administrative Agent shall have received an L/C Application or L/C Amendment Application, as required under Section 3.02;  

        (b)    Continuation of Representations and Warranties.    The representations and warranties
in Article VI shall be true and correct on and as of such Borrowing Date or Issuance Date with the same effect as if made on and as of such
Borrowing Date or Issuance Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date); and 

        (c)    No Existing Default.    No Default or Event of Default shall exist or shall result from such Borrowing or
Issuance. 

Each
Notice of Borrowing, L/C Application or L/C Amendment Application submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of
each such notice and as of each Borrowing Date or Issuance Date, as applicable, that the conditions in this Section 5.02 are satisfied. 

 
 

  ARTICLE VI    
    
    REPRESENTATIONS AND WARRANTIES    
    

        The Company represents and warrants to the Administrative Agent and each Lender that: 

        6.01    Existence and Power.    The Company and each of its Subsidiaries: 

        (a)   is
duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 

        (b)   has
the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, to carry on its business and to execute, deliver,
and perform its obligations under the Loan Documents to which it is a party; 

        (c)   is
duly qualified as a foreign corporation and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property
or the conduct of its business requires such qualification or license; and 

        (d)   is
in compliance with all Requirements of Law; except, in each case referred to in clause (c) or  clause (d), to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse Effect. 

        6.02    Authorization; No Contravention.    The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all necessary organizational action, and do not and will not: 

        (a)   contravene
the terms of any of such Person's Organization Documents; 

        (b)   conflict
with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which such Person is
a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its property is subject; or 

        (c)   violate
any Requirement of Law. 

40

 

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

        6.04    Binding Effect.    Each Loan Document to which a Loan Party is a party constitutes the legal, valid and
binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles relating to enforceability. 

        6.05    Litigation.    There are no actions, suits, investigations, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company or its Subsidiaries or any of their respective
properties: 

        (a)   which
purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or 

        (b)   as
to which there exists a substantial likelihood of an adverse determination, which determination could reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. 

        6.06    No Default.    No Default or Event of Default exists or would result from the incurring of any Obligations by
the Company. As of the Effective Date, neither the Company nor any Subsidiary is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Effective Date, create an Event of Default
under subsection 9.01(e).  

        6.07    ERISA Compliance.    

        (a)   Each
Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. 

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

        (c)   (i)
No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability to the PBGC under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in 

41

 

such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA. 

        6.08    Use of Proceeds; Margin Regulations.    The proceeds of the Loans are to be used solely for the purposes set
forth in and permitted by Section 7.12. Neither the Company nor any Subsidiary is generally engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. 

        6.09    Title to Properties.    The Company and each Subsidiary have good record and marketable title in fee simple
to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of the Effective Date, the property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens. 

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

        6.11    Financial Condition.    (a) The audited consolidated financial statements of the Company and its Subsidiaries
dated June 30, 2006, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal year ended on that date: 

        (x)   were
prepared in accordance with GAAP consistently applied throughout the period covered thereby; 

        (y)   fairly
present the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby; and 

        (z)   except
as specifically disclosed in Schedule 6.11, show all material indebtedness and other liabilities, direct or
contingent, of the Company and its Subsidiaries as of the date thereof. 

        (b)   Since
June 30, 2006 there has been no Material Adverse Effect. 

        6.12    Environmental Matters.    Except as specifically disclosed in Schedule 6.12:

        (a)   The
on-going operations of the Company and each of its Subsidiaries comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable law) result in liability in excess of $5,000,000 in the aggregate (exclusive of amounts payable under insurance
policies and indemnity agreements which the Company or such Subsidiary reasonably expects to receive). 

        (b)   The
Company and each of its Subsidiaries have obtained all licenses, permits, authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for their respective ordinary course operations, all such Environmental Permits are in good standing, and the
Company and each of its Subsidiaries are in compliance with all material terms and conditions of such Environmental Permits. 

        (c)   None
of the Company, any of its Subsidiaries or any of their respective present property or operations is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to (i) any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material or (ii) to
the extent that it could 

42

 

reasonably
be expected to have a Material Adverse Effect, any claim, proceeding or written notice from any Person regarding any Environmental Law, Environmental Claim or Hazardous Material. 

        (d)   There
are no Hazardous Materials or other conditions or circumstances existing with respect to any property of the Company or any Subsidiary, or arising from operations
prior to the Effective Date, of the Company or any of its Subsidiaries that would reasonably be expected to give rise to Environmental Claims with a potential liability of the Company and its
Subsidiaries in excess of $5,000,000 in the aggregate for all such conditions, circumstances and properties. In addition, (i) neither the Company nor any Subsidiary has any underground storage
tanks (x) that are not properly registered or permitted under applicable Environmental Laws or (y) that are leaking or disposing of Hazardous Materials off-site, and
(ii) the Company and its Subsidiaries have met all material notification requirements under applicable Environmental Laws. 

        6.13    Labor Relations.    There are no strikes, lockouts or other labor disputes against the Company or any of its
Subsidiaries, or, to the best of the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries, and no significant unfair labor practice complaint is pending against
the Company or any of its Subsidiaries or, to the best knowledge of the Company, threatened against any of them before any Governmental Authority. 

        6.14    Regulated Entities.    None of the Company, any Person controlling the Company, or any Subsidiary, is an
"Investment Company" within the meaning of the Investment Company Act of 1940. Neither the Company nor any Subsidiary is subject to regulation under the Federal Power Act, the Interstate Commerce Act,
any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 

        6.15    No Burdensome Restrictions.    Neither the Company nor any Subsidiary is a party to or bound by any
Contractual Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect. 

        6.16    Copyrights, Patents, Trademarks and Licenses, etc.    The Company and its Subsidiaries own or are licensed or
otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of the Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be employed, by the Company or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation
regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the
knowledge of the Company, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 

        6.17    Subsidiaries.    As of the Effective Date, the Company has no Subsidiaries other than those specifically
disclosed in part (a) of Schedule 6.17 and has no equity investments in any other corporation or entity other than those specifically
disclosed in part (b) of Schedule 6.17.  

        6.18    Insurance.    The properties of the Company and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the Company in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in
similar businesses and are similarly situated. 

        6.19    Swap Obligations.    Neither the Company nor any of its Subsidiaries has incurred any outstanding obligations
under any Swap Contract, other than Permitted Swap Obligations. The Company has undertaken its own independent assessment of its consolidated assets, liabilities and commitments and has considered
appropriate means of mitigating and managing risks associated with 

43

 

such
matters and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to enter into any Swap Contract. 

        6.20    Solvency.    The Company and each of its Subsidiaries are Solvent. 

        6.21    Full Disclosure.    None of the representations or warranties made by the Company or any Subsidiary in the
Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on
behalf of the Company or any Subsidiary in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of the Company or its Subsidiaries to the
Lenders prior to the Effective Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in
light
of the circumstances under which they are made, not misleading as of the time when made or delivered. 

 
 

  ARTICLE VII    
    
    AFFIRMATIVE COVENANTS    
    

        So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, unless the Required Lenders waive compliance in writing: 

        7.01    Financial Statements.    The Company shall deliver to the Administrative Agent, in form and detail
satisfactory to the Administrative Agent and the Required Lenders, with sufficient copies to be provided by the Administrative Agent to each Lender: 

        (a)   as
soon as available, but not later than the earlier of (i) the date of filing thereof with the SEC and (ii) 90 days after the end of each fiscal
year (commencing with the fiscal year ending June 30, 2007), a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income, shareholders' equity and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the
opinion of PriceWaterhouseCoopers LLP or another nationally-recognized independent public accounting firm ("Independent Auditor") which report
shall state that such consolidated financial statements present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years. Such
opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of the Company's or any Subsidiary's records or because of a
"going concern" exception; and 

        (b)   as
soon as available, but not later than the earlier of (i) the date of filing thereof with the SEC and (ii) 45 days after the end of each of the
first three fiscal quarters of each fiscal year (commencing with the fiscal quarter ending September 30, 2007), a copy of the unaudited consolidated and consolidating balance sheet of the
Company and its Subsidiaries as of the end of such fiscal quarter and the related consolidated and consolidating statements of income, shareholders' equity and cash flows for the period commencing on
the first day and ending on the last day of such fiscal quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good faith
year-end audit adjustments), the financial position and the results of operations of the Company and the Subsidiaries. 

        7.02    Certificates; Other Information.    The Company shall furnish to the Administrative Agent, with sufficient
copies to be provided by the Administrative Agent to each Lender: 

        (a)   concurrently
with the delivery of the financial statements referred to in subsections 7.01(a) and  (b), a Compliance Certificate executed by a Responsible Officer;

44

 

        (b)   concurrently
with the delivery of the financial statements referred to in subsection 7.01(a), (i) a
consolidating balance sheet and income statement for such year (which need not be audited) and setting forth in comparative form the figures for the previous fiscal year, and (ii) a budget for
the next succeeding fiscal year; 

        (c)   promptly,
copies of all financial statements and reports that the Company sends to its shareholders, and copies of all financial statements and regular, periodic or
special reports (including Forms 10K, 10Q and 8K) that the Company or any Subsidiary may make to, or file with, the SEC; and 

        (d)   promptly,
such additional information regarding the business, financial or corporate or other organizational affairs of the Company or any Subsidiary as the
Administrative Agent (or the Administrative Agent, at the request of any Lender) may from time to time reasonably request. 

        The
Company hereby acknowledges that (a) the Administrative Agent will make available to the Lenders and the Issuers materials and/or information provided by or on behalf of
Company hereunder (collectively, "Company Materials") by posting Company Materials on IntraLinks or another similar electronic system (the
"Platform") and (b) certain of the Lenders may be "public-side" Lenders (i.e.,
Lenders that do not wish to receive material non-public information with respect to Company or its securities) (each, a "Public Lender").
The Company hereby agrees that (w) all Company Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" which, at a minimum, shall mean that
the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Company Materials "PUBLIC," the Company shall be deemed to have authorized the Administrative Agent, the
Issuers and the Lenders to treat such Company Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Company
or its securities for purposes of United States Federal and state securities laws; (y) all Company Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform
designated "Public Investor;" and (z) the Administrative Agent shall be entitled to treat any Company Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of
the Platform not designated "Public Investor. 

