Document:

exv4w1

 

EXECUTION COPY

CUSIP # 50533PAA3

 

CREDIT AGREEMENT

dated as of February 6, 2008

by and among

LA-Z-BOY INCORPORATED,

KINCAID FURNITURE COMPANY, INCORPORATED,

ENGLAND, INC.,

BAUHAUS U.S.A., INC.,

LA-Z-BOY CANADA LIMITED,

LA-Z-BOY GREENSBORO, INC., and

LZB MANUFACTURING, INC.,

as the Borrowers,

LADD TRANSPORTATION, INC.,

LA-Z-BOY LOGISTICS, INC.,

LZB CAROLINA PROPERTIES, INC.,

LZB FURNITURE GALLERIES OF PARAMUS, INC.,

LZB FURNITURE GALLERIES OF ST. LOUIS, INC.,

LZB RETAIL, INC.,

LA-Z-BOY SHOWCASE SHOPPES, INC.,

LZB DELAWARE VALLEY PROPERTIES, INC.,

LZB DELAWARE VALLEY INC.,

MONTGOMERYVILLE HOME FURNISHINGS, INC.,

LZB FURNITURE GALLERIES OF WASHINGTON D.C., INC.,

LZB FURNITURE GALLERIES OF KANSAS CITY, INC.,

LZB FURNITURE GALLERIES OF BOSTON, INC.,

LZBFG OF SOUTH FLORIDA, LLC, LZB FINANCE, INC.,

and BOCA RATON GALLERIES, LLC,

as the Guarantors,

the Lenders referred to herein,

and

WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL)

as Administrative Agent

 

WACHOVIA CAPITAL MARKETS, LLC,

as Lead Arranger and Sole Bookrunner

NATIONAL CITY BUSINESS CREDIT, INC. and BANK OF AMERICA, N.A.,

as Co-Syndication Agents

WELLS FARGO FOOTHILL, LLC and JPMORGAN CHASE BANK, N.A.,

as Co-Documentation Agents

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE 1. DEFINITIONS
	 	 	2	 
	Section 1.1 Definitions
	 	 	2	 
	Section 1.2 Other Definitions and Provisions
	 	 	32	 
	Section 1.3 Accounting Terms
	 	 	33	 
	Section 1.4 UCC and PPSA Terms
	 	 	33	 
	Section 1.5 Rounding
	 	 	33	 
	Section 1.6 References to Agreement and Laws
	 	 	33	 
	Section 1.7 Times of Day
	 	 	33	 
	Section 1.8 Letter of Credit Amounts
	 	 	33	 
	ARTICLE 2. REVOLVING CREDIT FACILITY
	 	 	34	 
	Section 2.1 Revolving Credit Loans
	 	 	34	 
	Section 2.2 Swingline Loans
	 	 	34	 
	Section 2.3 Procedure for Advances of Revolving Credit and Swingline Loans
	 	 	36	 
	Section 2.4 Agent Advances
	 	 	37	 
	Section 2.5 Repayment of Loans
	 	 	39	 
	Section 2.6 Permanent Reduction of the Revolving Credit Commitment
	 	 	40	 
	Section 2.7 Additional Increase of Commitments; Additional Lenders
	 	 	41	 
	Section 2.8 Termination of Revolving Credit Facility
	 	 	43	 
	ARTICLE 3. LETTER OF CREDIT FACILITY
	 	 	43	 
	Section 3.1 L/C Commitment
	 	 	43	 
	Section 3.2 Procedure for Issuance of Letters of Credit
	 	 	43	 
	Section 3.3 Commissions and Other Charges
	 	 	44	 
	Section 3.4 L/C Participations
	 	 	44	 
	Section 3.5 Reimbursement Obligation of the Borrowers
	 	 	45	 
	Section 3.6 Obligations Absolute
	 	 	45	 
	Section 3.7 Effect of Application
	 	 	46	 
	Section 3.8 Existing Letters of Credit
	 	 	46	 

-i- 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	ARTICLE 4. JOINT AND SEVERAL LIABILITY OF THE BORROWERS
	 	 	46	 
	Section 4.1 Joint and Several Obligations
	 	 	46	 
	Section 4.2 Canadian Borrower
	 	 	49	 
	ARTICLE 5. GUARANTY
	 	 	50	 
	Section 5.1 Guaranty
	 	 	50	 
	Section 5.2 Special Provisions Applicable to Subsidiary Guarantors
	 	 	53	 
	ARTICLE 6. GENERAL LOAN PROVISIONS
	 	 	54	 
	Section 6.1 Interest
	 	 	54	 
	Section 6.2 Notice and Manner of Conversion or Continuation of Loans
	 	 	57	 
	Section 6.3 Fees and Charges
	 	 	58	 
	Section 6.4 Manner of Payment
	 	 	59	 
	Section 6.5 Evidence of Indebtedness
	 	 	60	 
	Section 6.6 Adjustments
	 	 	61	 
	Section 6.7 Nature of Obligations of Lenders Regarding Extensions of Credit;
Assumption by the Administrative Agent
	 	 	62	 
	Section 6.8 Changed Circumstances
	 	 	63	 
	Section 6.9 Indemnity
	 	 	64	 
	Section 6.10 Increased Costs
	 	 	64	 
	Section 6.11 Taxes
	 	 	65	 
	Section 6.12 Mitigation Obligations; Replacement of Lenders
	 	 	68	 
	ARTICLE 7. CLOSING; CONDITIONS OF CLOSING AND BORROWING
	 	 	69	 
	Section 7.1 Conditions to Closing
	 	 	69	 
	Section 7.2 Conditions to All Extensions of Credit
	 	 	74	 
	ARTICLE 8. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES
	 	 	74	 
	Section 8.1 Representations and Warranties
	 	 	74	 
	Section 8.2 Representations and Warranties Relating to Accounts
	 	 	83	 
	Section 8.3 Representations and Warranties Relating to Inventory
	 	 	83	 
	Section 8.4 Survival of Representations and Warranties, Etc
	 	 	83	 

-ii- 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	ARTICLE 9. FINANCIAL INFORMATION AND NOTICES
	 	 	84	 
	Section 9.1 Financial Statements and Projections
	 	 	84	 
	Section 9.2 Officer’s Compliance Certificate
	 	 	85	 
	Section 9.3 Accountants’ Certificate
	 	 	85	 
	Section 9.4 Other Reports
	 	 	86	 
	Section 9.5 Notice of Litigation and Other Matters
	 	 	87	 
	Section 9.6 Accuracy of Information
	 	 	88	 
	Section 9.7 Information Materials
	 	 	88	 
	ARTICLE 10. AFFIRMATIVE COVENANTS
	 	 	88	 
	Section 10.1 Preservation of Existence and Related Matters
	 	 	88	 
	Section 10.2 Maintenance of Property
	 	 	89	 
	Section 10.3 Insurance
	 	 	89	 
	Section 10.4 Accounting Methods and Financial Records
	 	 	90	 
	Section 10.5 Payment and Performance of Obligations
	 	 	90	 
	Section 10.6 Compliance With Laws and Approvals
	 	 	90	 
	Section 10.7 Environmental Laws
	 	 	90	 
	Section 10.8 Compliance with ERISA, Canadian Employer Benefits Legislation and the
Code
	 	 	90	 
	Section 10.9 Compliance with Agreements
	 	 	91	 
	Section 10.10 Visits and Inspections
	 	 	91	 
	Section 10.11 Additional Subsidiaries
	 	 	91	 
	Section 10.12 Use of Proceeds of Extensions of Credit
	 	 	92	 
	Section 10.13 The Blocked Account
	 	 	92	 
	Section 10.14 Further Assurances
	 	 	93	 
	Section 10.15 Assignments and Records of Accounts
	 	 	93	 
	Section 10.16 Administration of Accounts
	 	 	94	 
	Section 10.17 Lien Perfection
	 	 	94	 
	Section 10.18 Location of Collateral
	 	 	94	 
	Section 10.19 Protection of Collateral
	 	 	95	 

-iii- 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	ARTICLE 11. FINANCIAL COVENANTS
	 	 	96	 
	Section 11.1 Fixed Charge Coverage Ratio
	 	 	96	 
	Section 11.2 Capital Expenditures
	 	 	96	 
	ARTICLE 12. NEGATIVE COVENANTS
	 	 	96	 
	Section 12.1 Limitations on Debt
	 	 	96	 
	Section 12.2 Limitations on Liens
	 	 	98	 
	Section 12.3 Limitations on Loans, Advances, Investments and Acquisitions
	 	 	99	 
	Section 12.4 Limitations on Mergers and Liquidation
	 	 	102	 
	Section 12.5 Limitations on Sale of Assets
	 	 	103	 
	Section 12.6 Limitations on Dividends and Distributions
	 	 	104	 
	Section 12.7 Limitations on Exchange and Issuance of Equity Interests
	 	 	104	 
	Section 12.8 Transactions with Affiliates
	 	 	104	 
	Section 12.9 Certain Accounting Changes; Organizational Documents
	 	 	105	 
	Section 12.10 Amendments
	 	 	105	 
	Section 12.11 Restrictive Agreements
	 	 	105	 
	Section 12.12 Nature of Business
	 	 	106	 
	Section 12.13 Impairment of Security Interests
	 	 	106	 
	Section 12.14 Sales and Leasebacks
	 	 	106	 
	Section 12.15 Hedging Agreements
	 	 	106	 
	ARTICLE 13. DEFAULT AND REMEDIES
	 	 	106	 
	Section 13.1 Events of Default
	 	 	106	 
	Section 13.2 Remedies
	 	 	110	 
	Section 13.3 Rights and Remedies Cumulative; Non-Waiver; etc
	 	 	111	 
	Section 13.4 Administrative Agent May File Proofs of Claim
	 	 	111	 
	Section 13.5 Collateral Enforcement Actions
	 	 	112	 
	ARTICLE 14. THE ADMINISTRATIVE AGENT
	 	 	112	 
	Section 14.1 Appointment and Authority
	 	 	112	 
	Section 14.2 Rights as a Lender
	 	 	112	 
	Section 14.3 Exculpatory Provisions
	 	 	113	 

-iv- 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	Section 14.4 Reliance by the Administrative Agent
	 	 	113	 
	Section 14.5 Delegation of Duties
	 	 	114	 
	Section 14.6 Resignation of Administrative Agent
	 	 	114	 
	Section 14.7 Non-Reliance on Administrative Agent and Other Lenders
	 	 	115	 
	Section 14.8 No Other Duties, etc
	 	 	115	 
	Section 14.9 Collateral and Guaranty Matters
	 	 	115	 
	ARTICLE 15. MISCELLANEOUS
	 	 	116	 
	Section 15.1 Notices
	 	 	116	 
	Section 15.2 Expenses; Indemnity
	 	 	117	 
	Section 15.3 Right of Set-off
	 	 	119	 
	Section 15.4 Governing Law
	 	 	119	 
	Section 15.5 Waiver of Jury Trial; Binding Arbitration
	 	 	120	 
	Section 15.6 Reversal of Payments
	 	 	121	 
	Section 15.7 Injunctive Relief
	 	 	122	 
	Section 15.8 Accounting Matters
	 	 	122	 
	Section 15.9 Successors and Assigns; Register; Participations
	 	 	122	 
	Section 15.10 Confidentiality
	 	 	125	 
	Section 15.11 Amendments, Waivers and Consents
	 	 	125	 
	Section 15.12 Performance of Duties
	 	 	127	 
	Section 15.13 All Powers Coupled with Interest
	 	 	127	 
	Section 15.14 Survival of Indemnities
	 	 	127	 
	Section 15.15 Titles and Captions
	 	 	127	 
	Section 15.16 Severability of Provisions
	 	 	127	 
	Section 15.17 Counterparts
	 	 	128	 
	Section 15.18 Integration
	 	 	128	 
	Section 15.19 Term of Agreement
	 	 	128	 
	Section 15.20 Advice of Counsel
	 	 	128	 
	Section 15.21 No Strict Construction
	 	 	128	 

-v- 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	Section 15.22 Inconsistencies with Other Documents; Independent Effect of Covenants

	 	 	128	 
	Section 15.23 Fax Transmission
	 	 	129	 
	Section 15.24 USA Patriot Act
	 	 	129	 
	Section 15.25 Debtor-Creditor Relationship
	 	 	129	 
	Section 15.26 Parent as Agent for Borrowers
	 	 	129	 
	Section 15.27 Bank Product Providers
	 	 	130	 

-vi- 

 

	 	 	 
	EXHIBITS
	 	 
	Exhibit A-1
	 	Form of Revolving Credit Note
	Exhibit A-2
	 	Form of Swingline Note
	Exhibit B
	 	Form of Notice of Borrowing
	Exhibit C
	 	Form of Notice of Account Designation
	Exhibit D
	 	Form of Notice of Conversion/Continuation
	Exhibit E
	 	Form of Officer’s Compliance Certificate
	Exhibit F
	 	Form of Assignment and Assumption
	Exhibit G
	 	Form of Borrowing Base Certificate
	Exhibit H
	 	Form of Lender Agreement
	Exhibit I
	 	Form of Notice of Requested Commitment Increase
	 
	 	 
	SCHEDULES
	 	 
	 
	 	 
	Schedule 3.8
	 	Existing Letters of Credit
	Schedule 8.1(a)
	 	Jurisdictions of Organization and Qualification
	Schedule 8.1(b)
	 	Subsidiaries and Capitalization
	Schedule 8.1(f)
	 	Tax Audits
	Schedule 8.1(i)
	 	ERISA Plans
	Schedule 8.1(l)
	 	Material Contracts
	Schedule 8.1(m)
	 	Labor and Collective Bargaining Agreements
	Schedule 8.1(t)
	 	Debt and Guaranty Obligations
	Schedule 8.1(u)
	 	Litigation
	Schedule 8.1(y)
	 	Locations of Collateral
	Schedule 8.1(z)
	 	Insurance
	Schedule 12.2
	 	Existing Liens

-vii- 

 

     CREDIT AGREEMENT, dated as of February 6, 2008, by and among LA-Z-BOY INCORPORATED, a Michigan
corporation (the “Parent”), KINCAID FURNITURE COMPANY, INCORPORATED, a Delaware
corporation, ENGLAND, INC., a Michigan corporation, BAUHAUS U.S.A., INC., a Mississippi
corporation, LA-Z-BOY CANADA LIMITED, an Ontario corporation, LA-Z-BOY GREENSBORO, INC., a North
Carolina corporation, and LZB MANUFACTURING, INC., a Michigan corporation (together with those
additional entities that hereafter become parties hereto as subsidiary borrowers pursuant to
Section 10.11, each, a “Subsidiary Borrower” and collectively, the “Subsidiary
Borrowers”, and, together with the Parent, each, a “Borrower” and, collectively, the
“Borrowers”) as the Borrowers, LADD TRANSPORTATION, INC., a North Carolina corporation,
LA-Z-BOY LOGISTICS, INC., a Michigan corporation, LZB CAROLINA PROPERTIES, INC., a Michigan
corporation, LZB FURNITURE GALLERIES OF PARAMUS, INC., a Michigan corporation, LZB FURNITURE
GALLERIES OF ST. LOUIS, INC., a Michigan corporation, LZB RETAIL, INC., a Michigan corporation,
LA-Z-BOY SHOWCASE SHOPPES, INC., an Indiana corporation, LZB DELAWARE VALLEY PROPERTIES, INC., a
Michigan corporation, LZB DELAWARE VALLEY INC., a Delaware corporation, MONTGOMERYVILLE HOME
FURNISHINGS, INC., a Pennsylvania corporation, LZB FURNITURE GALLERIES OF WASHINGTON D.C., INC., a
Michigan corporation, LZB FURNITURE GALLERIES OF KANSAS CITY, INC., a Michigan corporation, LZB
FURNITURE GALLERIES OF BOSTON, INC., a Michigan corporation, LZBFG OF SOUTH FLORIDA, LLC, a
Michigan limited liability company, LZB FINANCE, INC., a Michigan corporation, and BOCA RATON
GALLERIES, LLC, a Michigan limited liability company (together with those additional entities that
hereafter become parties hereto as subsidiary guarantors pursuant to Section 10.11, each, a
“Subsidiary Guarantor” and, collectively, the “Subsidiary Guarantor”), as
Subsidiary Guarantors, the lenders who are or may become a party to this Agreement from time to
time, as Lenders, and WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL), an Illinois corporation, as
the Administrative Agent for the Lenders.

STATEMENT OF PURPOSE

     The Borrowers wish to obtain a revolving credit facility to refinance the Debt and other
obligations (other than the outstanding letters of credit issued thereunder) outstanding under the
Existing Credit Agreement and certain other existing indebtedness and for the working capital and
general corporate or organizational, as the case may be, needs of the Borrowers.

     Upon the terms and subject to the conditions set forth herein, the Lenders are willing to make
loans and other financial accommodations to the Borrowers.

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

 

 

ARTICLE 1.

DEFINITIONS

     SECTION 1.1 Definitions. The following terms when used in this Agreement shall have
the meanings assigned to them below:

     “AAA” shall have the meaning assigned thereto in Section 15.5(b).

     “Account Debtor” means any Person who is obligated to make payments in respect of an
Account.

     “Accounts” means all “accounts,” as such term is defined in the UCC, of each Credit
Party, whether now existing or hereafter created or arising, including (a) all accounts receivable,
other receivables, book debts and other forms of obligations (other than forms of obligations
evidenced by chattel paper (as defined in the UCC) or instruments (as defined in the UCC))
(including any such obligations that may be characterized as an account or contract right under the
UCC), (b) all of each Credit Party’s rights in, to and under all purchase orders or receipts for
goods or services, (c) all of each Credit Party’s rights to any goods represented by any of the
foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to a
Credit Party for property sold, leased, licensed, assigned or otherwise disposed of, for a policy
of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for
energy provided or to be provided, for the use or hire of a vessel under a charter or other
contract, arising out of the use of a credit card or charge card, or for services rendered or to be
rendered by such Credit Party or in connection with any other transaction (whether or not yet
earned by performance on the part of such Credit Party), (e) all health care insurance receivables,
(f) any instruments with respect to any of the foregoing and (g) all collateral security of any
kind, given by any Account Debtor or any other Person with respect to any of the foregoing.

     “ACH Transactions” means any cash management or related services including the
automated clearinghouse transfer of funds by the Administrative Agent (or any Affiliate of the
Administrative Agent) for the account of the Credit Parties pursuant to agreement or overdrafts.

     “Act” shall have the meaning assigned thereto in Section 15.24.

     “Administrative Agent” means Wachovia (Central) in its capacity as Administrative
Agent hereunder, and any successor thereto appointed pursuant to Section 14.6.

     “Administrative Agent’s Office” means the office of the Administrative Agent specified
in or determined in accordance with the provisions of Section 15.1(c).

     “Administrative Borrower” shall have the meaning assigned thereto in Section
15.26.

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

2

 

     “Affiliate” means, with respect to any Person, any other Person (other than a
Subsidiary of any Borrower) which directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such first Person or any of its
Subsidiaries. The term “control” means (a) the power to vote ten percent (10%) or more of the
securities or other Equity Interests of a Person having ordinary voting power, or (b) the
possession, directly or indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting securities, by contract or
otherwise.

     “Agent Advances” shall have the meaning assigned thereto in Section 2.4(a).

     “Aggregate Commitment” means the aggregate amount of the Lenders’ Commitments
hereunder, as such amount may be increased, reduced or otherwise modified at any time or from time
to time pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment shall be Two
Hundred Twenty Million Dollars ($220,000,000), as such Aggregate Commitments may be increased after
the Closing Date as set forth in Section 2.7.

     “Aggregate Revolving Credit Obligations” means, as of any particular time, the sum of
(a) the aggregate principal amount of all Revolving Credit Loans then outstanding, plus (b)
the aggregate principal amount of all Swingline Loans then outstanding, plus (c) the
aggregate principal amount of all Agent Advances then outstanding, plus (d) the aggregate
amount of all L/C Obligations then outstanding.

     “Agreement” means this Credit Agreement.

     “Applicable Law” means all applicable provisions of constitutions, laws, statutes,
ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders
of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators.

     “Applicable Margin” shall have the meaning assigned thereto in Section 6.1(c).

     “Application” means an application, in the form specified by the Issuing Lender from
time to time, requesting the Issuing Lender to issue a Letter of Credit.

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

     “Arbitration Rules” shall have the meaning assigned thereto in Section
15.5(b).

     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 15.9), and accepted by the Administrative Agent, in substantially the form of
Exhibit F or any other form approved by the Administrative Agent.

3

 

     “Average Excess Availability” means, as of any date of determination, the average of
the sum of daily Excess Availability on each day of the month most recently ended, divided by the
number of days in such month.

     “Avoidance Provisions” shall have the meaning assigned thereto in Section
4.1(c)(iii).

     “Bank Product Provider” means Wachovia, any Affiliate thereof and any Lender or
Affiliate thereof approved by the Administrative Agent.

     “Bank Product Reserves” means (a) one hundred percent (100%) of the aggregate
mark-to-market exposure then owing by any Credit Party under each Lender Hedging Agreement,
determined by the Lender (or its Affiliate) that is counterparty to such Lender Hedging Agreement,
based on termination value, using a mutually satisfactory method, and furnished to the
Administrative Agent on a monthly basis (or more frequently, in the reasonable discretion of the
Administrative Agent), and (b) all reserves that the Administrative Agent, from time to time,
establishes in its reasonable discretion for the other Bank Products then provided or outstanding.

     “Bank Products” means any one or more of the following types of services or facilities
extended to any of the Credit Parties by a Bank Product Provider: (a) credit, debit or payment
cards (including cardless e-payable services); (b) ACH Transactions; (c) cash management, including
overdraft and controlled disbursement services; and (d) Lender Hedging Agreements.

     “Bank Products Documents” means all agreements entered into from time to time by the
Credit Parties in connection with any of the Bank Products and shall include the Lender Hedging
Agreements.

     “Bankruptcy Code” means (a) the United States Bankruptcy Code (11 U.S.C. Section 101
et seq.), (b) the Bankruptcy and Insolvency Act (Canada), (c) the Companies’ Creditors Arrangement
Act (Canada) or (d) any similar legislation in any other relevant jurisdiction, in each case, as
now or hereafter amended, and any successor statute or legislation.

     “Base Rate” means, at any time, the higher of (a) the Prime Rate and (b) the Federal
Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take effect simultaneously
with the corresponding change or changes in the Prime Rate or the Federal Funds Rate.

     “Base Rate Loan” means any Loan bearing interest at a rate based upon the Base Rate as
provided in Section 6.1(a).

     “Blocked Account” shall have the meaning assigned thereto in Section 10.13(a).

     “Blocked Account Agreement” means any agreement executed by a depository bank or
securities intermediary and the Administrative Agent, for the benefit of the Secured Parties, and
acknowledged and agreed to by the applicable Credit Party, in form and substance acceptable to the
Administrative Agent in its discretion.

     “Borrowers” shall have the meaning assigned thereto in the Preamble to this Agreement.

     “Borrowing Base” means, at any particular time, the sum of:

4

 

          (a) up to eighty-five percent (85%) of Eligible Accounts; plus

          (b) the lesser of (i) up to sixty-five percent (65%) of the value of Eligible Inventory
consisting of finished goods, valued at the lower of cost (on a FIFO (or first in, first out)
basis) or market value and (ii) up to eighty-five percent (85%) of the Net OLV of Eligible
Inventory consisting of finished goods; plus

          (c) the lesser of (i) up to thirty-five percent (35%) of the value of Eligible Inventory
consisting of raw materials, valued at the lower of cost (on a FIFO (or first in, first out) basis)
or market value (and in no event including any intercompany profit thereon) and (ii) up to
eighty-five percent (85%) of the Net OLV of Eligible Inventory consisting of raw materials;
plus

          (d) up to twenty percent (20%) of the face amount of any Commercial Letter of Credit issued in
respect of the purchase of raw materials constituting Eligible L/C Inventory; plus

          (e) up to fifty percent (50%) of the face amount of any Commercial Letter of Credit issued in
respect of the purchase of finished goods constituting Eligible L/C Inventory; minus

          (f) the Reserves.

     “Borrowing Base Certificate” means a certificate of a Responsible Officer
substantially in the form of Exhibit G.

     “Business Day” means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Charlotte,
North Carolina and New York, New York, are open for the conduct of their commercial banking
business, and (b) with respect to all notices and determinations in connection with, and payments
of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in
clause (a) above and that is also a day for trading by and between banks in Dollar deposits
in the London interbank market.

     “Calculation Date” shall have the meaning assigned thereto in Section 6.1(c).

     “Canadian Employer Benefits Legislation” means the Canadian Pension Plan Act (Canada),
the Pension Benefits Standards Act (Canada), the Pension Benefits Act (Ontario), the Health
Insurance Act (Ontario), the Employment Standards Act (Ontario) and any federal (Canada),
provincial or local counterparts or equivalents, in each case, as applicable and as amended or
modified from time to time.

     “Canadian Borrower” means La-Z-Boy Canada Limited, an Ontario corporation.