        7.03    Notices.    The Company shall promptly notify the Administrative Agent and each Lender: 

        (a)   of
the occurrence of any Default or Event of Default, and of the occurrence or existence of any event or circumstance that foreseeably will become a Default or Event of
Default; 

        (b)   of
any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including, to the extent so applicable, (i) any breach or
non-performance of, or any default under, a Contractual Obligation of the Company or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between
the Company or any Subsidiary and any Governmental Authority; (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary,
including pursuant to any applicable Environmental Laws; or (iv) any other Environmental Claim; 

        (c)   of
the occurrence of any of the following events affecting the Company or any ERISA Affiliate (but in no event more than 10 days after such event), and deliver to
the Administrative Agent and each Lender a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company
or any ERISA Affiliate with respect to such event: 

        (i)    an
ERISA Event; 

        (ii)   a
material increase in the Unfunded Pension Liability of any Pension Plan; 

        (iii)  the
adoption of, or the commencement of contributions to, any Plan subject to Section 412 of the Code by the Company or any ERISA Affiliate; or 

45

 

        (iv)  the
adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension
Liability; 

        (d)   of
any material change in accounting policies or financial reporting practices by the Company or any of its consolidated Subsidiaries; 

        (e)   upon,
but in no event later than 15 days after, any officer of the Company or any Subsidiary becoming aware of (i) any and all enforcement, investigation,
cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Company or any Subsidiary or any of their respective properties pursuant to any applicable
Environmental Laws which could reasonably be expected to have a Material Adverse Effect, (ii) all other material Environmental Claims, and (iii) any environmental or similar condition on
any real property adjoining or in the vicinity of the property of the Company or any Subsidiary that could reasonably be anticipated to cause such property of the Company or such Subsidiary or any
part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws; and 

        (f)    upon
the reasonable request from time to time of the Administrative Agent, the Swap Termination Values, together with a description of the method by which such values
were determined, relating to any then-outstanding Swap Contract to which the Company or any of its Subsidiaries is party. 

        Each
notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action
the Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under subsection 7.03(a) shall
describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been (or foreseeably will be) breached or violated. 

        7.04    Preservation of Existence, Etc.    The Company shall, and shall cause each Subsidiary to: 

        (a)   preserve
and maintain in full force and effect its existence and good standing under the laws of its state or jurisdiction of formation; 

        (b)   preserve
and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal
conduct of its business except in connection with transactions permitted by Section 8.03 and sales of assets permitted by  Section 8.02;

        (c)   use
reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill; and 

        (d)   preserve
or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect. 

        7.05    Maintenance of Property.    The Company shall maintain and preserve, and shall cause each Subsidiary to
maintain and preserve, all its property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted, and make all necessary repairs thereto and
renewals and replacements thereof. 

        7.06    Insurance.    The Company shall maintain, and shall cause each Subsidiary to maintain, with financially sound
and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons, including workers' compensation insurance, public liability insurance and
property and casualty insurance. 

        7.07    Payment of Obligations.    The Company shall, and shall cause each Subsidiary to, pay and discharge as the
same shall become due and payable, all their respective obligations and liabilities, including: 

46

 

 

        (a)   all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary; and 

        (b)   all
material lawful claims which, if unpaid, would by law become a Lien upon its property in violation of  Section 8.01. 

        7.08    Compliance with Laws.    The Company shall comply, and shall cause each Subsidiary to comply, in all material
respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except such as may be contested in
good faith or as to which a bona fide dispute may exist. In addition, the Company shall (a) ensure, and cause each Subsidiary to ensure, that no Person that owns a controlling interest in or
otherwise controls the Company or any Subsidiary is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar list maintained by the Office of Foreign Assets
Control ("OFAC"), the Department of the Treasury, or included in any Executive Orders, (b) not use or permit the use of the proceeds of the Loans to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause each Subsidiary to comply, with all applicable Bank Secrecy Act ("BSA") laws and
regulations. 

        7.09    Compliance with ERISA.    The Company shall, and shall cause each of its ERISA Affiliates to:
(a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code. 

        7.10    Inspection of Property and Books and Records.    The Company shall maintain and shall cause each Subsidiary to
maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The Company shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the
Administrative Agent or any Lender to visit and inspect any of their respective properties, to examine their respective company, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided that when an Event of Default exists the Administrative
Agent or any Lender may do any of the foregoing at the expense of the Company at any time during normal business hours and without advance notice;  provided, further, that neither the Administrative Agent nor any Lender shall conduct any environmental
testing of any owned or leased facility of the Company or any Subsidiary without the prior written consent of the Company, which shall not unreasonably be withheld. 

        7.11    Environmental Laws.    (a) The Company shall, and shall cause each Subsidiary to, conduct its operations and
keep and maintain its property in compliance with all Environmental Laws, the violation of which could reasonably be expected to result in liability to the Company and its Subsidiaries in excess of
$5,000,000 in the aggregate (net of any payments under insurance policies or indemnity agreements which the Company or such Subsidiary reasonably expects to receive). 

        (b)   Upon
the written request of the Administrative Agent or any Lender, the Company shall submit and cause each of its Subsidiaries to submit, to the Administrative Agent
with sufficient copies for each Lender, at the Company's sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance,
hazard or liability issue identified in any notice or report required pursuant to subsection 7.03(e), that could, individually or in 

47

 

the
aggregate, result in liability in excess of $5,000,000 (net of any payments under insurance policies or indemnity agreements which the Company or such Subsidiary reasonably expects to receive). 

        7.12    Use of Proceeds.    The Company shall use the proceeds of the Loans (a) to finance Permitted
Acquisitions and to pay certain fees and expenses related thereto, (b) for working capital, capital expenditures, stock repurchases and dividends and other general corporate purposes not in
contravention of any Requirement of Law or of any Loan Document; provided that any stock of the Borrower that is repurchased by the Borrower shall be
immediately retired and (c) to refinance the Existing Credit Agreement and other existing Indebtedness. 

        7.13    Further Assurances.    (a) The Company shall ensure that all written information, exhibits and reports
furnished to the Administrative Agent or the Lenders do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact or any fact necessary
to make the statements contained therein not misleading in light of the circumstances in which made, and will promptly disclose to the Administrative Agent and the Lenders and correct any defect or
error that
may be discovered therein or in any Loan Document or in the execution, acknowledgment or recordation thereof. 

        (b)   Promptly
upon request by the Administrative Agent or the Required Lenders, the Company shall (and shall cause any of its Subsidiaries to) do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, certificates, assurances and other instruments the
Administrative Agent or such Lenders, as the case may be, may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement or any other Loan
Document, and (ii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Administrative Agent and the Lenders the rights granted or now or hereafter intended
to be granted to the Lenders under any Loan Document or under any other document executed in connection therewith. 

        7.14    Guaranties.    The Company shall (a) cause each Domestic Subsidiary that accounted for more than 5% of
the consolidated (gross) revenues of the Company and its Subsidiaries during the most recent 12-month period for which financial statements are available pursuant to  Section 7.01 (the "Test Period"), calculated (i) on an actual and a pro forma basis for
any Subsidiary created or acquired after the beginning of such Test Period and (ii) giving effect to any material intercompany transactions after the beginning of such Test Period, to be a
party to the Subsidiary Guaranty; and (b) if all Domestic Subsidiaries that are not parties to the Subsidiary Guaranty accounted for 10% or more of the consolidated (gross) revenues of the
Company and its Subsidiaries for the most recent Test Period (calculated as set forth above, but excluding from such calculation for the Test Periods ending March 31, 2007 and June 30,
2007 the Subsidiaries listed on Schedule 7.14; provided that if the Empire Joint Venture is not
consummated prior to September 30, 2007, such Subsidiaries shall be included in such calculation for the Test Period ending September 30, 2007), cause one or more of such Domestic
Subsidiaries to promptly execute the Subsidiary Guaranty so that, upon such execution, such 10% threshold is no longer exceeded. The Company shall promptly notify the Administrative Agent at any time
at which, in accordance with this Section 7.14, any Subsidiary is required to become a party to the Subsidiary Guaranty. 

48

 
 
 

  ARTICLE VIII    
    
    NEGATIVE COVENANTS    
    

        So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, unless the Required Lenders waive compliance in writing: 

        8.01    Limitation on Liens.    The Company shall not, and shall not permit any Subsidiary to, directly or indirectly,
make, create, incur, assume or permit to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"): 

        (a)   any
Lien existing on property of the Company or any Subsidiary on the Effective Date and set forth in  Schedule 8.01 securing Indebtedness outstanding on such date; 

        (b)   any
Lien created under any Loan Document; 

        (c)   Liens
for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 7.07, provided that no notice of lien has been filed or recorded under the Code; 

        (d)   carriers',
warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent
or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto; 

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

        (f)    Liens
on the property of the Company or its Subsidiaries securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases or statutory obligations, (ii) Contingent Obligations in connection with performance bonds, surety bonds and appeal bonds and (iii) other non-delinquent
obligations of a like nature, in each case, incurred in the ordinary course of business; provided that all such Liens in the aggregate could not
reasonably be expected to cause a Material Adverse Effect; 

        (g)   easements,
rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and
its Subsidiaries; 

        (h)   Liens
securing obligations in respect of Capital Leases on assets subject to such leases, provided that such Capital Leases are otherwise permitted hereunder; and 

        (i)    other
Liens securing Indebtedness that does not exceed in the aggregate at any one time outstanding the lesser of (x) five percent (5%) of Net Worth as set forth
in the most recently delivered Compliance Certificate pursuant to Section 7.02(a) and (y) the maximum amount of such secured Indebtedness
that, when aggregated with all other outstanding Priority Debt (within the meaning of the applicable Note Agreement), would be permitted under each Note Agreement. 

        8.02    Disposition of Assets.    The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, (x) issue any equity interests of any Subsidiary to any Person (other than a Joint Venture) which is not the Company or a Subsidiary or (y) sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions) any property, including accounts and 

49

 

notes
receivable, with or without recourse (each, an "Asset Disposition"), or enter into any agreement to do any of the foregoing, except: 

        (a)   dispositions
of inventory, or used, worn-out or surplus equipment, all in the ordinary course of business; 

        (b)   the
sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale
are reasonably promptly applied to the purchase price of such replacement equipment; 

        (c)   dispositions
made by the Company or any Subsidiary to any Wholly-Owned Subsidiary which is a Guarantor, or dispositions made by any Subsidiary to the Company; 

        (d)   dispositions
made in connection with Investments permitted under Section 8.04; and 

        (e)   dispositions
not otherwise permitted hereunder which are made for fair market value; provided that (i) at the time
of any disposition, no Default or Event of Default shall exist or shall result from such disposition, (ii) with respect to any disposition (or series of related dispositions) for which total
consideration exceeds $5,000,000, at least 75% of the aggregate sales price from such disposition(s) shall be paid in cash, and (iii) the aggregate value of all assets so sold by the Company
and its Subsidiaries after the Effective Date, together, shall not (x) represent more than 10% of the total assets of the Company and its Subsidiaries as of the last day of the fiscal quarter
most recently ended for which the Company has delivered financial statements pursuant to Section 7.01 or (y) be responsible for more than
10% of the consolidated net income of the Company and its Subsidiaries for the 12-month period ending as of the end of the fiscal quarter next preceding the date of determination; 

provided that no Asset Disposition with respect to the equity interests or Indebtedness of any Subsidiary or any note or account receivable may be made
if such Asset Disposition would be prohibited by the terms of any Note Agreement. 