     “Canadian Obligations” means (a) the Loans received, directly or indirectly, by the
Canadian Borrower, (b) the L/C Obligations outstanding in respect of Letters of Credit issued for
the benefit of the Canadian Borrower, (c) all Hedging Obligations owing by the Canadian Borrower
under any Lender Hedging Agreement, (d) all existing or future payments and other obligations owing
by the Canadian Borrower under any other Bank Products Document and (e) all other fees

5

 

and commissions (including attorneys’ fees), charges, indebtedness, loans, liabilities,
financial accommodations, obligations, covenants and duties owing by the Canadian Borrower or any
of its Subsidiaries to the Administrative Agent or any other member of the Lender Group, in each
case under or in respect of this Agreement, any Note, any Letter of Credit or any of the other Loan
Documents of every kind, nature and description, direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by
any note.

     “Canadian Pledge Agreement” means that certain Pledge Agreement dated as of even date
herewith executed by the Parent in favor of the Administrative Agent, for the benefit of the
Secured Parties.

     “Canadian Security Agreement” means that certain Security Agreement dated as of even
date herewith executed by the Canadian Borrower and any other Credit Party organized under the laws
of Canada or any province or territory thereof in favor of the Administrative Agent, for the
benefit of the Secured Parties.

     “Capital Asset” means, with respect to the Parent and its Subsidiaries, any asset that
should, in accordance with GAAP, be classified and accounted for as a capital asset on a
Consolidated balance sheet of the Parent and its Subsidiaries.

     “Capital Expenditures” means with respect to the Parent and its Subsidiaries (other
than any VIE) for any period, the aggregate cost of all Capital Assets acquired by the Parent and
its Subsidiaries during such period, as determined in accordance with GAAP.

     “Capital Lease” means any lease of any property by Parent or any of its Subsidiaries
(other than any VIE), as lessee, that should, in accordance with GAAP, be classified and accounted
for as a capital lease on a Consolidated balance sheet (but excluding any VIE) of the Parent and
its Subsidiaries.

     “Cash Equivalents” shall have the meaning assigned thereto in Section 12.3(e).

     “Cash Sweep Period” means the period of time from and after any Cash Sweep Trigger
Date and continuing though the date five (5) Business Days following the occurrence of any Cash
Sweep Termination Date.

     “Cash Sweep Termination Date” means any date on which (a) if the Cash Sweep Period
occurred as a result of an event described in clause (a) of the definition of Cash Sweep Trigger
Date, such Event of Default has been waived in accordance with the terms of this Agreement and no
other Event of Default shall have occurred and be continuing, or (b) if the Cash Sweep Period
occurred as a result of an event described in clause (b) of the definition of Cash Sweep Trigger
Date, Excess Availability has been greater than $50,000,000 for each day of any forty-five (45)
consecutive day period after the relevant Cash Sweep Trigger Date or (b) Excess Availability has
been greater than $30,000,000 for each day of any ninety (90) consecutive day period after the
relevant Cash Sweep Trigger Date; provided, however, except as the Administrative
Agent and the Required Lenders may otherwise hereafter agree in writing, a Cash Sweep Period may no
longer be terminated following the second termination of any Cash Sweep Period in any twelve (12)
consecutive month period or the sixth termination of any Cash Sweep Period during the term of this
Agreement, and

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such Cash Sweep Period shall continue until the payment in full of the Obligations (other than
contingent Obligations as to which the Administrative Agent shall have received cash collateral
pursuant to the terms of Section 2.6 or 13.2, as applicable, or otherwise
acceptable to the Administrative Agent) and the termination of the Commitments.

     “Cash Sweep Trigger Date” means any date (a) on which an Event of Default occurs or
(b) on which Excess Availability has been less than $30,000,000, as calculated by the
Administrative Agent hereunder, for more than three (3) consecutive Business Days.

     “CFC” means a controlled foreign corporation (as that term is defined in the Code).

     “Change of Control” means (a) any Person or two or more Persons acting in concert
shall have acquired “beneficial ownership,” directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, or control over, voting Equity Interests
of the Parent (or other securities convertible into such voting Equity Interests) representing
thirty-five percent (35%) or more of the combined voting power of all voting Equity Interests of
the Parent, (b) Continuing Directors shall cease for any reason to constitute a majority of the
members of the board of directors of the Parent then in office, or (c) the Parent shall cease to
own, free and clear of all Liens or other encumbrances (other than the Liens of the Administrative
Agent), directly or indirectly, one hundred percent (100%) of the outstanding voting Equity
Interests of its Subsidiaries that are Credit Parties on a fully diluted basis. As used herein,
“beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange
Commission under the Securities Act of 1934.

     “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.

     “Clearing Account” means account no. 5000000030266 (or such other account number
established by the Administrative Agent for purposes of Section 10.13) maintained by the
Administrative Agent at Wachovia, in Charlotte, North Carolina pursuant to Section 10.13,
and over which the Administrative Agent has the sole dominion and exclusive access and control for
withdrawal purposes pursuant to Section 10.13.

     “Closing Date” means the date of this Agreement or such later Business Day upon which
each condition described in Section 7.1 shall be satisfied or waived in a manner in
accordance with this Agreement.

     “Code” means the Internal Revenue Code of 1986, and the rules and regulations
thereunder, each as amended or modified from time to time.

     “Collateral” means the collateral security for the Obligations pledged or granted
pursuant to the Security Documents.

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     “Collateral Access Agreement” means any agreement of any lessor, warehouseman,
processor, customs broker, freight forwarder, consignee or other Person in possession of, having a
Lien upon or having rights or interests in any of the Collateral in favor of the Administrative
Agent, for the benefit of the Secured Parties, in form and substance satisfactory to the
Administrative Agent, pursuant to which such Person, among other things, waives or subordinates its
Liens or certain other rights or interests such Person may hold in regard to the property of any of
the Credit Parties and agrees to provide the Administrative Agent access to the Collateral.

     “Collateral Enforcement Actions” shall have the meaning assigned thereto in
Section 13.5.

     “Commercial Letter of Credit” means a documentary Letter of Credit issued by the
Issuing Lender in respect of the purchase of goods or services by a Borrower or its Subsidiaries in
the ordinary course of its business.

     “Commitment” means, as to any Lender, the obligation of such Lender to make or
participate in Loans to and issue or participate in Letters of Credit hereunder in an aggregate
principal or face amount at any time outstanding not to exceed the amount set forth opposite such
Lender’s name in the Register, as the same may be increased, reduced or otherwise modified at any
time or from time to time pursuant to the terms hereof or by the execution and delivery of an
Assignment and Assumption pursuant to the terms hereof.

     “Commitment Increase” shall have the meaning assigned thereto in Section
2.7(a)(i).

     “Commitment Increase Cap” shall have the meaning assigned thereto in Section
2.7(a)(i).

     “Commitment Percentage” means, as to any Lender at any time, the ratio of (a) the
amount of the Commitment of such Lender to (b) the Aggregate Commitment.

     “Consolidated” means, when used with reference to financial statements or financial
statement items of the Parent and its Subsidiaries, such statements or items on a consolidated
basis in accordance with applicable principles of consolidation under GAAP.

     “Continuing Directors” means, during any period of up to twenty-four (24) consecutive
months commencing after the Closing Date, individuals who at the beginning of such twenty-four (24)
month period were directors of the Parent (together with any new director whose election by the
Parent’s board of directors or whose nomination for election by the Parent’s shareholders was
approved by a vote of at least two-thirds 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).

     “Contributing Borrower” shall have the meaning assigned thereto in Section
4.1(f).

     “Copyright Security Agreements” means, collectively, the Copyright Security Agreements
made in favor of the Administrative Agent, on behalf of the Secured Parties, from time to time.

     “Credit Facility” means, collectively, the Revolving Credit Facility, the L/C Facility
and the Swingline Facility.

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     “Credit Parties” means, collectively, the Borrowers and the Subsidiary Guarantors.

     “Customer Dispute” means all instances in which (a) a customer of a Borrower has
rejected or returned goods sold by such Borrower to such customer and such return or rejection has
not been accepted by such Borrower as a valid return or rejection, or (b) a customer of a Borrower
has otherwise affirmatively asserted grounds for nonpayment of an Account, including any
repossession of goods by such Borrower, or any claim by an Account Debtor of total or partial
failure of delivery, set-off, counterclaim, or breach of warranty.

     “Debt” means, with respect to the Parent and its Subsidiaries (other than any VIE) at
any date and without duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such Person (other than
customary reservations or retentions of title under agreements with vendors and suppliers entered
into in the ordinary course of business), (d) all obligations of such Person issued or assumed as
the deferred purchase price of property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and not more than sixty (60) days past due) which would
appear as liabilities on a balance sheet of such Person, (e) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements, (f) all Debt of others secured
by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from, property owned or
acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all
guaranties of such Person with respect to Debt of others of the type referred in this definition of
another Person, (h) the principal portion of all obligations of such Person under Capital Leases,
(i) all obligations of such Person under Hedging Agreements, (j) the maximum amount of all letters
of credit issued or bankers’ acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent unreimbursed), (k) all preferred
Equity Interests issued by such Person and required by the terms thereof to be redeemed, or for
which mandatory sinking fund payments are due, by a fixed date, (l) the principal component of
payments due under any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product, other than operating leases that do not constitute any
of the foregoing, during the applicable period ending on such date, determined on a Consolidated
basis in accordance with GAAP, and (m) the Debt of any partnership or unincorporated joint venture
in which such Person is a general partner or a joint venturer.

     “Default” means any of the events specified in Section 13.1 which, with the
passage of time, the giving of notice or any other condition, would constitute an Event of Default.

     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the
Revolving Credit Loans, participations in L/C Obligations or participations in Swingline Loans
required to be funded by it hereunder within one (1) Business Day of the date on which the same was
required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative
Agent or any other Lender any other amount required to be paid by it hereunder within one (1)
Business Day of the date when due, unless such amount is the subject of a good

9

 

faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

     “Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior period, that is the result of dividing the Dollar amount of (a)
bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with
respect to the Accounts of the Borrowers during such period, by (b) the billings of the Borrowers
with respect to Accounts during such period.

     “Dilution Reserve” means, as of any date of determination, an amount sufficient to
reduce the advance rate against Eligible Accounts by one (1) percentage point for each percentage
point by which Dilution is in excess of five percent (5%).

     “Disputes” shall have the meaning set forth in Section 15.5(b).

     “Dollars” or “$” means, unless otherwise qualified, dollars in lawful currency
of the United States.

     “Domestic Subsidiary” means any Subsidiary of a Credit Party that is organized and
existing under the laws of the United States or any state or commonwealth thereof or under the laws
of the District of Columbia.

     “EBITDA” means, for any period, the sum of the following determined on a Consolidated
basis (but excluding any VIE), without duplication, for the Parent and its Subsidiaries (other than
any VIE) in accordance with GAAP: (a) Net Income for such period plus (b) the sum of the
following to the extent deducted in determining Net Income for such period: (i) Interest Expense,
(ii) Tax Expense, and (iii) amortization and depreciation less (c) interest income and any
extraordinary gains; provided, however, that if any such calculation includes any
period in which an acquisition or sale of a Person or all or substantially all of the assets of a
Person occurred, then such calculation shall be made on a pro forma basis.

     “Eligible Accounts” means, at any particular date, all Accounts of the Borrowers that
the Administrative Agent, in the exercise of its Permitted Discretion, determines to be Eligible
Accounts; provided, however, that, without limiting the right of the Administrative
Agent to establish other criteria of ineligibility, Eligible Accounts shall not include any of the
following Accounts:

     (a) Accounts with respect to which more than sixty (60) days have elapsed since the due date
of the original invoice therefor or more than one hundred twenty (120) days have elapsed since the
date of the original invoice therefor; provided, however, that up to $5,000,000 of
Accounts owed by Account Debtors with payment terms permitting payment more than one hundred (100)
days after the date of the original invoice therefor may be included as eligible pursuant to this
clause (a) so long as no more than sixty (60) days have elapsed since the due date of the
original invoice therefor and no more than one hundred thirty (130) days have elapsed since the
date of the original invoice therefor;

     (b) Accounts that do not conform to all of the warranties and representations regarding the
same which are set forth in this Agreement or any of the other Loan Documents;

10

 

     (c) Accounts (or any other Account due from the same Account Debtor) with respect to which, in
whole or in part, a check, promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned uncollected for any reason;

     (d) Accounts as to which any Borrower has not performed, as of the applicable date of
calculation, all of its obligations then required to have been performed, including the delivery of
merchandise or rendition of services applicable to such Accounts;

     (e) Accounts as to which any one or more of the following events has occurred with respect to
the Account Debtor on such Accounts: death or judicial declaration of incompetency of such Account
Debtor who is an individual; the filing by or against such Account Debtor of a request or petition
for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,
winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the United States
or Canada, any state, territory or province thereof, or any foreign jurisdiction, now or hereafter
in effect; the making of any general assignment by such Account Debtor for the benefit of
creditors; the appointment of a receiver or trustee for such Account Debtor or for any of the
assets of such Account Debtor, including the appointment of or taking possession by a “custodian,”
as defined in Bankruptcy Code; the institution by or against such Account Debtor of any other type
of insolvency proceeding (under the bankruptcy laws of the United States, Canada or otherwise) or
of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, such Account Debtor; the sale, assignment, or transfer of all
or substantially all of the assets of such Account Debtor unless the obligations of such Account
Debtor in respect of the Accounts are assumed by and assigned to such purchaser or transferee; the
nonpayment generally by such Account Debtor of its debts as they become due; or the cessation of
the business of such Account Debtor as a going concern;

     (f) (i) those Accounts of an Account Debtor for whom fifty percent (50%) or more of the
aggregate Dollar amount of such Account Debtor’s outstanding Accounts are classified as ineligible
under the criteria (other than this clause (f)) set forth herein; or (ii) those Accounts with
respect to which the aggregate Dollar amount of all Accounts owed by the Account Debtor thereon
exceeds ten percent (10%), or such higher percentage to which the Administrative Agent agrees, in
its Permitted Discretion, of the aggregate amount of all Accounts at such time to the extent of
such excess;

     (g) Accounts owed by an Account Debtor which: (i) does not maintain its chief executive office
in the United States or, with respect to Accounts owed by an Account Debtor to the Canadian
Borrower, Canada; or (ii) is not organized under the laws of the United States or any state or
territory thereof or, with respect to Accounts owed by an Account Debtor to the Canadian Borrower,
is not organized under the laws of Canada or any province or territory thereof; or (iii) is the
government of any foreign country or sovereign state, or of any state, province, territory,
municipality, or other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the extent that such Accounts are secured
or payable by a letter of credit or acceptance, or insured under foreign credit insurance in each
case, on terms and conditions satisfactory to the Administrative Agent in its sole discretion;

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     (h) Accounts owed by (i) an Account Debtor which is an Affiliate or employee of any Credit
Party or (ii) a VIE;

     (i) Accounts owed by an Account Debtor that the Administrative Agent does not deem to be
creditworthy in any material respect in its Permitted Discretion;

     (j) Accounts owed by an Account Debtor that is indebted to any Borrower in any way pursuant to
a promissory note or other instrument, other than any promissory notes or instruments in an
aggregate amount not to exceed $2,500,000 at any time outstanding, provided that no such
note or instrument was issued in respect of a trade receivable and the Account Debtor obligated
under such note or instrument is current as to all payments such note or instrument;

     (k) Accounts which are subject to any right of setoff by the Account Debtor, unless the
Account Debtor has entered into an agreement acceptable to the Administrative Agent to waive setoff
rights, except, if such right of setoff is exercised in the ordinary course of the business of the
Borrowers, to the extent of such right of setoff;

     (l) Accounts which are subject to any Customer Dispute, but only to the extent of the amount
in dispute;

     (m) Accounts which are owed by the government of the United States or, with respect to the
Canadian Borrower, Canada, or any department, agency, public corporation, or other instrumentality
thereof, unless all required procedures for the effective collateral assignment of the Accounts
under the Federal Assignment of Claims Act of 1940 (or similar Canadian law, as applicable) and any
other steps necessary to perfect the Administrative Agent’s security interest, for the benefit of
the Secured Parties, in such Accounts have been complied with to the Administrative Agent’s
satisfaction with respect to such Accounts;

     (n) Accounts which are owed by any state, municipality, territory, province or other political
subdivision of the United States or, with respect to the Canadian Borrower, Canada, or any
department, agency, public corporation, or other instrumentality thereof and as to which the
Administrative Agent determines in its Permitted Discretion that its security interest therein is
not or cannot be perfected;

     (o) Accounts which represent sales on a bill-and-hold, guaranteed sale, sale and return, sale
on approval, consignment or other repurchase or return basis;

     (p) Accounts which are evidenced by a promissory note or other instrument or by chattel paper;

     (q) Accounts with respect to which the Account Debtor is located in a state, province or other
jurisdiction that requires, as a condition to access to the courts of such jurisdiction, that a
creditor qualify to transact business, file a business activities report or form, or take one or
more other actions, unless the applicable Borrower has so qualified, filed such report or forms, or
taken such actions (and, in each case, paid any required fees or other charges), except to the
extent that such Borrower may qualify subsequently as a foreign entity authorized to transact
business in such state, province or other jurisdiction and gain access to such courts, without

12

 

incurring any cost or penalty viewed by the Administrative Agent to be significant in amount,
and such later qualification cures any access to such courts to enforce payment of such Account;

     (r) Accounts as to which the applicable Account Debtor has not been sent an invoice;

     (s) Accounts which are not a bona fide, valid and, to the best of any Borrower’s knowledge,
enforceable obligation of the Account Debtor thereunder;

     (t) Accounts which are owed by an Account Debtor with whom any Borrower has any agreement or
understanding for deductions from the Accounts, except for discounts or allowances which are made
in the ordinary course of business for prompt payment or volume purchases and which discounts or
allowances are reflected in the calculation of the face value of each invoice related to such
Accounts, or Accounts with respect to which a debit or chargeback has been issued or generated;

     (u) Accounts which are not subject to a valid and continuing first priority Lien in favor of
the Administrative Agent, for the benefit of the Secured Parties, pursuant to the Security
Documents as to which all action necessary or desirable to perfect such security interest shall
have been taken, and to which any Borrower has good and marketable title, free and clear of any
Liens (other than Liens in favor of the Administrative Agent, for the benefit of the Secured
Parties); or

     (v) Accounts as to which a security agreement, financing statement, equivalent security or
Lien instrument or continuation statement is on file or of record in any public office, except as
may have been filed in favor of the Administrative Agent, for the benefit of the Secured Parties,
pursuant to the Security Documents.

     “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved
Fund, and (d) any other Person (other than a natural person) approved by (i) the Administrative
Agent, (ii) the Swingline Lender and the Issuing Lender, and (iii) unless a Default or Event of
Default has occurred and is continuing, the Administrative Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Parent or any of the Parent’s Affiliates or Subsidiaries.

     “Eligible In Transit Inventory” means Inventory that would otherwise be Eligible
Inventory (other than for its location) as to which:

     (a) such Inventory has been paid for in full in cash;

     (b) such Inventory is then in transit (whether by vessel, air or land) from a location outside
of the continental United States to any location (i) that is the subject of an Collateral Access
Agreement relating to such Inventory or (ii) for which the Administrative Agent has established
appropriate Reserves;

     (c) the title of such Inventory has passed to, and such Inventory is owned by, a Borrower and
for which the Administrative Agent shall have received such evidence thereof as the Administrative
Agent may require in its Permitted Discretion;

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     (d) the Administrative Agent has received each of the following: (i) a copy of the certificate
of marine cargo insurance in connection therewith in which the Administrative Agent has been named
as an additional insured and loss payee in a manner acceptable to the Administrative Agent in its
Permitted Discretion; and (ii) a copy of the invoice, packing slip and manifest with respect
thereto;

     (e) such Inventory is either (i) subject to a negotiable bill of lading (A) that is consigned
to the Administrative Agent, (B) that was issued by the carrier in respect of such Inventory and
(C) is in the possession of the customs broker, freight forwarder or other third party handling the
shipping and delivery of such Inventory acting on behalf of the Administrative Agent or (ii)
subject to a negotiable cargo receipt and is not the subject of a bill of lading (other than a
negotiable bill of lading consigned to, and in the possession of a consolidator or the
Administrative Agent, or their respective agents) and such negotiable cargo receipt is (A)
consigned to the Administrative Agent, (B) issued by a consolidator in respect of such Inventory
and (C) either in the possession of the Administrative Agent or the customs broker, freight
forwarder or other third party handling the shipping and delivery of such Inventory acting on
behalf of the Administrative Agent;

     (f) such Inventory is insured against types of loss, damage, hazards, and risks, and in
amounts, satisfactory to the Administrative Agent;

     (g) the Administrative Agent has received an executed Collateral Access Agreement with respect
to such Inventory; and

     (h) such Inventory shall not have been in transit for more than ninety (90) days.

     “Eligible Inventory” means, as of any particular date, the portion of the Inventory of
the Borrowers that the Administrative Agent, in the exercise of its Permitted Discretion,
determines to be Eligible Inventory; provided, however, that without limiting the
right of the Administrative Agent to establish other criteria of ineligibility, Eligible Inventory
shall not include any of the following Inventory:

     (a) Inventory that is not owned solely by any Borrower;

     (b) Inventory that does not conform to all of the warranties and representations regarding the
same which are set forth in this Agreement or any of the other Loan Documents;

     (c) Inventory that is not located in the continental United States or, with respect to
Inventory of the Canadian Borrower, Canada (other than the Province of Quebec), either (i) on real
property owned by any Borrower or any Subsidiary Guarantor, or (ii) on leased premises (A) in
regard to which the landlord thereof, or any bailee, warehouseman or similar party that will be in
possession of such Inventory, shall have executed and delivered to the Administrative Agent a
Collateral Access Agreement or (B) for which the Administrative Agent has established appropriate
Reserves;

     (d) Inventory that is subject to any claim of reclamation, Lien, adverse claim, interest or
right of any other Person, subject only to normal and customary warehouseman, filler, packer,

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or processor charges payable to a Person who is party to an Collateral Access Agreement
relating to such Inventory;

     (e) Inventory to which no Borrower has good, valid, and marketable title;

     (f) Inventory that constitutes goods returned or rejected by a Borrower’s customer for which a
credit has not yet been issued;

     (g) Inventory that is damaged;

     (h) Inventory that has been determined by the Administrative Agent, in its Permitted
Discretion, to be a “no charge” or sample item;

     (i) Inventory that is held by a Borrower pursuant to consignment, sale or return, sale on
approval or any similar arrangement;

     (j) Inventory that is not in good condition or does not meet all standards imposed by any
Person having regulatory authority over such goods or their use or sale, or Inventory that is not
currently saleable in the ordinary course of any Borrower’s business;

     (k) Inventory that consists of work-in-process or spare parts;

     (l) Inventory constituting shrink reserve;

     (m) Inventory owned by a VIE;

     (n) Inventory scheduled for return to vendors, Inventory which is obsolete or slow-moving (for
purposes of this clause (n), what constitutes “obsolete or slow-moving” Inventory shall be
determined by the Administrative Agent in its Permitted Discretion), display items, packaging
materials, labels or name plates or similar supplies;

     (o) Inventory that is not personal property in which any Borrower has granted a valid and
continuing first Lien in favor of the Administrative Agent, for the benefit of the Secured Parties,
pursuant to the Security Documents, or as to which all action necessary to perfect such security
interest has not been taken;

     (p) Inventory that constitutes goods in transit from a location outside of the United States
to any location (i) that is the subject of an Collateral Access Agreement relating to such
Inventory or (ii) for which the Administrative Agent has established appropriate Reserves;
provided, however, that up to $12,500,000 of Inventory so in transit from vendors
and suppliers may be included as eligible pursuant to this clause (p) so long as such
Inventory is Eligible In Transit Inventory; or

     (q) Inventory that is covered, in whole or in part, by any security agreement, financing
statement, equivalent security or Lien instrument or continuation statement which is on file or of
record in any public office, except such as may have been filed in favor of the Administrative
Agent, for the benefit of the Secured Parties, pursuant to the Security Documents.

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     “Eligible L/C Inventory” means Inventory that would otherwise be Eligible Inventory
(other than for its location) as to which:

     (a) such Inventory is purchased with and subject to a Commercial Letter of Credit;

     (b) such Inventory is then in transit (whether by vessel, air or land) from a location outside
of the continental United States to any location (i) that is the subject of an Collateral Access
Agreement relating to such Inventory or (ii) for which the Administrative Agent has established
appropriate Reserves;

     (c) the title of such Inventory has passed to, and such Inventory is owned by, a Borrower and
for which the Administrative Agent shall have received such evidence thereof as the Administrative
Agent may require in its Permitted Discretion;

     (d) the Administrative Agent has received each of the following: (i) a copy of the certificate
of marine cargo insurance in connection therewith in which the Administrative Agent has been named
as an additional insured and loss payee in a manner acceptable to the Administrative Agent in its
Permitted Discretion; and (ii) a copy of the invoice, packing slip and manifest with respect
thereto;

     (e) such Inventory is either (i) subject to a negotiable bill of lading (A) that is consigned
to the Issuing Lender (unless and until such time as the Administrative Agent shall require that
the same be consigned to the Administrative Agent, then thereafter, that is consigned to the
Administrative Agent either directly or by means of endorsements), (B) that was issued by the
carrier in respect of such Inventory and (C) is either in the possession of the customs broker,
freight forwarder or other third party handling the shipping and delivery of such Inventory acting
on behalf of the Administrative Agent or the subject of a telefacsimile or other electronic copy
that the Administrative Agent has received from the Issuing Lender with respect to the Letter of
Credit and as to which the Administrative Agent has also received confirmation from the Issuing
Lender that such document is in transit to the Administrative Agent or the customs broker, freight
forwarder or other third party handling the shipping and delivery of such Inventory acting on
behalf of the Administrative Agent or (ii) subject to a negotiable cargo receipt and is not the
subject of a bill of lading (other than a negotiable bill of lading consigned to, and in the
possession of a consolidator or the Administrative Agent, or their respective agents) and such
negotiable cargo receipt is (A) consigned to the Issuing Lender (unless and until such time as the
Administrative Agent shall require that the same be consigned to the Administrative Agent, then
thereafter, that is consigned to the Administrative Agent either directly or by means of
endorsements), (B) issued by a consolidator in respect of such Inventory and (C) either in the
possession of the Administrative Agent or the customs broker, freight forwarder or other third
party handling the shipping and delivery of such Inventory acting on behalf of the Administrative
Agent or the subject of a telefacsimile or other electronic copy that the Administrative Agent has
received from the Issuing Lender with respect to the Letter of Credit and as to which the
Administrative Agent has also received a confirmation from the Issuing Lender that such document is
in transit to the Administrative Agent or the customs broker, freight forwarder or other third
party handling the shipping and delivery of such Inventory;

16

 

     (f) such Inventory is insured against types of loss, damage, hazards, and risks, and in
amounts, satisfactory to the Administrative Agent;

     (g) the Administrative Agent has received an executed Collateral Access Agreement with respect
to such Inventory; and

     (h) such Inventory shall not have been in transit for more than ninety (90) days.