        8.03    Consolidations and Mergers.    The Company shall not, and shall not permit any Subsidiary to, merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no Default or Event of Default exists immediately before and after giving effect to such transaction: 

        (a)   any
Subsidiary may merge with the Company or another Subsidiary; provided that (i) in the case of any transaction
between a Subsidiary and the Company, the Company shall be the continuing or surviving corporation, (ii) in the case of any transaction between a Subsidiary and a Wholly-Owned Subsidiary, such
Wholly-Owned Subsidiary shall be the continuing or surviving corporation or entity, and (iii) in the case of any transaction between a Domestic Subsidiary and a Foreign Subsidiary, such
Domestic Subsidiary shall be the continuing or surviving corporation or entity; 

        (b)   any
Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Company or another Wholly-Owned Subsidiary; 

        (c)   any
Subsidiary may merge or consolidate with another Person in order to effect a Permitted Acquisition; 

        (d)   so
long as it is the surviving entity, the Company may merge or consolidate with another Person in order to effect a Permitted Acquisition; and 

        (e)   the
Company and Subsidiaries may make Investments permitted under Section 8.04. 

        8.04    Loans and Investments.    The Company shall not purchase or acquire, or permit any Subsidiary to purchase or
acquire, or make any commitment therefor, any capital stock, equity interest, or any obligation or other security of, or any interest in, any Person, or make or commit to make any 

50

 

Acquisition,
or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any Person including any Affiliate of the Company (together,
"Investments"), except for: 

        (a)   Investments
held by the Company or Subsidiary in the form of Cash Equivalents; 

        (b)   extensions
of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business; 

        (c)   Investments
by the Company or any Subsidiary in Wholly-Owned Subsidiaries or in the form of unsecured loans made by any Subsidiary to the Company; 

        (d)   Investments
incurred in order to consummate Acquisitions otherwise permitted herein ("Permitted Acquisitions"),  provided that (i) such Acquisitions are undertaken
in accordance with all applicable Requirements of Law, (ii) the prior, effective
written consent or approval to such Acquisition of the board of directors or equivalent governing body of the Person to be acquired (and its stockholders or equivalent equity holders, if necessary) is
obtained, (iii) the Company provides the Administrative Agent, for the benefit of the Lenders, prior to consummating any such Acquisition (or series of related Acquisitions) for which the total
consideration (other than stock of the Company) exceeds $100,000,000, a Compliance Certificate executed by a Responsible Officer evidencing that, after giving effect to such Acquisition, no Default or
Event of Default shall have occurred and be continuing (including in respect of Sections 8.14,  8.15 and 8.16 on a pro forma basis as of the last day of the preceding fiscal quarter), and
(iv) the Person or business which is the subject of such Acquisition is in the same or similar line of business as the Company and its Subsidiaries; 

        (e)   other
Investments (excluding Permitted Acquisitions but including Investments in Joint Ventures (including the Empire Joint Venture)) in addition to the foregoing
Investments permitted by this Section 8.04; provided that (i) the total amount of
Investments permitted under this Section 8.04(e) do not exceed in the aggregate at any one time outstanding thirty percent (30%) of Net Worth as
set forth in the most recently delivered Compliance Certificate pursuant to Section 7.02(a) and (ii) the aggregate amount of such
Investments made in or to Persons that are not in the same or similar line of business in which the Company and its Subsidiaries are engaged as of the Effective Date shall not exceed ten percent (10%)
of Net Worth as set forth in the most recently delivered Compliance Certificate pursuant to Section 7.02(a); 

        (f)    Investments
of a nature not contemplated by the foregoing clauses hereof that are outstanding as of the Effective Date and set forth in  Schedule 8.04 hereto; and 

        (g)   Investments
in the form of repurchase of the Company's or any Subsidiary's capital stock or Indebtedness approved by the Company's board of directors (or the
Subsidiary's equivalent managers or directors) that would not otherwise result in a Default or an Event of Default. 

        For
the avoidance of doubt, contributions made by the Company or any ERISA Affiliate to any Pension Plan or other employee benefit plan (including qualified plans) of the Company or such
ERISA Affiliate shall not constitute an Investment by the Company or such ERISA Affiliate under this Section 8.04. 

        8.05    Limitation on Indebtedness.    The Company shall not, and shall not permit any Subsidiary to, create, incur,
assume, permit to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: 

        (a)   Indebtedness
incurred pursuant to this Agreement; 

        (b)   Indebtedness
consisting of Contingent Obligations permitted pursuant to Section 8.08; 

        (c)   Indebtedness
existing on the Effective Date and set forth in Schedule 8.05; 

51

 

 

        (d)   Indebtedness incurred in connection with Capital Leases permitted pursuant to Section 8.01(h); 

        (e)   unsecured
intercompany Indebtedness so long as the related Investment is permitted by Section 8.04; 

        (f)    Indebtedness
under the Existing Credit Agreement, so long as such Indebtedness is repaid concurrently with the making of the initial Credit Extensions hereunder; and 

        (g)   other
Indebtedness incurred by the Company or any Subsidiary from time to time; provided that after giving effect to such
Indebtedness, (i) Section 8.14 would not be violated (as determined on a pro forma basis as of the last day of the previous fiscal
quarter) and (ii) the aggregate outstanding amount of such Indebtedness of Subsidiaries that are not Guarantors shall not at any time exceed 10% of Net Worth. 

        8.06    Transactions with Affiliates.    Except for intercompany Indebtedness otherwise permitted hereunder, the
Company shall not, and shall not permit any Subsidiary to, enter into any transaction with any Affiliate of the Company, except upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Company or such Subsidiary. 

        8.07    Margin Regulations.    The Company shall not permit Margin Stock to constitute 25% or more of the value of the
assets of the Company and its Subsidiaries which are subject to any limitation on sale or pledge, or any similar restriction, hereunder. 

        8.08    Contingent Obligations.    The Company shall not, and shall not permit any Subsidiary to, create, incur,
assume or permit to exist any Contingent Obligation except: 

        (a)   endorsements
for collection or deposit in the ordinary course of business; 

        (b)   Permitted
Swap Obligations; 

        (c)   L/C
Obligations; 

        (d)   Contingent
Obligations constituting Investments permitted under Section 8.04; and 

        (e)   other
Contingent Obligations (other than L/C Obligations) of the Company and its Subsidiaries not to exceed in the aggregate at any one time outstanding 7.5% of Net
Worth as set forth in the most recently delivered Compliance Certificate pursuant to Section 7.02(a). 

        8.09    Restrictive Agreements.    The Company shall not, nor shall it permit any of its Subsidiaries to, enter into
any indenture, agreement, instrument or other arrangement which directly or indirectly prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions
upon, the ability of any Subsidiary to (a) pay dividends or make other distributions (i) on its Capital Stock or (ii) with respect to any other interest or participation in, or
measured by, its profits, (b) make loans or advances to the Company or any Subsidiary, (c) repay loans or advances from the Company or any Subsidiary or (d) transfer any of its
properties or assets to the Company or any Subsidiary. 

        8.10    ERISA.    The Company shall not, and shall not permit any of its Subsidiaries to, (i) terminate any
Plan subject to Title IV of ERISA so as to result in any material (in the opinion of the Required Lenders) liability to the Company or any ERISA Affiliate, (ii) permit to exist any ERISA Event
or any other event or condition, which presents the risk of a material (in the opinion of the Required Lenders) liability to the Company or any ERISA Affiliate, (iii) make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any material (in the opinion of the Required Lenders) liability to the Company or any ERISA
Affiliate or (iv) enter into any new Plan or modify any existing Plan in a manner that (a) increases its 

52

 

obligations
thereunder and (b) could result in any material (in the opinion of the Required Lenders) liability to the Company or any ERISA Affiliate. 

        8.11    Change in Business.    The Company shall not, and shall not permit any Subsidiary to, engage in any material
line of business substantially different from those lines of business carried on by the Company and its Subsidiaries on the Effective Date. 

        8.12    Accounting Changes.    The Company shall not, and shall not permit any Subsidiary to, (a) make any
significant change in accounting treatment or reporting practices, except as required by GAAP, or (b) change the fiscal year of the Company or of any Subsidiary;  provided that the fiscal year of
the Company and its Subsidiaries may be changed to a year ending December 31. 

        8.13    Amendments to Charter.    The Company shall not, and shall not permit any Subsidiary to, (a) amend or
modify any term or provision of its certificate or articles of formation or bylaws (or similar organizational document) which is materially adverse to the Administrative Agent or the Lenders without
the prior written consent of the Required Lenders or (b) issue any preferred stock or other preferred equity interest. 

        8.14    Leverage Ratio.    The Company shall not, as of the last day of any fiscal quarter, permit its Leverage Ratio
to be greater than 3.00 to 1.0. 

        8.15    Fixed Charge Coverage Ratio.    The Company shall not, as of the last day of any fiscal quarter, permit its
ratio of (a) EBITDAR for the period of four fiscal quarters then ending to (b) Fixed Charges for such four fiscal quarter period to be less than 1.50 to 1.0. 

        8.16    Minimum Net Worth.    The Company shall not, as of the last day of any fiscal quarter, permit its Net Worth to
be less than the sum of (a) $675,000,000 plus (b) on a cumulative basis, 25% of the positive net income earned during each fiscal quarter
commencing on or after March 31, 2007, plus (c) on a cumulative basis, 50% of the net cash proceeds received from the issuance of equity
securities of the Company, if any, after the Effective Date. 

        8.17    Most Favored Lender Status.    The Company shall not, and shall not permit any Subsidiary, to enter into,
assume or otherwise be bound or obligated under any agreement creating or evidencing Indebtedness in excess of $15,000,000 containing one or more Additional Financial Covenants or Additional Defaults,
without the prior written consent of the Required Lenders; provided that if the Company or any Subsidiary shall enter into, assume or otherwise become
bound by or obligated under any such agreement without the prior written consent of the Required Lenders, the terms of this Agreement shall, without any further action on the part of the Company, the
Administrative Agent or any Lender, be deemed to be amended automatically to include each Additional Financial Covenant and each Additional Default contained in such agreement, but only for so long as
such Additional Financial Covenants and Additional Defaults remain in effect with respect to such other agreement. The Company shall promptly execute and deliver at its expense (including Attorney
Costs) an amendment to this Agreement in form and substance satisfactory to the Required Lenders evidencing the amendment of this Agreement to include such Additional Financial Covenants and
Additional
Defaults; provided that the execution and delivery of such amendment shall not be a precondition to the effectiveness of such amendment as provided for
in this Section 8.17. 