     “Employee Benefit Plan” means any employee benefit plan within the meaning of Section
3(3) of ERISA (a) that is maintained for employees of any Borrower or any ERISA Affiliate, (b)
that has at any time within the preceding six (6) years been maintained for the employees of any
Borrower or any current or former ERISA Affiliate, (c) to which any Borrower or any ERISA Affiliate
makes contributions or is required to make contributions, (d) to which any Borrower or any ERISA
Affiliate has made or has been required to make contributions at any time within the preceding six
(6) years or (e) to which any Borrower or any ERISA Affiliate has, or has had at any time within
the preceding six (6) years, any liability, contingent or otherwise.

     “England” means England, Inc., a Michigan corporation.

     “Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of
noncompliance or violation, investigations (other than internal reports prepared by any Person in
the ordinary course of business and not in response to any third party action or request of any
kind) or proceedings relating in any way to any actual or alleged violation of or liability under
any Environmental Law or relating to any permit issued, or any approval given, under any such
Environmental Law, including any and all claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or by any third party for damages,
contribution, indemnification cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to human health or the
environment.

     “Environmental Laws” means any and all federal (United States or Canada), foreign,
state, provincial and local laws, statutes, ordinances, codes, rules, standards and regulations,
permits, licenses, approvals, interpretations, decrees, agreements and orders of courts or
Governmental Authorities, relating to the protection of human health or the environment, including
requirements pertaining to the manufacture, processing, distribution, use, treatment, storage,
disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation
of Hazardous Materials.

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

     “ERISA” means the Employee Retirement Income Security Act of 1974, and the rules and
regulations thereunder, each as amended or modified from time to time.

17

 

     “ERISA Affiliate” means any Person who, together with any Credit Party, is treated as
a single employer or who is under common control with any Credit Party within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

     “Eurodollar Reserve Percentage” means, for any day, the percentage (expressed as a
decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in
effect for such day as prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including any basic, supplemental or
emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities
for a member bank of the Federal Reserve System in New York City.

     “Event of Default” means any of the events specified in Section 13.1, provided
that any requirement for passage of time, giving of notice, or any other condition, has been
satisfied.

     “Excess Availability” means, as of any particular time, (a) the lesser of (i) the
Revolving Credit Commitment minus the Reserves and (ii) the Borrowing Base, minus
(b) in each case, the sum of (i) the Aggregate Revolving Credit Obligations plus (ii) the
aggregate amount of all then outstanding and unpaid trade payables and other obligations of the
Borrowers which are outstanding more than sixty (60) days past due as of the end of the immediately
preceding month or at the Administrative Agent’s option, as of a more recent date based on such
reports as the Administrative Agent may from time to time specify (other than trade payables or
other obligations being contested or disputed by a Borrower in good faith), plus (iii)
without duplication, the amount of checks issued by the Borrowers to pay trade payables and other
obligations which are more than sixty (60) days past due as of the end of the immediately preceding
month or at the Administrative Agent’s option, as of a more recent date based on such reports as
the Administrative Agent may from time to time specify (other than trade payables or other
obligations being contested or disputed by a Borrower in good faith), but not yet sent.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Lender or any other recipient of any payment to be made by or on account of any obligation
of any Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction
(or any political subdivision thereof) under the laws under which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by the United States or any similar
tax imposed by any other jurisdiction in which any Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by a Borrower under Section
6.12(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with Section 6.11(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending office (or assignment),
to receive additional amounts from the Borrowers with respect to such withholding tax pursuant to
Section 6.11(a).

     “Existing Credit Agreement” means that certain Credit Agreement, dated as of March 30,
2004, by and among Parent, certain Subsidiaries of the Parent party thereto as guarantors, the

18

 

lenders party thereto and Wachovia, as administrative agent for such lenders, as amended by
that certain Consent and Waiver dated November 11, 2005, that certain First Amendment to Credit
Agreement dated as of November 22, 2005, and that certain Second Amendment to Credit Agreement
dated as of February 9, 2007.

     “Existing Reimbursement and Fee Documents” means shall have the meaning assigned
thereto in Section 3.8.

     “Extensions of Credit” means, as to any Lender at any time, (a) an amount equal to the
sum of (i) the aggregate principal amount of all Revolving Credit Loans made by such Lender then
outstanding, (ii) such Lender’s Revolving Credit Commitment Percentage of the L/C Obligations then
outstanding, (iii) such Lender’s Revolving Credit Commitment Percentage of the Swingline Loans then
outstanding, and (iv) such Lender’s Revolving Credit Commitment Percentage of the Agent Advances
then outstanding or (b) the making of any Loan or participation in any Letter of Credit by such
Lender, as the context requires.

     “FASB 142” means the Financial Accounting Standards Board Statement No. 142, as in
effect on the date of this Agreement, specifying applicable accounting principles with respect to
goodwill adjustments.

     “FDIC” means the Federal Deposit Insurance Corporation, or any successor thereto.

     “Federal Funds Rate” means the rate per annum (rounded upwards, if necessary, to the
next higher 1/100th of 1%) representing the daily effective federal funds rate as quoted
by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519)
or any successor or substitute publication selected by the Administrative Agent. If, for any
reason, such rate is not available, then “Federal Funds Rate” means a daily rate which is
determined, in the opinion of the Administrative Agent, to be the rate at which federal funds are
being offered for sale in the national federal funds market at 9:00 a.m. Rates for weekends or
holidays shall be the same as the rate for the most immediately preceding Business Day.

     “Fee Letter” shall have the meaning assigned thereto in Section 6.3(b).

     “Fiscal Year” means the fiscal year of the Parent and its Subsidiaries ending on the
last Saturday in April.

     “Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a)
the sum of (i) EBITDA minus (ii) unfinanced Capital Expenditures minus (iii) Tax
Expense (payable in cash) minus (iv) dividends and distributions (payable in cash) made by
the Parent minus (v) the amount paid by the Parent to purchase any of its Equity Interests
minus (vi) loans and cash contributions made after the Closing Date by any Credit Party or
any Subsidiary of a Credit Party to a Foreign Subsidiary to (b) Fixed Charges, in each case, for
the period of twelve (12) consecutive months ending on or immediately prior to such date.

     “Fixed Charges” means, with respect to the Parent and its Subsidiaries (other than any
VIE) for any period, the sum of the following determined on a Consolidated basis (but excluding any
VIE), without duplication, for the Parent and its Subsidiaries in accordance with GAAP: (a)
Interest Expense (payable in cash); and (b) principal payments with respect to Debt.

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

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

     “Funding Borrower” shall have the meaning assigned thereto in Section 4.1(f).

     “GAAP” means generally accepted accounting principles, as recognized by the American
Institute of Certified Public Accountants and the Financial Accounting Standards Board,
consistently applied and maintained on a consistent basis for the Parent and its Subsidiaries
throughout the period indicated and (subject to Section 15.8) consistent with the prior
financial practice of the Parent and its Subsidiaries.

     “Governmental Approvals” means all authorizations, consents, permits, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all Governmental
Authorities.

     “Governmental Authority” means any nation, province, territory, state or political
subdivision thereof, and any government or any Person exercising executive, legislative, regulatory
or administrative powers or functions of or pertaining to government, and any corporation or other
entity owned or controlled, through Equity Interests or capital ownership or otherwise, by any of
the foregoing.

     “Guaranty” shall have the meaning assigned thereto in Section 5.1.

     “Guaranty Obligation” means, with respect to the Parent and its Subsidiaries, without
duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such
Person has directly or indirectly guaranteed any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or in part);
provided, that the term Guaranty Obligation shall not include (i) endorsements for
collection or deposit in the ordinary course of business or (ii) any guaranty by any Borrower of
any operating lease of any Subsidiary of such Borrower.

     “Hazardous Materials” means any substances or materials (a) which are or become
defined as hazardous wastes, hazardous substances, pollutants, contaminants, chemical substances or
mixtures or toxic substances under any Environmental Law, (b) which are toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to
human health or the environment and are or become regulated by any Governmental Authority, (c) the
presence of which require investigation or remediation under any

20

 

Environmental Law or common law, (d) the discharge or emission or release of which requires a
permit or license under any Environmental Law or other Governmental Approval, (e) which are deemed
to constitute a nuisance or a trespass which pose a health or safety hazard to Persons or
neighboring properties, (f) which consist of underground or aboveground storage tanks, whether
empty, filled or partially filled with any substance, or (g) which contain asbestos,
polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.

     “Hedging Agreement” means any agreement with respect to any Interest Rate Contract,
forward rate agreement, commodity swap, forward foreign exchange agreement, currency swap
agreement, cross-currency rate swap agreement, currency option agreement or other agreement or
arrangement designed to alter the risks of any Person arising from fluctuations in interest rates,
currency values or commodity prices, all as amended, restated, supplemented or otherwise modified
from time to time.

     “Hedging Obligations” shall have the meaning assigned thereto in the definition of
Obligations.

     “Indemnified Taxes” means Taxes and Other Taxes other than Excluded Taxes.

     “Indemnitee” shall have the meaning assigned thereto in Section 15.2(b).

     “Independent Accountants” shall have the meaning assigned thereto in Section
9.1(c).

     “Information Materials” shall have the meaning assigned thereto in Section
9.7.

     “Interest Expense” means, with respect to the Parent and its Subsidiaries (other than
any VIE) for any period, the gross interest expense (including interest expense attributable to
Capital Leases and all net payment obligations pursuant to Hedging Agreements but excluding the
effect of any changes in fair value with respect to any such Hedging Agreements) of the Parent and
its Subsidiaries, all determined for such period on a Consolidated basis (but excluding any VIE),
without duplication, in accordance with GAAP.

     “Interest Period” shall have the meaning assigned thereto in Section 6.1(b).

     “Interest Rate Contract” means any interest rate swap agreement, interest rate cap
agreement, interest rate floor agreement, interest rate collar agreement, interest rate option or
any other agreement regarding the hedging of interest rate risk exposure executed in connection
with hedging the interest rate exposure of any Person and any confirming letter executed pursuant
to such agreement, all as amended, restated, supplemented or otherwise modified from time to time.

     “Inventory” means all “inventory,” as such term is defined in the UCC, of each Credit
Party, whether now existing or hereafter acquired, wherever located, and in any event including
inventory, merchandise, goods and other personal property that are held by or on behalf of a Credit
Party for sale or lease or are furnished or are to be furnished under a contract of service, goods
that are leased by a Credit Party as lessor, or that constitute raw materials, samples,
work-in-process, finished goods, returned goods, promotional materials or materials or supplies of
any kind, nature or description used or consumed or to be used or consumed in such Credit Party’s
business or in the

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processing, production, packaging, promotion, delivery or shipping of the same, including all
supplies and embedded software.

     “ISP98” means the International Standby Practices (1998 Revision, effective January 1,
1999), International Chamber of Commerce Publication No. 590.

     “Issuing Lender” means, individually and collectively, (a) Wachovia, in its capacity
as issuer of any Letter of Credit, or any successor thereto, (b) unless resulting from the
Borrowers’ failure to satisfy the conditions of Section 7.2, if Wachovia is unwilling or
unable to issue a Letter of Credit requested pursuant to Article 3, any Lender, and (c)
with respect to the Letters of Credit listed on Schedule 3.8 that were not issued by
Wachovia, each of the following Lenders or, with respect to National City Business Credit, Inc., an
Affiliate of a Lender: National City Bank; JPMorgan Chase Bank, N.A. SunTrust Bank; and Branch
Banking and Trust Company.