 
 

  ARTICLE IX    
    
    EVENTS OF DEFAULT    
    

        9.01    Event of Default.    Any of the following shall constitute an "Event of Default": 

        (a)    Non-Payment.    The Company fails to pay, (i) when and as required to be paid herein, any
amount of principal of any Loan or of any L/C Obligation, or (ii) within five days after the same 

53

 

becomes
due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or 

        (b)    Representation or Warranty.    Any representation or warranty by the Company or any Subsidiary made or deemed
made herein or in any other Loan Document, or contained in any certificate, document or financial or other statement by the Company, any Subsidiary or any Responsible Officer, furnished at any time
under this Agreement, or in or under any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or 

        (c)    Specific Defaults.    The Company fails to perform or observe any term, covenant or agreement contained in  Section 7.03
or in Article VIII; or 

        (d)    Other Defaults.    Any Loan Party fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the earlier of (i) the date upon which any senior officer of the Company
knew or reasonably should have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Administrative Agent or any Lender; or 

        (e)    Cross-Default.    (i) The Company or any Subsidiary (A) fails to make any payment in respect of any
Indebtedness (other than Specified Acquisition Debt) or Contingent Obligation (other than in respect of Swap Contracts), having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $10,000,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails
to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness (other than Specified
Acquisition Debt) or Contingent Obligation, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect
of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable, or to be required to be repurchased, prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap
Contract) resulting from (1) any event of default under such Swap Contract as to which the Company or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any
Termination Event (as so defined) as to which the Company or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Company or such Subsidiary
as a result thereof is greater than $10,000,000; provided that any Event of Default arising under  clause (i)(B) in respect of Indebtedness evidenced
or governed by a Note Agreement shall be determined without regard to any amendment to or
waiver of any provision of such Note Agreement or any related document or instrument entered into by the parties thereto in anticipation of, concurrent with or subsequent to the occurrence of any such
event or circumstance; or 

        (f)    Insolvency; Voluntary Proceedings.    The Company or any Subsidiary (i) ceases or fails to be solvent,
or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or
authorize any of the foregoing; or 

        (g)    Involuntary Proceedings.    (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company
or any Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's or any Subsidiary's 

54

 

properties,
and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the Company or any Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or 

        (h)    ERISA.    (i) An ERISA Event shall occur with respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability of the Company or any ERISA Affiliate under Title IV of ERISA to such Pension Plan or Multiemployer Plan or to the PBGC in an
aggregate amount for all such Pension Plans and Multiemployer Plans in excess of $1,000,000, less any outstanding amounts under clauses (ii) and  (iii); (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans and Multiemployer Plans at any time exceeds $1,000,000,
less any outstanding amounts under clauses (i) and (iii) (determined, in respect of Multiemployer
Plans, by reference to the Unfunded Pension Liability for which the Company or any ERISA Affiliate may be liable); or (iii) the Company or any ERISA Affiliate shall fail to pay when due, after
the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $1,000,000, less any outstanding amounts under clauses (i) and (ii); or 

        (i)    Monetary Judgments.    One or more non-interlocutory judgments, non-interlocutory
orders, decrees or arbitration awards is entered against the Company or any Subsidiary involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related series of transactions, incidents or conditions, of $5,000,000 (or, if less, the applicable threshold set forth in the
corresponding provision of any Note Agreement) or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 10 days after the entry thereof; or 

        (j)    Non-Monetary Judgments.    Any non-monetary judgment, order or decree is entered
against the Company or any Subsidiary which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 20 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or 

        (k)    Change of Control.    There occurs any Change of Control; or 

        (l)    Loss of Licenses.    Any Governmental Authority revokes or fails to renew any license, permit or franchise of
the Company or any Subsidiary, or the Company or any Subsidiary for any reason loses any license, permit or franchise, or the Company or any Subsidiary suffers the imposition of any restraining order,
escrow, suspension or impound of funds in connection with any proceeding (judicial or administrative) with respect to any license, permit or franchise, in each case to the extent that the same
individually, collectively or cumulatively, does or would reasonably be expected to have a Material Adverse Effect; or 

        (m)    Guarantor Defaults.    Any Guarantor fails in any material respect to perform or observe any term, covenant or
agreement in the Subsidiary Guaranty; or the Subsidiary Guaranty is for any reason partially (including with respect to future advances) or wholly revoked or invalidated, or otherwise ceases to be in
full force and effect, or any Guarantor or any other Person contests in any manner the
validity or enforceability thereof or denies that it has any further liability or obligation thereunder; or any event described at  subsections (f) or (g) of this Section occurs with respect to any Guarantor. 

        9.02    Remedies.    If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, 

55

 

	(a)
	declare
the Commitment of each Lender to make Loans and any obligation of each Issuer to Issue Letters of Credit to be terminated, whereupon such
Commitments and obligations shall be terminated;

	(b)
	declare
an amount equal to the maximum aggregate amount that is or at any time thereafter may become available for drawing under any outstanding Letters of
Credit (whether or not any beneficiary shall have presented, or shall be entitled at such time to present, the drafts or other documents required to draw under such Letters of Credit) to be
immediately due and payable, and declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any
other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and

	(c)
	exercise
on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law; 

provided that upon the occurrence of any event specified in subsection (f) or  (g) of Section 9.01 (in the case of  clause (i) of subsection (g) upon the expiration of the 60-day period
mentioned therein), the obligation of each Lender to make Loans and any obligation of an Issuer to Issue Letters of Credit shall automatically terminate and the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent, either Issuer or any Lender. 

        9.03    Rights Not Exclusive.    The rights provided for in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. 

 
 

  ARTICLE X    
    
    THE ADMINISTRATIVE AGENT    
    

        10.01    Appointment and Authorization.    (a) Each of the Lenders and the Issuers hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental thereto. The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with the Company or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder. The Lenders and the Issuers acknowledge that, pursuant to such
activities, JPMorgan or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company
or such Subsidiary) and acknowledge that the Administrative Agent shall not be under any obligation to provide such information to them. With respect to its Loans and Letters of Credit, JPMorgan shall
have the same rights and powers under this Agreement as any other Lender and Issuer and may exercise the same as though it were not the Administrative Agent. 

        (b)   Each
Issuer shall act on behalf of the Lenders with respect to any Letter of Credit Issued by it and the documents associated therewith until such time and except for so
long as the Administrative Agent may agree at the request of the Required Lenders to act for such Issuer with respect thereto; provided that such Issuer
shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article X with respect to any acts taken or
omissions suffered by such Issuer in connection with Letters of Credit Issued by it or proposed to be Issued by it and the application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the 

56

 

term
"Administrative Agent", as used in this Article X, included such Issuer with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to such Issuer. 

        10.02    Liability.    The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein. Without limiting the generality of the foregoing, (a) none of the Administrative Agent or any Related Party thereof shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default or an Event of Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 11.01), and (c) except as
expressly set forth herein, none of the Administrative Agent or any Related Party thereof shall have any duty to disclose, and shall not be liable for the failure to disclose, any information relating
to the Company or any of its Subsidiaries that is communicated to or obtained by such Person or any Affiliate thereof in any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in  Section 11.01) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default or Event of Default unless and until written notice thereof is given to the Administrative Agent by the Company or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document or (v) the satisfaction of any condition
set forth in Article V or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative
Agent. 

        10.03    Reliance by Administrative Agent.    (a) The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent
by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability
for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), 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. 

        (b)   For
purposes of determining compliance with the conditions specified in Section 5.01, each Lender that has
executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Administrative Agent to such Lender for
consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender. 

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

57

 

        10.05    Resignation by Administrative Agent.    Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuers and the Company. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Company, to appoint a successor. 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 gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuers, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the Company to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Company and such successor. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 11.03
shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of
them while it was acting as Administrative Agent. 

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

        10.07    Notice of Default.    The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent (or the Administrative
Agent for the account of the Lenders), unless the Administrative Agent shall have received written notice from a Lender or the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The Administrative Agent will notify the Lenders of their receipt of any such notice. The Administrative Agent shall take such action
with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Article IX;  provided that unless and
until the Administrative Agent has received any such request, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain
from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders. 

        10.08    Indemnification of Administrative Agent.    Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Administrative Agent and its Related Parties (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation
of the Company to do so), in accordance with such Lender's Pro Rata Share of all Loans and Commitments, from and against any and all Indemnified Liabilities;  provided that no Lender shall be liable for
the payment to the Administrative Agent or any Related Party thereof of any portion of such Indemnified
Liabilities resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the 

58

 

Administrative
Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or
replacement of the Administrative Agent. 

        10.09    Guaranty Matters.    The Administrative Agent shall, and the Lenders irrevocably authorize the Administrative
Agent to, upon the written request of the Company so long as no Default or Event of Default exists, release any Guarantor from its obligations under the Subsidiary Guaranty if, after giving effect to
such release, the Company is in compliance with Section 7.14. Upon request by the Administrative Agent at any time, the Lenders will confirm in
writing the Administrative Agent's authority to release any Guarantor from its obligations under the Subsidiary Guaranty pursuant to this  Section 10.09. 

        10.10    Co-Agents.    None of the Lenders identified on the facing page or signature pages of this
Agreement as a "syndication agent" or a "documentation agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders
as such. Without limiting the foregoing, none of the Lenders so identified as a "syndication agent" or a "documentation agent" shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 

 
 

  ARTICLE XI    
    
    MISCELLANEOUS    
    

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

        (a)   waive
any condition set forth in Section 5.01 without the written consent of each Lender; 

        (b)   extend
or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.02)
without the written consent of such Lender; 

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

        (d)   reduce
the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to  clause (iv) of the proviso below) any fee or other amount payable hereunder or under any
other Loan Document without the written consent of each
Lender directly affected thereby; provided that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" or
to waive any obligation of the Company to pay interest at the Default Rate; 

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

        (f)    amend
Section 2.15 in a manner that would alter the pro rata sharing of payments required thereby without the
written consent of each Lender; or 

59

 

 
        (g)   release all or substantially all of the Guarantors from the Subsidiary Guaranty without the written consent of each Lender; 

and,
provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the applicable Issuer in addition to the
Required Lenders and/or each directly-affected Lender, as the case may be, affect the rights or duties of such Issuer under this Agreement or any Letter of Credit Application relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Required Lenders and/or each
directly-affected Lender, as the case may be, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and
signed by the Administrative Agent in addition to the Required Lenders and/or each directly-affected Lender, as the case may be, affect the rights or duties of the Administrative Agent under this
Agreement or any other Loan Document; and (iv) the Agent Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the respective parties thereto. 

        11.02    Notices.    (a) All notices, requests, consents, approvals, waivers and other communications shall be in
writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by
facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on Schedule 11.02 or, in the
case of a Lender, in such Lender's Administrative Questionnaire), and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, faxed or delivered, to the address
or facsimile number specified for notices on Schedule 11.02 (or, in the case of a Lender, in such Lender's Administrative Questionnaire); or, as
directed to the Company or the Administrative Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such
other address as shall be designated by such party in a written notice to the Company and the Administrative Agent. 

        (b)   All
such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day)
delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II, III or  X to the Administrative Agent shall not be effective
until actually received by the Administrative Agent, and notices pursuant to  Article III to an Issuer shall not be effective until actually received by such Issuer at the address specified on
 Schedule 11.02. 

        (c)   Any
agreement of the Administrative Agent and the Lenders herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of
the Company. The Administrative Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice, and the
Administrative Agent and the Lenders shall not have any liability to the Company or other Person on account of any action taken or not taken by the Administrative Agent or the Lenders in reliance upon
such telephonic or facsimile notice. The obligation of the Company to repay the Loans and L/C Obligations shall not be affected in any way or to any extent by any failure by the Administrative Agent
and the Lenders to receive written confirmation of any telephonic or facsimile notice or the receipt by the Administrative Agent and the Lenders of a confirmation which is at variance with the terms
understood by the Administrative Agent and the Lenders to be contained in the telephonic or facsimile notice. 

        11.03    No Waiver; Cumulative Remedies.    No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 

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        11.04    Costs and Expenses.    The Company shall: 

        (a)   whether
or not the transactions contemplated hereby are consummated, pay or reimburse each Lead Agent within five Business Days after demand (subject to  subsection 5.01(e)) for all reasonable out-of-pocket
costs and expenses incurred by such Lead Agent in connection with
the development, preparation, delivery, administration, syndication and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other document prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including reasonable
Attorney Costs of a single counsel to the Lead Agents (except to the extent that any Lead Agent or such counsel determines that separate counsel is necessary to avoid a conflict of interest); 

        (b)   pay
or reimburse each Lead Agent and each Lender within five Business Days after demand (subject to  subsection 5.01(e)) for all reasonable out-of-pocket costs and expenses (including Attorney Costs of
a single counsel,
except to the extent that any Lead Agent, any Lender or such counsel determines that separate counsel is necessary to avoid a conflict of interest) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any right or remedy under this Agreement or any other Loan Document during the existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding); and 

        (c)   pay
or reimburse JPMorgan (including in its capacity as the Administrative Agent) within five Business Days after demand (subject to  subsection 5.01(e)) for all reasonable appraisal (including the
allocated cost of internal appraisal services), audit, environmental inspection
and review (including the allocated cost of such internal services), search and filing costs, fees and expenses, incurred or sustained by JPMorgan (including in its capacity as the Administrative
Agent) in connection with the matters referred to under subsections (a) and (b) of this Section. 

        11.05    Company Indemnification.    Whether or not the transactions contemplated hereby are consummated, the Company
shall indemnify, defend and hold each Lead Agent, its Related Parties and each Lender and each of its respective Affiliates, officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time
following repayment of the Loans, the termination of the Letters of Credit and the termination, resignation or replacement of the Administrative Agent or replacement of any Lender or assignment by any
Lender of its Loans or Commitments) be imposed on, incurred by or asserted against any Indemnified Person in any way relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or Letters of Credit or the use of the
proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities");  provided that
the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities to the extent resulting
from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations. 

        11.06    Marshalling; Payments Set Aside.    Neither the Administrative Agent nor any Lender shall be under any
obligation to marshall any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment to the
Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently 

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invalidated,
declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally
agrees to pay to the Administrative Agent upon demand its pro rata share of any amount so recovered from or repaid by the Administrative Agent. 

        11.07    Successors and Assigns.    The provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written
consent of each Lead Agent and each Lender. 

        11.08    Assignments, Participations, etc.    (a) Any Lender may, with the written consent of the Company at all times
other than during the existence of an Event of Default and the Administrative Agent, the Swing Line Lender and the Issuers, which consents shall not be unreasonably withheld or delayed, at any time
assign and delegate to one or more Eligible Assignees (each an "Assignee") all, or any part of all, of the Loans, the Commitments, the L/C Obligations
and the other rights and obligations of such Lender hereunder, in a minimum amount (other than with respect to an assignment to an Eligible Assignee that is a Lender or an Affiliate or an Approved
Fund of such assigning Lender) of $5,000,000 or, if less, the total amount of such Lender's outstanding Loans and/or Commitments (provided that no written consent of the Company, the Administrative
Agent, the Swing Line Lender or either Issuer shall be required in connection with any assignment and delegation by a Lender to an Eligible Assignee that is a Lender or an Affiliate or Approved Fund
of such assigning Lender); provided that the Company and the Administrative Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Company and the
Administrative Agent an Assignment and Acceptance in the form of Exhibit C ("Assignment and
Acceptance") and (iii) the assignor Lender or Assignee has paid to the Administrative Agent a processing fee in the amount of $3,500. Each 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 other Loan Parties and their related parties or their respective securities) will be made available and who may receive such
information in accordance with such Assignee's compliance procedures and applicable laws, including federal and state securities laws. 

        (b)   From
and after the date that the Administrative Agent notifies the assignor Lender that it has received (and, if required, provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations
hereunder (including any obligation under Section 10.10) have been assigned to it pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents. 

        (c)   Within
five Business Days after its receipt of notice by the Administrative Agent that it has received an executed Assignment and Acceptance and payment of the
processing fee (and, if required, provided that it consents to such assignment in accordance with subsection 11.08(a)), the Company shall execute
and deliver to the Administrative Agent, to the extent requested by the applicable Assignee, a Note evidencing such Assignee's purchased Loans and Commitment. Immediately upon each Assignee's 

62

 

making
its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro
tanto. 

        (d)   Any
Lender may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents; provided that (i) the
originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations,
(iii) the Company, each Issuer and the Administrative Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Lenders
as described in clause (a) (but only in respect of any increase of any Commitment of any originating Lender),  (b) or (e)
 of the first proviso to  Section 11.01. In the case of any such participation, the Participant shall be entitled to the
benefit of  Sections 4.01, 4.03 and 11.05 as though it were
also a Lender hereunder, and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this Agreement. 

        (e)   Notwithstanding
any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and
interest in this Agreement and the Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR §203.14,
and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 

        11.09    Confidentiality.    (a) Each Lender agrees to take and to cause its Affiliates to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" by the Company and provided to it by the Company or any Subsidiary, or by the
Administrative Agent on the Company's or such Subsidiary's behalf, under this Agreement or any other Loan Document ("Information"), and neither it nor
any of its Affiliates shall use any Information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter
existing or contemplated with the Company or any Subsidiary, except to the extent such Information (i) was or becomes generally available to the public other than as a result of disclosure by
any Lender; or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement
with the Company known to any Lender; provided that any Lender may disclose such Information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process;
(C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding
to which the Administrative Agent, any Lender or their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under
any other Loan Document; (F) to such Lender's independent auditors and other professional advisors; (G) to any Participant or Assignee, actual or potential, provided that such Person
agrees to keep such Information confidential to the same extent required of the Lenders hereunder; (H) as to any Lender or its Affiliate, as expressly permitted 

63

 

under
the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with such Lender or such Affiliate; (I) to its
Affiliates; and (J) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about such
Lender's investment portfolio in connection with ratings issued with respect to such Lender. 

        (b)   EACH
LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 11.09(a) FURNISHED TO IT PURSUANT TO THIS
AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY AND ITS 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. 

        (c)   ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE COMPANY 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 LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.
ACCORDINGLY, EACH LENDER REPRESENTS TO THE COMPANY 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. 

        11.10    Set-off.    In addition to any rights and remedies of the Lenders provided by law, if an Event of
Default exists or the Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company 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 by, and other indebtedness at any time owing by,
such Lender to or for the credit or the account of the Company against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Administrative Agent
or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Company and the
Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not
affect the validity of such set-off and application. 

        11.11    Automatic Debits of Fees.    With respect to any principal or interest due on the Loans, unreimbursed L/C
Obligation, facility fee, arrangement fee, letter of credit fee or other fee, or any other cost or expense (including Attorney Costs) due and payable to the Administrative Agent or JPMSI under the
Loan Documents, the Company hereby irrevocably authorizes JPMorgan to debit any deposit account of the Company with JPMorgan or any of its Affiliates in an amount such that the aggregate amount
debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in JPMorgan's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section shall be
deemed a set-off. 

        11.12    Notification of Addresses, Lending Offices, Etc.    Each Lender shall notify the Administrative Agent in
writing of any changes in the address to which notices to such Lender should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it 

64

 

hereunder
and of such other administrative information as the Administrative Agent shall reasonably request. 

        11.13    Counterparts.    This Agreement may be executed in any number of separate counterparts, each of which, when
so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. Delivery of an executed counterpart hereof by
facsimile shall be effective as delivery of a manually executed counterpart hereof. 

        11.14    Severability.    The illegality or unenforceability of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 

        11.15    No Third Parties Benefited.    This Agreement is made and entered into for the sole protection and legal
benefit of the Company, the Lenders and the Lead Agents and their respective Related Parties, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. 

        11.16    GOVERNING LAW AND JURISDICTION.    (A) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF ILLINOIS (WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THEREOF); PROVIDED THAT THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 

        (B)  ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW. 

        11.17    WAIVER OF JURY TRIAL.    THE COMPANY, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, ANY RELATED PARTY OF THE ADMINISTRATIVE AGENT, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR 

65

 

OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 

        11.18    Judgment.    If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due
hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent
could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Company in respect of any such sum due from it to
the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender of any sum adjudged to be so due in the
Judgment Currency, the Administrative Agent or such Lender may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement
Currency so purchased is less than the sum originally due to the Administrative Agent or such Lender in the Agreement Currency, the Company agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Administrative Agent or such Lender or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater
than the sum originally due to the Administrative Agent or such Lender in such currency, the Administrative Agent or such Lender agrees to return the amount of any excess to the Company (or to any
other Person who may be entitled thereto under applicable law). 

        11.19    Entire Agreement.    This Agreement, together with the other Loan Documents, embodies the entire agreement
and understanding among the Company, the Lenders and the Administrative Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof. 

        11.20    Euro Currency.    (a) If at any time that an Offshore Currency Loan is outstanding, the relevant Offshore
Currency is replaced as the lawful currency of the country that issued such Offshore Currency (the "Issuing Country") by the Euro then such Offshore
Currency Loan shall be automatically converted into a Loan denominated in Euros in a principal amount equal to the amount of Euros into which the principal amount of such Offshore Currency Loan would
be converted pursuant to the laws of the Issuing Country and thereafter (i) no further Loans will be available in such Offshore Currency and (ii) all references in the Loan Documents to
such Offshore Currency shall be deemed to be the Euro. 

        (b)   The
Company agrees, at the request of any Lender, to compensate each Lender for any loss, cost, expense or reduction in return that such Lender shall reasonably
determine shall be incurred or sustained by such Lender as a result of the implementation of the European Monetary Union and the Euro and that would not have been incurred or sustained by such Lender
but for the transactions provided for herein. A certificate of any such Lender setting forth such Lender's determination of the amount or amounts necessary to compensate such Lender shall be delivered
to the Administrative Agent for delivery to the Company and shall be conclusive absent manifest error so long as such determination is made by such Lender on a reasonable basis. The Company shall pay
such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. The agreements and obligations of the Company in this  Section 11.20 shall survive the payment
of all obligations. 