     “L/C Commitment” means, as to any Lender, the obligation of such Lender to participate
in Letters of Credit hereunder in an aggregate principal amount at any time outstanding not to
exceed the amount set forth opposite such Lender’s name on the Register, as such amount may be
reduced or otherwise modified at any time or from time to time pursuant to the terms hereof. The
L/C Commitment of all Lenders shall be the lesser of (a) the Revolving Credit Commitment and (b)
Fifty Million Dollars ($50,000,000).

     “L/C Commitment Percentage” means, as to any Lender, at any time, the ratio of (a) the
amount of the L/C Commitment of such Lender to (b) the L/C Commitment of all Lenders.

     “L/C Facility” means the letter of credit facility established pursuant to Article
3.

     “L/C Obligations” means at any time, an amount equal to the sum of (a) the aggregate
undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount
of drawings under Letters of Credit which have not then been reimbursed pursuant to Section
3.5.

     “Lender” means (a) each Person executing this Agreement as a Lender (including the
Issuing Lender and the Swingline Lender unless the context otherwise requires) set forth on the
signature pages hereto and (b) each Person that hereafter becomes a party to this Agreement as a
Lender pursuant to Section 2.7 or 15.9.

     “Lender Agreement” means a Lender Agreement executed pursuant to Section 2.7,
substantially in the form attached hereto as Exhibit H.

     “Lender Group” means, collectively, the Administrative Agent and the Lenders. In
addition, if Wachovia (Central) ceases to be the Administrative Agent or any Lender ceases to be a
Lender, then for any Lender Hedging Agreement entered into by any Credit Party with Wachovia or
such Lender (or an Affiliate of such Person), as the case may be, while Wachovia (Central) was the
Administrative Agent or a Lender (in each case as defined hereunder), Wachovia, such Lender (or
such Affiliate), as the case may be, shall be a deemed to be a member of the Lender Group for
purposes of determining the secured parties under any of the Security Documents.

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     “Lender Hedging Agreement” means any Hedging Agreement between any Credit Party and
any Person (or Affiliate of such Person) that was the Administrative Agent or a Lender (in each
case as defined hereunder) at the time it entered into such Hedging Agreement, whether or not such
Person has ceased to be the Administrative Agent or a Lender under this Agreement.

     “Lending Office” means, with respect to any Lender, the office of such Lender
maintaining such Lender’s Revolving Credit Commitment Percentage or L/C Commitment Percentage of
the Extensions of Credit, as applicable.

     “Letters of Credit” means either Standby Letters of Credit or Commercial Letters of
Credit issued by the Issuing Lender on behalf of the Borrowers from time to time in accordance with
Article 3.

     “LIBOR” means the rate of interest per annum determined on the basis of the rate for
deposits in Dollars in minimum amounts of at least $3,000,000 for a period equal to the applicable
Interest Period which appears on the that page of the Reuters or Bloomberg reporting service (as
then being used by the Administrative Agent to obtain such interest rate quotes) that displays
British Bankers’ Association Interest Settlement Rates for deposits in Dollars for a period equal
to such Interest Period at approximately 11:00 a.m. (London time) two (2) Business Days prior to
the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest
1/100th of 1%). If, for any reason, such rate does not appear thereon, then
“LIBOR” shall be determined by the Administrative Agent to be the arithmetic average of the
rate per annum at which deposits in Dollars in minimum amounts of at least $3,000,000 would be
offered by first class banks in the London interbank market to the Administrative Agent at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period. Each calculation by the
Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest
error.

     “LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the next higher
1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:

	 	 	 	 	 	 	 
	 

	 	LIBOR Rate =
	 	                LIBOR	 	 
	 

	 	 	 	 

1.00-Eurodollar Reserve Percentage
	 	 

     “LIBOR Rate Loan” means any Loan bearing interest at a rate based upon the LIBOR Rate
as provided in Section 6.1(a).

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement, easement, security agreement or
encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.

     “Loan Documents” means, collectively, this Agreement, the Notes, the Applications, the
Security Documents, the Collateral Access Agreements, each joinder agreement executed pursuant to
Section 10.11, and each other document, instrument, certificate and agreement executed and
delivered by any Credit Party or any Subsidiary thereof in connection with this

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Agreement or any other Loan Document or otherwise referred to herein or therein or
contemplated hereby or thereby (excluding any Hedging Agreement).

     “Loans” means the collective reference to the Revolving Credit Loans, the Agent
Advances and the Swingline Loans and “Loan” means any of such Loans.

     “Margin Rate Period” shall have the meaning assigned thereto in Section
6.1(c).

     “Material Adverse Effect” means, with respect to the Parent or any of its
Subsidiaries, (a) a material adverse effect on the assets, liabilities (whether actual or
contingent), business, prospects, operations or condition (financial or otherwise) of the Parent
and its Subsidiaries, taken as a whole, (b) a material impairment of (i) the ability of the Parent
and its Subsidiaries, taken as a whole, to perform their obligations under the Loan Documents or
(ii) the ability of the Lender Group to enforce the Obligations, (c) a material impairment of the
enforceability or priority of the Administrative Agent’s Liens with respect to the Collateral as a
result of an action or failure to act on the part of the Parent or any of its Subsidiaries or (d)
an impairment of the Administrative Agent’s ability to realize upon Collateral included in the
calculation of the Borrowing Base with a value of at least $10,000,000 in the aggregate.

     “Material Contract” means (a) any contract or other agreement (other than the Loan
Documents), written or oral, of any Borrower or any of its Subsidiaries involving monetary
liability of or to any Person in an amount in excess of $5,000,000 and (b) any other contract or
other agreement, written or oral, of any Borrower or any of its Subsidiaries the failure of any
Person party thereto to comply with which, or the cancellation of which, could reasonably be
expected to have a Material Adverse Effect.

     “Material Operating Subsidiary” means a Subsidiary of a Credit Party that has assets
constituting at least ten percent (10%) of total assets of the Parent on a Consolidated basis (but
excluding any VIE) as of the end of the immediately preceding fiscal quarter for which the Parent
has delivered financial statements pursuant to Section 9.1(b).

     “Maximum Borrower Liability” shall have the meaning assigned thereto in
Section 4.1(c).

     “Maximum Guaranteed Amount” shall have the meaning assigned thereto in
Section 5.1(g).

     “Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA to which any Borrower or any ERISA Affiliate is making, or is accruing an obligation to make,
or has made, or has accrued an obligation to make, contributions within the preceding six (6)
years.

     “Net Cash Proceeds” means, as applicable, (a) with respect to any sale or other
disposition of assets, the gross cash proceeds received by any Borrower or any of their
Subsidiaries from such sale less the sum of (i) all income taxes and other taxes assessed
by a Governmental Authority as a result of such sale and any other fees and expenses incurred in
connection therewith and (ii) the principal amount of, premium, if any, and interest on any Debt
secured by a Lien on the asset (or a portion thereof) sold, which Debt is required to be repaid in

24

 

connection with such sale, (b) with respect to any offering of Equity Interests or issuance of
Debt, the gross cash proceeds received by any Borrower or any of their Subsidiaries therefrom
less all legal, underwriting and other fees and expenses incurred in connection therewith
and (c) with respect to any payment under an insurance policy or in connection with a condemnation
proceeding, the amount of cash proceeds received by any Borrower or any of their Subsidiaries from
an insurance company or Governmental Authority, as applicable, net of all expenses of collection.

     “Net Income” means, with respect to any Person for any period, the aggregate of the
net income (loss) of such Person and its Subsidiaries (other than any VIE), on a consolidated
basis, for such period (and as to the Parent and its Subsidiaries (other than any VIE), excluding
to the extent included therein (a) any extraordinary, one-time or non-recurring gains, (b) non-cash
losses or charges and (c) non-cash items resulting from operations that have been discontinued on
or before the end of the applicable period) after deducting all charges which should be deducted
before arriving at the net income (loss) for such period (but without regard to operations that
have been discontinued on or before the date hereof) and after deducting the provision for taxes
for such period, all as determined in accordance with GAAP; provided, that

     (i) the net income of any Person that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions paid or payable to
such Person or a Subsidiary of such Person;

     (ii) except to the extent included pursuant to the foregoing clause, the net income of any
Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or
consolidated with such Person or any of its Subsidiaries or that Person’s assets are acquired by
such Person or by any of its Subsidiaries shall be excluded; and

     (iii) the net income (if positive) of any Wholly-Owned Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such Wholly-Owned Subsidiary to
such Person or to any other Wholly-Owned Subsidiary of such Person is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Wholly-Owned Subsidiary shall be
excluded.

     For the purposes of this definition, net income excludes any gain and non-cash loss together
with any related provision for taxes for such gain and non-cash loss realized upon the sale or
other disposition of any assets that are not sold in the ordinary course of business (including
dispositions pursuant to sale and leaseback transactions and for this purpose sales or other
dispositions of retail stores, warehouses, distribution centers or corporate offices shall not be
deemed to be in the ordinary course of the business of the Parent and its Subsidiaries) or of any
Equity Interests of such Person or a Subsidiary of such Person and any net income or non-cash loss
realized as a result of changes in accounting principles or the application thereof to such Person
and any net income realized as the result of the extinguishment of debt. The amounts payable in
respect of leases of real property treated as capital leases under GAAP, but not as Capital Leases
hereunder, will be treated as an expense for purposes of calculating Net Income.

25

 

     “Net OLV” means, as to each of the following categories of assets, the value that is
estimated to be recoverable in an orderly liquidation thereof, net of liquidation expenses of
selling such category of assets, as determined from time to time by a qualified appraiser selected
by the Administrative Agent: retail; upholstery; case goods; and raw materials.

     “New Lender” shall have the meaning assigned thereto in Section 2.7(a)(i).

     “Notes” means the collective reference to the Revolving Credit Notes and the Swingline
Notes.

     “Notice of Account Designation” shall have the meaning assigned thereto in
Section 2.3(b).

     “Notice of Borrowing” shall have the meaning assigned thereto in Section
2.3(a).

     “Notice of Conversion/Continuation” shall have the meaning assigned thereto in
Section 6.2.

     “Notice of Requested Commitment Increase” shall have the meaning assigned thereto in
Section 2.7(a)(i).

     “Obligations” means, in each case, whether now in existence or hereafter arising: (a)
the principal of and interest on (including interest accruing after the filing of any bankruptcy or
similar petition) the Loans, (b) the L/C Obligations, (c) all existing or future payments and other
obligations owing by any Credit Party under any Lender Hedging Agreement (all such obligations with
respect to any such Lender Hedging Agreement, “Hedging Obligations”), (d) all existing or
future payments and other obligations owing by any Credit Party under any other Bank Products
Document and (e) all other fees and commissions (including attorneys’ fees), charges, indebtedness,
loans, liabilities, financial accommodations, obligations, covenants and duties owing by any Credit
Party or any of their Subsidiaries to the Administrative Agent or any other member of the Lender
Group, in each case under or in respect of this Agreement, any Note, any Letter of Credit or any of
the other Loan Documents of every kind, nature and description, direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether
or not evidenced by any note.

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

     “Officer’s Compliance Certificate” shall have the meaning assigned thereto in
Section 9.2.

     “Other Debtor Relief Law” shall have the meaning assigned thereto in
Section 4.1(c)(iii).

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

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     “Overadvance” shall have the meaning assigned thereto in Section 2.2(c).

     “Patent Security Agreements” means, collectively, the Patent Security Agreements made
in favor of the Administrative Agent, on behalf of the Secured Parties, from time to time.

     “Parent” shall have the meaning assigned thereto in the Preamble to this Agreement.

     “Participant” shall have the meaning assigned thereto in Section 15.9(d).

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

     “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which
is subject to the provisions of Title IV of ERISA or Section 412 of the Code and (a) which is
maintained for the employees of any Borrower or any ERISA Affiliates, (b) which has at any time
within the preceding six (6) years been maintained for the employees of any Borrower or any of its
current or former ERISA Affiliates, (c) to which any Borrower or any ERISA Affiliate makes
contributions or is required to make contributions, (d) to which any Borrower or any ERISA
Affiliate has made or has been required to make contributions at any time within the preceding six
(6) years or (e) to which any Borrower or any ERISA Affiliate has, or has had at any time within
the preceding six (6) years, any liability, contingent or otherwise.

     “Permitted Acquisitions” shall have the meaning assigned thereto in Section
12.3(c).

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

     “Permitted Lien” means any Lien permitted pursuant to Section 12.2.

     “Person” means an individual, corporation, limited liability company, partnership,
association, trust, business trust, joint venture, joint stock company, pool, syndicate, sole
proprietorship, unincorporated organization, Governmental Authority or any other form of entity or
group thereof.