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        11.21    Effect of Amendment and Restatement.    The Company, the Lenders that are parties to the Existing Credit
Agreement (which constitute "Required Lenders" under and as defined in the Existing Credit Agreement), Bank of America, as administrative agent under the Existing Credit Agreement, LaSalle, as
co-administrative agent under the Existing Credit Agreement, and the Administrative Agent agree that upon the effectiveness of this Agreement, (a) the Existing Credit Agreement
shall be amended and restated in the form hereof (and, except for any provision of the Existing Credit Agreement that by its terms survives any termination thereof, the Existing Credit Agreement shall
have no further force or effect); (b) the "Commitments" under the Existing Credit Agreement shall be superseded and replaced by the Commitments hereunder (and, except in its capacity as an
Issuer or the Swing Line Lender, no "Lender" under the Existing Credit Agreement shall have any obligation to make loans or other credit extensions to the Company, or to buy participations therein, in
excess of its Commitment, if any, hereunder), without regard to any notice requirement set forth in Section 2.07 of the Existing Credit Agreement; (c) the outstanding "Revolving Loans"
and participation interests in other credit extensions under the Existing Credit Agreement shall be reallocated among the Lenders so that, after giving effect to such reallocation, each Lender has the
proper principal amount of outstanding Loans and participation interests in other credit extensions hereunder (giving effect to any fronting arrangements) based upon its reallocated Commitment;
(d) after receiving and distributing funds as provided in clause (f)(i) below, Bank of America shall cease to have any obligations in its
capacity as administrative agent, and LaSalle shall cease to have any obligations in its capacity as co-administrative agent, under the Existing Credit Agreement; (e) JPMorgan, in
its capacity as Administrative Agent, shall assume all responsibilities for administration of this Agreement as amended and restated; and (f) for convenience in making the reallocations
described in clauses (b) and (c) above given the change in Persons acting as administrative
agent, (i) the Company shall pay all
amounts outstanding under the Existing Credit Agreement (other than amounts payable under Section 4.04 of the Existing Credit Agreement, which shall be (A) calculated as if all
outstanding Loans under the Existing Credit Agreement were prepaid on the Effective Date rather than reallocated pursuant hereto and (B) paid by the Company to the Persons, if any, entitled
thereto) to LaSalle, in its capacity as co-administrative agent under the Existing Credit Agreement (and, acting in such capacity, LaSalle shall distribute such amounts to the "Lenders"
under the Existing Credit Agreement) and (ii) each Lender shall deliver to the Administrative Agent immediately available funds as if it were making new Loans on the Effective Date in the
amount required to give effect to the reallocation described in clause (c) above. 

        11.22    Amendment to Private Shelf Agreement.    Not later than 30 days after the Effective Date, the Company
shall cause to be effective an amendment to the Amended and Restated Private Shelf Agreement referred to in the definition of "Note Agreements" that amends Section 6C thereof (Investments) in a
manner that results in such Section 6C being no more restrictive on the Company and its Subsidiaries than Section 8.04;  provided that if the
Company fails to enter into such amendment, then this Agreement shall be automatically amended on such 30th day to conform  Section 8.04 to such Section 6C, and the Company agrees to take
all actions reasonably requested by the Administrative Agent to evidence
such amendments to this Agreement. 

        11.23    USA PATRIOT Act Notice.    Each Lender that is subject to the Act (as hereinafter defined) and the
Administrative Agent (each for itself and not on behalf of any Lender) hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the
Company and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Company in accordance with the Act. 

67

 

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

					
	 	 	REGIS CORPORATION
	

 	
 	

By:	
 	

/s/ Randy Pearce

	 	 	Title:	 	Senior Executive VP and CFO

S-1

 

					
	 	 	JPMORGAN CHASE BANK, N.A.,

as Administrative Agent, as Issuer, as Swing

Line Lender and as a Lender
	

 	
 	

By:	
 	

/s/ Krys Szremski

	 	 	Title:	 	Vice President

S-2

 

					
	 	 	BANK OF AMERICA, N.A.,

as Syndication Agent and as a Lender
	

 	
 	

By:	
 	

/s/ Steven Kessler

	 	 	Title:	 	Senior Vice President

S-3

 

					
	 	 	LASALLE BANK NATIONAL

ASSOCIATION, as Documentation Agent, as

an Issuer and as a Lender
	

 	
 	

By:	
 	

/s/ Peg Laughlin

	 	 	Title:	 	SVP

S-4

 

					
	 	 	THE BANK OF TOKYO-MITSUBISHI UFJ,

LTD., CHICAGO BRANCH, as Documentation

Agent and as a Lender
	

 	
 	

By:	
 	

/s/ Matthew Ross

	 	 	Title:	 	Vice President and Manager

S-5

 

					
	 	 	WACHOVIA BANK, NATIONAL

ASSOCIATION, as Documentation Agent and

as a Lender
	

 	
 	

By:	
 	

/s/ Thomas Harper

	 	 	Title:	 	Senior Vice President

S-6

 

					
	 	 	SUNTRUST BANK
	

 	
 	

By:	
 	

/s/ Michael Vegh

	 	 	Title:	 	Vice President

S-7

 

					
	 	 	U.S. BANK NATIONAL ASSOCIATION
	

 	
 	

By:	
 	

/s/ Peter I. Bystol

	 	 	Title:	 	AVP

S-8

 

					
	 	 	WELLS FARGO BANK, NATIONAL

ASSOCIATION
	

 	
 	

By:	
 	

/s/ Mark H. Halldorson

	 	 	Title:	 	Vice President

S-9

 

					
	 	 	ROYAL BANK OF CANADA
	

 	
 	

By:	
 	

/s/ Dustin Craven

	 	 	Title:	 	Attorney-in-Fact

S-10

 

 
 

  SCHEDULE 1.01(a)    
    
    PRICING SCHEDULE    
    

        The Applicable Margin and Applicable Facility Fee Percentage shall be determined in accordance with the foregoing table based on the
applicable Leverage Ratio (as determined in accordance with the most recent annual audited or quarterly unaudited financial statements delivered pursuant to  Section 7.1 and the corresponding
compliance certificate delivered pursuant to  subsection 7.2(a). (the "Financials")). Adjustments, if any, to the Applicable Margin or the
Applicable Facility Fee Percentage shall be effective five Business Days after the earlier of (a) the date on which the Company is required to file its Financials with the SEC and (b)(i) in the
case of the annual audited Financials, 90 days after the end of each fiscal year of the Company, and (ii) in the case of the quarterly unaudited Financials, 45 days after the end
of each of the first three quarters of each fiscal year of the Company; provided that if the Company fails to file any Financials on a timely basis,
Level V shall apply until such Financials are filed. Initially, Pricing shall be based on Level III. 

																	
	Level

 
	 	Level I 	 	Level II 	 	Level III 	 	Level IV 	 	Level V 	 
	 Leverage Ratio
	 	 	£1.25 to 1.0	 	 	>1.25 to 1.0 and £1.75 to 1.0	 	 	>1.75 to 1.0 and £2.25 to 1.0	 	 	>2.25 to 1.0 and £2.75 to 1.0	 	 	>2.75 to 1.0	 
	 Applicable Margin (bps)
	 	 	32.0	 	 	41.0	 	 	50.0	 	 	60.0	 	 	82.5	 
	 Applicable Facility Fee Percentage (bps)
	 	 	8.0	 	 	9.0	 	 	12.5	 	 	15.0	 	 	17.5	 

        If,
as a result of any restatement of or other adjustment to Financials or for any other reason, the Lenders determine that (a) the Leverage Ratio as calculated by the Company as
of any applicable date was inaccurate and (b) a proper calculation of the Leverage Ratio would have resulted in different pricing for any period, then (i) if the proper calculation of
the Leverage Ratio would have resulted in higher pricing for such period, the Company shall automatically and retroactively be obligated to pay to the Administrative Agent for the benefit of the
Lenders, promptly following demand by the Administrative Agent (accompanied by supporting materials (which may be in the form of Financials prepared by the Company or the Company's independent
auditors)), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period; and
(ii) if the proper calculation of the Leverage Ratio would have resulted in lower pricing for such period, the Lenders shall have no obligation to repay any interest or fees to the Company;  provided that if, as a result of any restatement or other event a proper calculation of the Leverage Ratio would have resulted in higher pricing for one
or more periods and lower pricing for one or more other periods (due to the shifting of income or expenses from one period to another period or any similar reason), then the amount payable by the
Company pursuant to clause (i) above shall be based upon the excess, if any, of the amount of interest and fees that should have been paid for
all applicable periods over the amount of interest and fees paid for all such periods. 

 
 

  SCHEDULE 1.01(b)    
    
    EXISTING LETTERS OF CREDIT    
    

							
	LASALLE BANK L/C #

 
	 	BENEFICIARY 	 	AMOUNT 	 
	 S587106
	 	US Dept. of Education (DOE)	 	$	23,000,000	 
	 S532292
	 	Standard Bank of South Africa LTD	 	 	30,000	 
	 S541357
	 	Atlantic Mutual	 	 	2,579,321	 
	 S541344
	 	Hartford Fire Insurance Company	 	 	28,200,000	 
	 S583667
	 	Accredited School of Cosmetology	 	 	8,004	 
	 S582243
	 	Progress Energy	 	 	33,000	 
	 S552682
	 	Lexington Building Co. LP	 	 	123,750	 

 
 

  SCHEDULE 2.01    
    
    COMMITMENTS AND PRO RATA SHARES    
    

								
	Lenders

 
	 	Commitment 	 	Pro Rata Share 	 
	 JPMorgan Chase Bank, N.A. 
	 	$	52,500,000	 	 	15.000000001	%
	 Bank of America, N.A. 
	 	$	52,500,000	 	 	15.000000001	%
	 LaSalle Bank National Association
	 	$	45,000,000	 	 	12.857142857	%
	 The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch
	 	$	45,000,000	 	 	12.857142857	%
	 Wachovia Bank, N.A. 
	 	$	45,000,000	 	 	12.857142857	%
	 SunTrust Bank
	 	$	30,000,000	 	 	8.571428571	%
	 U.S. Bank National Association
	 	$	30,000,000	 	 	8.571428571	%
	 Wells Fargo Bank, National Association
	 	$	30,000,000	 	 	8.571428571	%
	 Royal Bank of Canada
	 	$	20,000,000	 	 	5.714285714	%
	 	 	 	 	 	 
	 TOTAL
	 	$	350,000,000	 	 	100.000000000	%
	 	 	 	 	 	 

 
 

  SCHEDULE 6.11    
    
    FINANCIAL CONDITION    
    

None. 

 
 

  SCHEDULE 6.12    
    
    ENVIRONMENTAL MATTERS    
    

None.