     “PPSA” means the Personal Property Security Act (Ontario) (as may be amended and in
effect from time to time), as applicable in the context, or analogous legislation of the applicable
Canadian province, provinces, territory or territories in respect of the Canadian Borrower.

     “Prime Rate” means, at any time, the rate of interest per annum publicly announced
from time to time by Wachovia as its prime rate. Each change in the Prime Rate shall be effective
as of the opening of business on the day such change in such prime rate occurs. The parties hereto
acknowledge that the rate announced publicly by Wachovia as its prime rate is an index or base rate
and shall not necessarily be its lowest or best rate charged to its customers or other banks.

     “Register” shall have the meaning assigned thereto in Section 15.9(c).

     “Reimbursement Obligation” means the obligation of the Borrowers to reimburse the
Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

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

     “Release” means, with respect to Hazardous Materials, any releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping, as any of such terms may be further defined under any Environmental Laws,
into or through any medium, including groundwater, surface water, land, soil or air.

     “Required Lenders” means, at any date, (a) any combination of Lenders holding in the
aggregate greater than fifty percent (50%) of the outstanding Extensions of Credit plus the
aggregate unused Revolving Credit Commitment at such time or, (b) if the Credit Facility has been
terminated pursuant to Section 13.2, any combination of Lenders holding greater than fifty
percent (50%) of the aggregate Extensions of Credit; provided that the Commitment of, and
the portion of the Extensions of Credit, as applicable, held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required Lenders.

     “Reserves” means reserves that the Administrative Agent may establish from time to
time in its Permitted Discretion for such purposes as the Administrative Agent shall deem
necessary. Without limiting the generality of the foregoing, the following reserves shall be
deemed an exercise of the Administrative Agent’s Permitted Discretion: (a) reserves for price
adjustments and damages; (b) reserves for obsolescence of Inventory; (c) reserves for special order
goods and deferred shipment sales; (d) reserves for accrued but unpaid vendor royalties and ad
valorem and personal property tax liability; (e) reserves for market value declines; (f) Account
reserves; (g) Bank Product Reserves; (h) reserves for rent to be paid with respect to leased assets
and warehousemen’s, bailees’, shippers’ or carriers’ charges; (i) to the extent not excluded
pursuant to the definition of Eligible Accounts, the Dilution Reserve; (j) reserves for amounts
owing by a Borrower to a credit card issuer or credit card processor; (k) reserves for changes in
Inventory turnover or mix that results in a decrease in the value of the Inventory; (l) reserves
for duty and freight on in transit goods; (m) reserves for customer deposits; (n) reserves for
variances between the Borrowers’ perpetual Inventory records and periodic test counts by the
Administrative Agent’s field examiners; (o) reserves for the face amount of letters of credit
existing on the Closing Date that were issued for the account of the Parent or any of its
Subsidiaries but do not constitute Letters of Credit; and (p) reserves for any other matter that
has a negative impact on the value of the Collateral.

     “Responsible Officer” means any of the following: the chief executive officer, chief
financial officer, senior vice president, principal accounting officer or treasurer of the Parent.
Any document delivered hereunder that is signed by a Responsible Officer shall be conclusively
presumed to have been authorized by all necessary corporate, partnership or other action on the
part of the Parent and such Responsible Officer shall be conclusively presumed to have acted on
behalf of the Parent.

     “Revolving Credit Commitment” means (a) as to any Lender, the obligation of such
Lender to make Revolving Credit Loans to the account of the Borrowers hereunder in an aggregate
principal amount at any time outstanding not to exceed the amount set forth opposite such Lender’s
name on the Register as such amount may be reduced or modified at any time or

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from time to time pursuant to the terms hereof and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Revolving Credit Loans, as such amount may be reduced or modified
at any time or from time to time pursuant to the terms hereof. The Revolving Credit Commitment of
all Lenders on the Closing Date shall be Two Hundred Twenty Million Dollars ($220,000,000).

     “Revolving Credit Commitment Percentage” means, as to any Lender at any time, the
ratio of (a) the amount of the Revolving Credit Commitment of such Lender to (b) the Revolving
Credit Commitments of all Lenders.

     “Revolving Credit Facility” means the revolving credit facility established pursuant
to Article 2.

     “Revolving Credit Loans” means any revolving loan made to the Borrowers pursuant to
Section 2.1, and all such revolving loans collectively as the context requires.

     “Revolving Credit Maturity Date” means the earliest of (a) February 6, 2013, (b) the
date of termination of the Revolving Credit Facility by the Borrowers pursuant to
Section 2.6, or (c) the date of termination of the Revolving Credit Facility by the
Administrative Agent on behalf of the Lenders pursuant to Section 13.2(a).

     “Revolving Credit Note” means a promissory note made by the Borrowers payable to the
order of a Lender, substantially in the form of Exhibit A-1, evidencing a Revolving Credit
Loan, and any amendments and modifications thereto, any substitutes therefor, and any replacements,
restatements, renewals or extensions thereof, in whole or in part.

     “Sanctioned Country” means a country subject to a sanctions program identified on the
list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/programs/index.html, or as otherwise
published from time to time.

     “Sanctioned Person” means (a) a person named on the list of Specially Designated
Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published
from time to time, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an
organization controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned
Country, to the extent subject to a sanctions program administered by OFAC.

     “Secured Parties” means the members of the Lender Group and the Bank Product
Providers.

     “Security Agreement” means that certain Security Agreement dated as of even date
herewith executed by the Credit Parties (other than the Canadian Borrower and any other Credit
Party organized under the laws of Canada or any province or territory thereof) in favor of the
Administrative Agent, for the benefit of the Secured Parties.

     “Security Documents” means the collective reference to the Security Agreement, the
Canadian Security Agreement, the Canadian Pledge Agreement, the Copyright Security Agreements, the
Patent Security Agreements, the Trademark Security Agreements, the Blocked

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Account Agreements and each other agreement or writing pursuant to which any Borrower or any
Subsidiary thereof purports to pledge or grant a security interest in any property or assets
securing the Obligations or any such Person purports to guaranty the payment or performance of the
Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to
time.

     “Solvent” means, as to the Borrowers and their Subsidiaries on a particular date, that
any such Person (a) has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage and is able to pay its debts as they
mature, (b) has assets having a value, both at fair valuation and at present fair saleable value,
greater than the amount required to pay its probable liabilities (including contingencies), and (c)
does not believe that it will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.

     “Standby Letter of Credit” means a Letter of Credit issued to support obligations of
any Borrower or its Subsidiaries incurred in the ordinary course of its business, and which is not
a Commercial Letter of Credit.

     “Subsidiary” means as to any Person, any corporation, partnership, limited liability
company or other entity of which more than fifty percent (50%) of the outstanding capital stock or
other Equity Interests having ordinary voting power to elect a majority of the board of directors
or other managers of such corporation, partnership, limited liability company or other entity is at
the time owned by or the management is otherwise controlled by such Person, or one or more
Subsidiaries of such Person (irrespective of whether, at the time, capital stock or other Equity
Interest of any other class or classes of such corporation, partnership, limited liability company
or other entity shall have or might have voting power by reason of the happening of any
contingency). Unless otherwise qualified, references to “Subsidiary” or
“Subsidiaries” herein shall refer to those of the Parent.

     “Subsidiary Borrower” shall have the meaning assigned thereto in the Recitals of this
Agreement.

     “Subsidiary Guarantors” shall have the meaning assigned thereto in the Recitals of
this Agreement.

     “Supermajority Lenders” means, at any date, (a) any combination of Lenders holding in
the aggregate greater than seventy-five percent (75%) of the outstanding Extensions of Credit
plus the aggregate unused Revolving Credit Commitment at such time or, (b) if the Credit
Facility has been terminated pursuant to Section 13.2, any combination of Lenders holding
greater than seventy-five percent (75%) of the aggregate Extensions of Credit; provided
that the Commitment of, and the portion of the Extensions of Credit, as applicable, held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required
Lenders.

     “Swingline Commitment” means the lesser of (a) Thirty-Five Million Dollars
($35,000,000) and (b) the aggregate Revolving Credit Commitment of the Lenders.

     “Swingline Facility” means the swingline facility established pursuant to Section
2.2.

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     “Swingline Lender” means Wachovia (Central) in its capacity as swingline lender
hereunder.

     “Swingline Loan” means any swingline loan made by the Swingline Lender to the
Borrowers pursuant to Section 2.2, and all such swingline loans collectively as the context
requires.

     “Swingline Note” means the Swingline Note made by the Borrowers payable to the order
of the Swingline Lender, if requested, substantially in the form of Exhibit A-2, evidencing
the Swingline Loans, and any amendments and modifications thereto, any substitutes therefor, and
any replacements, restatements, renewals or extensions thereof, in whole or in part.

     “Swingline Termination Date” means the first to occur of (a) the resignation of
Wachovia (Central) as Administrative Agent in accordance with Section 14.6 and (b) the
Revolving Credit Maturity Date.

     “Tax Expense” means, with respect to the Parent and its Subsidiaries (other than any
VIE) for any period, federal (United States or Canada), state, provincial, local and foreign
income, value added and similar taxes and any single business taxes that are not recorded as sales
and general administration (expense), in each case, imposed on the Parent or any of its
Subsidiaries, without duplication, for such period.

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

     “Termination Event” means (a) a “Reportable Event” described in Section 4043 of ERISA
for which the notice requirement has not been waived by the PBGC, (b) the withdrawal of any
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a
“substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient
to pay all plan liabilities, (d) the institution of proceedings to terminate, or the appointment of
a trustee with respect to, any Pension Plan by the PBGC, (e) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan, (f) the imposition of a Lien pursuant to Section 412
or 430 of the Code or Section 302 or 4068 of ERISA, (g) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan, (h) any event or condition which results
in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA,
(i) any event or condition which results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to terminate or to appoint a trustee
to administer a Multiemployer Plan under Section 4042 of ERISA, (j) any Pension Plan being in “at
risk status” within the meaning of Code Section 430(i), (k) any Multiemployer Plan being in
“endangered status” or “critical status” within the meaning of Code Section 432(b), or (l) with
respect to any Pension Plan, any Borrower or any ERISA Affiliate incurring a substantial cessation
of operations within the meaning of ERISA Section 4062(e).

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     “Trademark Security Agreements” means, collectively, the Trademark Security Agreements
made in favor of the Administrative Agent, on behalf of the Secured Parties, from time to time.

     “Uniform Customs” means the Uniform Customs and Practice for Documentary Credits (1993
Revision), effective January, 1994 International Chamber of Commerce Publication No. 500.

     “UCC” means the Uniform Commercial Code as in effect in the State of North Carolina,
as amended or modified from time to time.

     “United States” means the United States of America.

     “VIE” means an independent dealer of any Credit Party that is determined to have
insufficient equity to carry out its businesses without the financial support of a Credit Party and
is categorized under GAAP or generally accepted Canadian accounting principles, as applicable, as a
“variable interest entity” or a “VIE”.

     “Wachovia” means Wachovia Bank, National Association, a national banking association,
and its successors.

     “Wachovia (Central)” means Wachovia Capital Finance Corporation (Central), an Illinois
corporation, and its successors.

     “Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors’ qualifying shares or shares aggregating
less than one percent (1%) of the outstanding shares of such Subsidiary which are owned by
individuals) and voting interests of which are owned by any one or more of the Parent and the
Parent’s other Wholly-Owned Subsidiaries at such time.

     SECTION 1.2 Other Definitions and Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a)
the definitions of terms herein shall apply equally to the singular and plural forms of the terms
defined, (b) whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms, (c) the words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”, (d) the word “will” shall be construed to
have the same meaning and effect as the word “shall”, (e) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications set forth herein),
(f) any reference herein to any Person shall be construed to include such Person’s successors and
assigns, (g) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular provision hereof,
(h) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (i) the words “asset”
and “property” shall be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities, accounts and contract
rights, (j) the term “documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements

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and other writings, however evidenced, whether in physical or electronic form, (k) 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”, (l) and the term “or” has, except where otherwise indicated,
the inclusive meaning represented by the phrase “and/or” and (m) Section headings herein and in the
other Loan Documents are included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.

     SECTION 1.3 Accounting Terms. All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to this Agreement shall
be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time,
applied in a manner consistent with that used in preparing the audited financial statements
required by Section 9.1(b), except as otherwise specifically prescribed herein.

     SECTION 1.4 UCC and PPSA Terms. Any terms used in this Agreement that are defined in
the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein;
provided, however, that to the extent that the UCC is used to define any term herein and such term
is defined differently in different Articles of the UCC, the definition of such term contained in
Article 9 of the UCC shall govern, and when used to describe a category or categories of Collateral
owned or hereafter acquired by the Canadian Borrower and located in Canada, such terms shall
include the equivalent category or categories of property set out in the PPSA.