 
 

  SCHEDULE 6.17    
    
    SUBSIDIARIES    
    

													
	Subsidiaries of Regis Corporation

 
	 	Jurisdiction 	 	% Ownership

Structure 
	1.	 	The Barbers, Hairstyling for Men & Women, Inc. 	 	Minnesota	 	100.00% Regis Corporation
	 	 	A.	 	WCH, Inc.*	 	Minnesota	 	100.00% The Barbers, Hairstyling for Men & Women, Inc.
	 	 	 	 	1.	 	We Care Hair Realty, Inc.*	 	Delaware	 	100.00% WCH, Inc.
	

2.	
 	

Supercuts, Inc. 	
 	

Delaware	
 	

100% Regis Corporation
	 	 	A.	 	Supercuts Corporate Shops, Inc. 	 	Delaware	 	100% Supercuts, Inc.
	 	 	B.	 	Super Rico, Inc. 	 	Puerto Rico	 	100% Supercuts, Inc.
	 	 	C.	 	Tulsa's Best Haircut LLC	 	Oklahoma	 	50% Supercuts, Inc.
	

3.	
 	

RPC Acquisition Corp. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	

4.	
 	

Regis Corp. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	

5.	
 	

Regis Insurance Group, Inc. 	
 	

Vermont	
 	

100.00% Regis Corporation
	

6.	
 	

Trade Secret, Inc. 	
 	

Colorado	
 	

100.00% Regis Corporation
	

7.	
 	

Regis, Inc. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	

8.	
 	

First Choice Haircutters International Corp. 	
 	

Delaware	
 	

100.00% Regis Corporation
	

9.	
 	

Cutco Acquisition Corp. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	 	 	A.	 	2 Inactive Subsidiaries *	 	 	 	100.00% Cutco Acquisition Corp.
	

10.	
 	

Regis International Ltd. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	 	 	A.	 	Regis Europe, Ltd *	 	United Kingdom	 	100.00% Regis International Ltd
	 	 	 	 	1.	 	Essanelle Ltd *	 	United Kingdom	 	100.00% Regis Europe Ltd.
	 	 	B.	 	Blinkers Group, Ltd	 	United Kingdom	 	100.00% Regis International Ltd
	 	 	 	 	1.	 	Blinkers Property, Ltd	 	United Kingdom	 	100.00% Blinkers Group, Ltd
	

11.	
 	

N.A.H.C. Acquisition LLC*	
 	

Minnesota	
 	

100.00% Regis Corporation
	

12.	
 	

Regis Hairstylists, Ltd	
 	

Yukon	
 	

100.00% Regis Corporation
	 	 	A.	 	First Choice Haircutters, Ltd	 	Yukon	 	100.00% Regis Hairstylists, Ltd
	 	 	 	 	1.	 	First Choice Haircutters Realty, Inc. *	 	Canada Federal	 	100.00% First Choice Haircutters, Ltd.
	 	 	B.	 	Magicuts Zee, Inc. 	 	Yukon	 	100.00% Regis Hairstylists, Ltd
	

13.	
 	

Regis Cuts Acquisition Corp. 	
 	

Nova Scotia	
 	

100.00% Regis Corporation
	

14.	
 	

Mary Lentine School of Hair Design, Inc. 	
 	

Massachusetts	
 	

100.00% Regis Corporation
	

15.	
 	

Melrose Beauty Academy, Inc. 	
 	

Massachusetts	
 	

100.00% Regis Corporation
	

16.	
 	

Blaine The Beauty Career School of Hyannis, Inc.*	
 	

Massachusetts	
 	

100.00% Regis Corporation
	

17.	
 	

Bernett-Anthony Beauty Corporation	
 	

New Jersey	
 	

100.00% Regis Corporation
	

18.	
 	

Concorde School of Hair Design, Inc. 	
 	

New Jersey	
 	

100.00% Regis Corporation
	

19.	
 	

European Academy of Cosmetology, Inc. 	
 	

New Jersey	
 	

100.00% Regis Corporation
	

20.	
 	

Accredited School of Cosmetology, Inc. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	

21.	
 	

Scot-Lewis School—Crystal, Inc. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	

22.	
 	

Martin's School of Hair Design of Oshkosh, Ltd. 	
 	

Wisconsin	
 	

100.00% Regis Corporation
	

23.	
 	

Martin's School of Hair Design of Manitowoc, Ltd. 	
 	

Wisconsin	
 	

100.00% Regis Corporation
	

24.	
 	

Martin's Management Associates, Inc. 	
 	

Wisconsin	
 	

100.00% Regis Corporation
	

25.	
 	

Hair Design, Inc. 	
 	

Kentucky	
 	

100.00% Regis Corporation
	

26.	
 	

School of Hair Design, Inc. 	
 	

Kentucky	
 	

100.00% Regis Corporation
	

27.	
 	

Radcliff Hair Design School, Inc. 	
 	

Kentucky	
 	

100.00% Regis Corporation
	

28.	
 	

Pierre's School of Cosmetology, Inc. 	
 	

Maine	
 	

100.00% Regis Corporation

													
	Subsidiaries of Regis Corporation

 
	 	Jurisdiction 	 	% Ownership

Structure 
	29.	 	Chic Schools, Inc. 	 	Michigan	 	100.00% Regis Corporation
	

30.	
 	

Artistic Enterprises, Inc. 	
 	

Arizona	
 	

100.00% Regis Corporation
	

31.	
 	

Wheat Ridge Beauty College, Inc. 	
 	

Colorado	
 	

100.00% Regis Corporation
	

32.	
 	

First Par Management Corp. 	
 	

Rhode Island	
 	

100.00% Regis Corporation
	 	 	A.	 	Arthur Angelo School of Cosmetology and HairDesign, Inc. 	 	Rhode Island	 	100.00% First Par Management Corp.
	

33.	
 	

Lee Grubbs, Inc. (d/b/a A Cut Above Beauty College)	
 	

Indiana	
 	

100.00% Regis Corporation
	

34.	
 	

HC (USA), Inc. 	
 	

Delaware	
 	

100.00% Regis Corporation
	 	 	 	 	1.	 	HCM Industries, Inc. 	 	Florida	 	100.00% HC (USA), Inc.
	 	 	 	 	2.	 	Hair Club for Men, Ltd., Inc. 	 	Florida	 	100.00% HC (USA), Inc.
	 	 	 	 	 	 	a.	 	Hair Club for Men, LLC	 	Delaware	 	100.00% Hair Club for Men, Ltd., Inc.
	 	 	 	 	 	 	b.	 	HCA Advertising Services, Inc. 	 	New York	 	100.00% Hair Club for Men, Ltd., Inc.
	 	 	 	 	 	 	c.	 	Hair Club for Men, Ltd. 	 	Delaware	 	100.00% Hair Club for Men, Ltd., Inc.
	 	 	 	 	 	 	d.	 	3115038 Canada, Inc. 	 	Canada Federal	 	100.00% Hair Club for Men, Ltd., Inc.
	 	 	 	 	 	 	e.	 	Hair Club for Men, Ltd. 	 	Illinois	 	50.00% Hair Club for Men, Ltd., Inc.
	 	 	 	 	 	 	f.	 	Hair Club for Men of Milwaukee, Ltd. 	 	Wisconsin	 	50.00% Hair Club for Men, Ltd., Inc.
	 	 	 	 	 	 	g.	 	TTEM, LLC	 	Delaware	 	100.00% Hair Club for Men, Ltd., Inc.
	

35.	
 	

Mark Anthony, Inc. 	
 	

North Carolina	
 	

100.00% Regis Corporation
	

36.	
 	

Warwick Academy of Beauty Culture, Inc. 	
 	

Rhode Island	
 	

100.00% Regis Corporation
	

37.	
 	

Salon Management Corporation	
 	

California	
 	

100.00% Regis Corporation
	 	 	A.	 	Salon Management Corporation of New York*	 	New York	 	100.00% Salon Management Corporation
	

38.	
 	

Regis Netherlands, Inc. 	
 	

Minnesota	
 	

100.00% Regis Corporation
	

39.	
 	

RHS Netherlands CV	
 	

Netherlands	
 	

1.00% Regis Corporation

89.00% Regis Netherlands, Inc.

10.00% Regis International Ltd
	 	 	A.	 	RHS Netherlands Finance B.V. 	 	Netherlands	 	100.00% RHS Netherlands CV
	 	 	B.	 	RHS Netherlands Holdings B.V. 	 	Netherlands	 	100.00% RHS Netherlands CV
	 	 	 	 	1.	 	RHS France SAS	 	France	 	100.00% RHS Netherlands Holdings BV
	 	 	 	 	 	 	a.	 	Jean Louis David France SAS	 	France	 	100.00% RHS France SAS
	 	 	 	 	 	 	b.	 	Saint Algue France SAS	 	France	 	100.00% RHS France SAS
	 	 	 	 	 	 	 	 	    i. GIE Regis France	 	France	 	100.00% Saint Algue France SAS
	 	 	 	 	 	 	 	 	    ii. Regis France Salons SAS	 	France	 	100.00% Saint Algue France SAS
	 	 	 	 	 	 	c.	 	RHS Switzerland	 	Switzerland	 	100.00% RHS France SAS
	 	 	 	 	2.	 	RHS UK Holdings Ltd	 	United Kingdom	 	100.00% RHS Netherlands Holdings BV
	 	 	 	 	 	 	a.	 	Haircare Ltd	 	United Kingdom	 	100.00% RHS UK Holdings Ltd
	 	 	 	 	 	 	 	 	    i. Haircare Gmbh	 	Germany	 	100.00% Haircare Ltd
	 	 	 	 	 	 	 	 	    ii. York Ave Beauty Salons	 	Canada	 	50.00% Haircare Ltd
	 	 	 	 	 	 	 	 	    iii. Sagestyle Ltd*	 	United Kingdom	 	100.00% Haircare Ltd
	 	 	 	 	 	 	 	 	    iv. Haircare UK Ltd*	 	United Kingdom	 	100.00% Haircare Ltd
	 	 	 	 	 	 	 	 	    v. Supercuts UK Limited	 	United Kingdom	 	100.00% Haircare Ltd
	 	 	 	 	 	 	 	 	        A. 9 Inactive Subsidiaries*	 	United Kingdom	 	100.00% Supercuts UK Limited
	 	 	 	 	3.	 	Regis International Shared Services SAS	 	France	 	100.00% RHS Netherlands Holdings BV
	 	 	C.	 	Gameo International Ltd	 	Cayman Islands	 	100.00% RHS Netherlands CV
	 	 	 	 	1.	 	Cleo International SARL	 	Luxembourg	 	100.00% Gameo International Ltd
	 	 	 	 	2.	 	Regis International Franchising SARL	 	Luxembourg	 	100.00% Gameo International Ltd
	 	 	 	 	 	 	a.	 	Bram Franchising	 	Brazil	 	100.00% Regis International Franchising SARL
	 	 	 	 	 	 	b.	 	Jean Louis David Poland Spzoo	 	Poland	 	100.00% Regis International Franchising SARL
	 	 	 	 	 	 	c.	 	Regis Holding Spain SL	 	Spain	 	100.00% Regis International Franchising SARL
	 	 	 	 	 	 	 	 	    i. Regis Hair Salons SL	 	Spain	 	100.00% Regis Holding Spain SL
	 	 	 	 	 	 	 	 	    ii. Regis Spain SL	 	Spain	 	100.00% Regis Holding Spain SL
	

40.	
 	

Intelligent Nutrients, LLC	
 	

Delaware	
 	

50.00% Regis Corporation

	*
	Inactive
Entities 

 
 

  SCHEDULE 8.01    
    
    PERMITTED LIENS    
    

 Regis Corporation  

        Regis
Corporation and certain Subsidiaries have granted numerous liens in favor of Information Leasing Corporation ("ILC") and National
City Commercial Capital Corporation ("National City"). ILC and National City are now one and the same company, National City. Such liens are attached to
various salon and warehouse equipment and the Salt Lake Distribution Center. The combined amount outstanding secured by such liens is approximately $42.5 million. 

        In
addition, the following UCC financing statements have been filed with the Minnesota Secretary of State's office with respect to Regis
Corporation:

	•
	Number 2211705 in favor of Steelcase Financial Services Inc. 

 
	•
	Number 2298738 in favor of Pitney Bowes Credit
Corp. 

 
	•
	Number 20025242846 in favor of Equilease Financial Services Inc.

 
	•
	Number 20036264225 in favor of The Huntington National Bank (as assignee of ILC)

 
	•
	Number 20037146639 in favor of IOS Capital LLC. 

 
	•
	Number 200410755149 in favor of
Weingarten Nostat Inc. 

 
	•
	Number 200413100402 in favor of Canon Financial Services, Inc.

 
	•
	Number 200414190427 in favor of Canon Financial Services, Inc.

 
	•
	Number 200514714925 in favor of Canon Financial Services, Inc.

 
	•
	Number 200515509296 in favor of Canon Financial Services, Inc.

 
	•
	Number 200516194224 in favor of Canon Financial Services, Inc.

 
	•
	Number 200612959103 in favor of Canon Financial Services. 

 
	•
	Number 200613340480 in favor of WRI
Flamingo Pines LLC. 

 
	•
	Number 200717214325 in favor of Trimarc Financial, Inc. 

        The
collateral for the Weingarten filing is essentially all assets located at one location, and we believe it secures the obligations under the lease for such premises. 

        The
collateral for the WRI Flamingo Pines LLC filing is essentially all assets located at one location, and we believe it secures the obligations under the lease for such
premises. 

        The
Huntington filing is as assignee of ILC. 

        The
collateral for all of the other filings are specific equipment provided by such parties, and the aggregate amount owing to all such parties is less than $1 million. 

 The Barbers, Hairstyling for Men and Women  

        The following UCC financing statements have been filed with the Minnesota Secretary of State's office with respect to this
entity:

	•
	Number 20024755905 in favor of Avent Ferry Associates Ltd: all property located in leased premises at 3223
Avent Ferry Road, Raleigh, NC 

 
	•
	Number 200413993508 in favor of Hippo Partners 04, Ltd.: all property located at Hanson Corner Shopping
Center, 612 Hwy 79, Hutto, TX and real estate on a tract of land in Williamson County, Texas 

 Supercuts, Inc.  

        The following UCC financing statements have been filed with the Delaware Secretary of State's office with respect to this
entity:

	•
	Number 22177664 in favor of Vestar California XXIII, L.L.C.: all property located within or upon premises known as
Pad A, Suite 3434, College Grove, 3434 College Ave., San Diego, CA and real estate on Parcel B of Parcel Map 18131, San Diego, CA 

 
	•
	Number 32325234 in favor of
Washington Place, LP: all property located at 10117 East Washington St.,
Indianapolis, IN 

 
	•
	Number 41569765 in favor of Vestar Arizona XXXI, L.L.C.: all property located within or upon the premises known as
Shops J, Suite 103 Happy Valley Town Center, Phoenix, AZ and real estate located in Meridian, Maricopa County, AZ 

 
	•
	Number 42955617 in favor of Vestar California XXII,
L.L.C.: all property located within or upon the premises known
as Shops A, Suite 9, Las Tiendas Village, Chandler, AZ and real estate located in Meridian, Maricopa County, AZ 

        The
collateral for each of the foregoing four financing statements we believe secures the obligations of Supercuts, Inc. under the lease for such premises.

	•
	Liens in favor of the Myerson Companies, Inc.: two financing statements which secure two Equipment Leases, which
include appliances, speakers, chairs, menu board, TV/VCR, Phone/FAC, microwave, shelves and other such items. 

 Trade Secret, Inc.  

        The following UCC financing statement has been filed with the Colorado Secretary of State's office with respect to this
entity:

	•
	Number 20042051284 in favor of Vestar CTC Phase I, L.L.C..: all property located within or upon premises
known as 3855 South Gilbert Road, Suite 109, Crossroads Towne Center—Phase I, Gilbert, AZ and real estate of Shopping Center located in the Town of Gilbert, Maricopa County,
AZ, Lots 1 through 11. 

 
	•
	Number 20062051868 in favor of CBL & Associates Properties: Landlord has a security interest in any
furnishings, equipment, fixtures, inventory, accounts receivable, chattel paper, documents, instruments and goods which are or are to become fixtures, together with all items now or hereafter affixed
thereto. 

 Supercuts Corporate Shops, Inc.  

        The following UCC financing statement has been filed with the Delaware Secretary of State's office with respect to this
entity:

	•
	Number 23111535 in favor of La Carina Supercuts, Inc.: all assets located in Palm Harbor, FL; Sarasota, FL;
Tampa, FL; and Valrico, FL 

        The
collateral for the foregoing filing is essentially all assets located at six Supercuts locations, and secures the payment obligation to the franchisee from whom the locations were
repurchased. 

 Regis Corp.  

        The
following UCC financing statement has been filed with the Minnesota Secretary of State's office with respect to this entity:

	•
	Number 20051831746 in favor of Iskum II, LLC. 

        The
collateral for this filing is essentially all assets located at one location, and we believe it secures the obligations under the lease for such premises. 

 

 
 

  SCHEDULE 8.04    
    
    INVESTMENTS    
    

None. 

 
 

  SCHEDULE 8.05    
    
    EXISTING DEBT    
    

 Senior Notes  

								
	Amount

 
	 	Rate 	 	Due 	 
	 $14,000,000
	 	 	7.14	%	 	07/02/08	 
	 $25,000,000
	 	 	8.39	%	 	10/03/10	 
	 $30,000,000
	 	 	4.69	%	 	06/09/13	 
	 $40,000,000
	 	 	4.03	%	 	11/30/07	 
	 $30,000,000
	 	 	4.65	%	 	11/30/09	 
	 $30,000,000
	 	 	4.86	%	 	11/30/10	 
	 $25,000,000
	 	 	6.01	%	 	07/06/10	 
	 $58,000,000
	 	 	6.73	%	 	03/15/09	 
	 $67,000,000
	 	 	7.20	%	 	03/15/12	 
	 $30,000,000
	 	 	4.97	%	 	03/31/13	 
	 $70,000,000
	 	 	5.20	%	 	03/31/15	 
	 $70,000,000
	 	 	LIBOR + 0.52	%	 	03/31/13	 
	 $30,000,000
	 	 	LIBOR + 0.55	%	 	03/31/15	 

 Syndicated Revolving Credit Facilities  

								
	Amount

 
	 	Rate 	 	Due 	 
	 $173,000,000(1)
	 	 	LIBOR + 0.875	%	 	04/07/10	 

  

	(1)
	 To be repaid concurrently with the effectiveness of this Agreement. Number represents borrowings under the revolving credit facility as of 7/5/07 and does
not include letter of credit usage

 Other Debt  

					
	 National City Leases
	 	$	35,737,668	 
	 Salt Lake City Lake City Mortgage
	 	$	6,630,572	 
	 Other (including acquired)
	 	$	5,342,131	 

 Other Contingent Obligations  

Guarantees
for leases on behalf of Franchisees (NPV) $2,045,263 

 
 

  SCHEDULE 11.02    
    
    ADMINISTRATIVE AGENT'S PAYMENT OFFICE; CERTAIN ADDRESSES FOR NOTICES    
    

 ADMINISTRATIVE AGENT:  

For Borrowing Notices and Payments in U.S. Dollars:

JPMorgan
Chase Bank, N.A.

Loan and Agency Services

10 South Dearborn Street, 7th Floor

Chicago, Illinois 60603

Mail Code IL1-0010

Attention: Nida G. Mischke

Facsimile: (312) 385-7096 

        with
a copy to 

JPMorgan
Chase Bank, N.A.

10 South Dearborn Street

Chicago, Illinois 60603

Mail Code IL1-0364

Attention: Krys Szremski

Facsimile: (312) 325-3239 

For Borrowing Notices and Payments in Offshore Currencies:

JP
Morgan Europe Limited

Loan & Agency Services

125 London Wall, London EC2Y 5AJ

Attention: Maxine Graves

Facsimile: 44 (0) 207 777 2360

E-mail: maxine.graves@jpmorgan.com 

 COMPANY:  

Regis
Corporation

7201 Metro Boulevard

Edina, Minnesota 55349

Attention: Director of Treasury

Facsimile: (952) 995-3094 and (952) 995-3222 

QuickLinks

Exhibit 10(aa)

TABLE OF CONTENTS

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

ARTICLE I DEFINITIONS

ARTICLE II THE CREDITS

ARTICLE III THE LETTERS OF CREDIT

ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY

ARTICLE V CONDITIONS PRECEDENT

ARTICLE VI REPRESENTATIONS AND WARRANTIES

ARTICLE VII AFFIRMATIVE COVENANTS

ARTICLE VIII NEGATIVE COVENANTS

ARTICLE IX EVENTS OF DEFAULT

ARTICLE X THE ADMINISTRATIVE AGENT

ARTICLE XI MISCELLANEOUS

SCHEDULE 1.01(a) PRICING SCHEDULE

SCHEDULE 1.01(b) EXISTING LETTERS OF CREDIT

SCHEDULE 2.01 COMMITMENTS AND PRO RATA SHARES

SCHEDULE 6.11 FINANCIAL CONDITION

SCHEDULE 6.12 ENVIRONMENTAL MATTERS

SCHEDULE 6.17 SUBSIDIARIES

SCHEDULE 8.01 PERMITTED LIENS

SCHEDULE 8.04 INVESTMENTS

SCHEDULE 8.05 EXISTING DEBT

SCHEDULE 11.02 ADMINISTRATIVE AGENT'S PAYMENT OFFICE; CERTAIN ADDRESSES FOR NOTICES

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