     SECTION 1.5 Rounding. Any financial ratios required to be maintained by the Borrowers
pursuant to this Agreement shall be calculated by dividing the appropriate component by the other
component, carrying the result to one decimal place more than the number of decimal places by which
such ratio is expressed herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

     SECTION 1.6 References to Agreement and Laws. Unless otherwise expressly provided
herein, (a) references to formation documents, governing documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only to the extent that
such amendments, restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Applicable Law shall include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or interpreting such
Applicable Law.

     SECTION 1.7 Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Eastern time (daylight or standard, as applicable).

     SECTION 1.8 Letter of Credit Amounts. Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face
amount of such Letter of Credit after giving effect to all increases thereof contemplated by

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such Letter of Credit or the Application therefor, whether or not such maximum face amount is
in effect at such time.

ARTICLE 2.

REVOLVING CREDIT FACILITY

     SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties set forth herein, each Lender
severally agrees to make Revolving Credit Loans to the Borrowers from time to time from the Closing
Date through, but not including, the Revolving Credit Maturity Date as requested by the
Administrative Borrower in accordance with the terms of Section 2.3; provided, that
(a) the aggregate principal amount of all outstanding Revolving Credit Loans (after giving effect
to any amount requested), together with all other Aggregate Revolving Credit Obligations, shall not
exceed the Revolving Credit Commitment, (b) the principal amount of outstanding Revolving Credit
Loans from any Lender to the Borrowers shall not at any time exceed such Lender’s Revolving Credit
Commitment less such Lender’s Revolving Credit Commitment Percentage of outstanding
Swingline Loans and L/C Obligations, (c) the aggregate principal amount of all outstanding
Revolving Credit Loans (after giving effect to any amount requested), together with all other
Aggregate Revolving Credit Obligations, shall not exceed the Borrowing Base and (d) the aggregate
principal amount of all outstanding Revolving Credit Loans (after giving effect to any amount
requested) made to the Canadian Borrower, together with all other Aggregate Revolving Credit
Obligations made to or for the benefit of the Canadian Borrower, shall not exceed the aggregate
amount of the applicable percentage of Eligible Accounts and Eligible Inventory of the Canadian
Borrower included in the calculation of the Borrowing Base. Each Revolving Credit Loan by a Lender
shall be in a principal amount equal to such Lender’s Revolving Credit Commitment Percentage of the
aggregate principal amount of Revolving Credit Loans requested on such occasion. Subject to the
terms and conditions hereof, the Borrowers may borrow, repay and reborrow Revolving Credit Loans
hereunder from the Closing Date until the Revolving Credit Maturity Date.

     SECTION 2.2 Swingline Loans.

     (a) Availability. Subject to the terms and conditions of this Agreement, the
Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time from the Closing
Date through, but not including, the Swingline Termination Date; provided, that the
aggregate principal amount of all outstanding Swingline Loans (after giving effect to any amount
requested), shall not exceed the least of (i) the Revolving Credit Commitment less the sum
of all other outstanding Aggregate Revolving Credit Obligations, (ii) the Borrowing Base
less the sum of all other outstanding Aggregate Revolving Credit Obligations, and (iii) the
Swingline Commitment.

     (b) Refunding.

     (i) Swingline Loans shall be refunded by the Lenders on demand by the Swingline Lender,
which demand shall be made no less frequently than weekly. Such refundings shall be made by
the Lenders in accordance with their respective Revolving

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Credit Commitment Percentages and shall thereafter be reflected as Revolving Credit
Loans of the Lenders on the books and records of the Administrative Agent. Each Lender
shall fund its respective Revolving Credit Commitment Percentage of Revolving Credit Loans
as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the
Swingline Lender but in no event later than 12:00 p.m. on the next succeeding Business Day
after such demand is made. No Lender’s obligation to fund its respective Revolving Credit
Commitment Percentage of a Swingline Loan shall be affected by any other Lender’s failure to
fund its Revolving Credit Commitment Percentage of a Swingline Loan, nor shall any Lender’s
Revolving Credit Commitment Percentage be increased as a result of any such failure of any
other Lender to fund its Revolving Credit Commitment Percentage of a Swingline Loan. Each
Revolving Credit Loan made in accordance with this Section 2.2(b) shall bear
interest as a Base Rate Loan commencing on the date of the refunding of the Swingline Loan
to which such Revolving Credit Loan relates.

     (ii) The Borrowers shall pay to the Swingline Lender on demand the amount of such
Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay
in full the outstanding Swingline Loans requested or required to be refunded. In addition,
if the Borrowers have not repaid such outstanding Swingline Loans within one (1) Business
Day of such demand by the Swingline Lender, each Borrower hereby authorizes the
Administrative Agent to charge any account maintained by any Borrower with the Swingline
Lender (up to the amount available therein) in order to immediately pay the Swingline Lender
the amount of such Swingline Loans to the extent amounts received from the Lenders are not
sufficient to repay in full the outstanding Swingline Loans requested or required to be
refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered
by or on behalf of any Borrower from the Swingline Lender in bankruptcy or otherwise, the
loss of the amount so recovered shall be ratably shared among all the Lenders in accordance
with their respective Revolving Credit Commitment Percentages (unless the amounts so
recovered by or on behalf of such Borrower pertain to a Swingline Loan extended after the
occurrence and during the continuance of an Event of Default of which the Administrative
Agent has received notice in the manner required pursuant to Section 14.3 and which
such Event of Default has not been waived by the Required Lenders or the Lenders, as
applicable).

     (iii) Each Lender acknowledges and agrees that its obligation to refund Swingline Loans
in accordance with the terms of this Section 2.2(b) is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including non-satisfaction of the
conditions set forth in Article 7. Further, each Lender agrees and acknowledges
that, if prior to the refunding of any outstanding Swingline Loans pursuant to this
Section 2.2, one of the events described in Section 13.1(j) or (k)
shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan
would have been made, be deemed to have purchased an undivided participating interest in the
Swingline Loan to be refunded in an amount equal to its Revolving Credit Commitment
Percentage of the aggregate amount of such Swingline Loan. Each Lender will immediately
transfer to the Swingline Lender, in immediately available funds, the amount of its
participation and upon receipt thereof the Swingline Lender will deliver to

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such Lender a certificate evidencing such participation dated the date of receipt of
such funds and for such amount. Whenever, at any time after the Swingline Lender has
received from any Lender such Lender’s participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender will
distribute to such 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).

     (c) Overadvances; Optional Overadvances. If at any time the amount of the Aggregate
Revolving Credit Obligations exceeds the Revolving Credit Commitment, the Borrowing Base or any
other applicable limitation set forth in this Agreement (including the limitations on Swingline
Loans, Agent Advances and Letters of Credit), such excess (an “Overadvance”) shall
nevertheless constitute a portion of the Obligations that are secured by the Collateral and are
entitled to all benefits thereof. In no event, however, shall the Borrowers have any right
whatsoever to (i) receive any Revolving Credit Loan, (ii) receive any Swingline Loan, or (iii)
request the issuance of any Letter of Credit if, before or after giving effect thereto, there shall
exist a Default or Event of Default. Notwithstanding any other contrary provision of this
Agreement, including Section 7.2, the Lenders hereby authorize the Swingline Lender, at the
direction of the Administrative Agent in the Administrative Agent’s Permitted Discretion, and
Swingline Lender shall at the direction of the Administrative Agent, knowingly and intentionally,
continue to make Swingline Loans to the Borrowers notwithstanding that an Overadvance exists or
thereby would be created, so long as (i) the total principal amount of such Overadvances, together
with the amount of Agent Advances made pursuant to Section 2.4(a), then outstanding does
not exceed an aggregate amount equal to ten percent (10%) of the lesser of (A) the Revolving Credit
Commitment and (B) the Borrowing Base, (ii) after giving effect to such Swingline Loans, the
outstanding Aggregate Revolving Credit Obligations does not exceed the Revolving Credit Commitment,
and (iii) at the time of the making of any such Swingline Loans, the Administrative Agent does not
believe, in good faith, that the Overadvance created by such Swingline Loans will be outstanding
for more than ninety (90) days. The foregoing sentence is for the exclusive benefit of the
Administrative Agent, the Swingline Lender, and the Lenders and is not intended to benefit the
Borrowers in any way.

     SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline Loans.

     (a) Requests for Borrowing. The Administrative Borrower shall give the Administrative
Agent irrevocable prior written notice substantially in the form attached hereto as Exhibit
B (a “Notice of Borrowing”) not later than 12:00 noon (i) on the same Business Day as
each Base Rate Loan and each Swingline Loan and (ii) at least three (3) Business Days before each
LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall
be a Business Day, (B) the amount of such borrowing, which shall be (x) with respect to Base Rate
Loans (other than Swingline Loans), in an aggregate principal amount of $3,000,000 or a whole
multiple of $1,000,000 in excess thereof, (y) with respect to LIBOR Rate Loans, in an aggregate
principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof and (z) with
respect to Swingline Loans, in an aggregate principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof, (C) whether such Loan is to be a Revolving Credit Loan or Swingline
Loan, (D) in the case of a Revolving Credit Loan, whether the Loans are to be LIBOR Rate Loans or
Base Rate Loans, and (E) in the case of a LIBOR Rate

36

 

Loan, the duration of the Interest Period applicable thereto. A Notice of Borrowing received
after 12:00 noon shall be deemed received on the next Business Day. The Administrative Agent shall
promptly notify the Lenders of each Notice of Borrowing.

     (b) Disbursement of Revolving Credit and Swingline Loans. Not later than 2:00 p.m. on
the proposed borrowing date, (i) each Lender will make available to the Administrative Agent, for
the account of the Borrowers, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Lender’s Revolving Credit Commitment Percentage of the
Revolving Credit Loans to be made on such borrowing date and (ii) the Swingline Lender will make
available to the Administrative Agent, for the account of the Borrowers, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent, the Swingline
Loans to be made on such borrowing date. Each Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this
Section 2.3 in immediately available funds by crediting or wiring such proceeds to the
deposit account of the Administrative Borrower or, if such proceeds are to be wired by the
Administrative Agent to the Canadian Borrower, to the deposit account of the Canadian Borrower
maintained with a commercial bank incorporated under the laws of the United States acceptable to
the Administrative Agent, in each case, identified in the most recent notice substantially in the
form of Exhibit C (a “Notice of Account Designation”) delivered by the
Administrative Borrower to the Administrative Agent or as may be otherwise agreed upon by the
Administrative Borrower and the Administrative Agent from time to time. Subject to Section
6.7, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of
any Revolving Credit Loan requested pursuant to this Section 2.3 to the extent that any
Lender has not made available to the Administrative Agent its Revolving Credit Commitment
Percentage of such Loan. Revolving Credit Loans to be made for the purpose of refunding Swingline
Loans shall be made by the Lenders as provided in Section 2.2(b). Each of the Borrower
Parties hereby acknowledges and agrees that any proceeds of Loans to be disbursed or otherwise
delivered to the Canadian Borrower by such Borrower Party or any of its Subsidiaries or Affiliates
shall be wired to a deposit account of the Canadian Borrower maintained with a commercial bank
incorporated under the laws of the United States.

     SECTION 2.4 Agent Advances.

     (a) Availability. Subject to the limitations set forth below and notwithstanding
anything else in this Agreement to the contrary, the Administrative Agent is authorized by the
Borrowers and the Lenders, from time to time in the Administrative Agent’s sole discretion, (i) at
any time that a Default exists, or (ii) at any time that any of the other conditions precedent set
forth in Section 7.2 have not been satisfied, to make Base Rate Loans to the Borrowers on
behalf of the Lenders in an aggregate amount outstanding at any time not to exceed, together with
the amount of Overadvances made pursuant to Section 2.2(c) then outstanding, an aggregate
amount equal to ten percent (10%) of the lesser of (A) the Revolving Credit Commitment and (B) the
Borrowing Base, which the Administrative Agent, in its Permitted Discretion, deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (C) to
pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including
costs, fees and expenses as provided under this Agreement (any of such advances are herein referred
to as “Agent Advances”). The Administrative Agent shall promptly provide to

37

 

the Borrowers written notice of any Agent Advance. In no event shall the Aggregate Revolving
Credit Obligations, after giving effect to any Agent Advances, exceed the Revolving Credit
Commitment.

     (b) Terms. The Agent Advances shall be secured by the Collateral and shall constitute
Obligations hereunder. Each Agent Advance shall bear interest as a Base Rate Loan. Each Agent
Advance shall be subject to all terms and conditions of this Agreement and the other Loan Documents
applicable to Revolving Credit Loans, except that all payments thereon shall be made to the
Administrative Agent solely for its own account and the making of any Agent Advance shall not
require the consent of the Borrowers. The Administrative Agent shall have no duty or obligation to
make any Agent Advance hereunder.

     (c) Refunding.

     (i) Agent Advances shall be refunded by the Lenders on demand by the Administrative
Agent. Such refundings shall be made by the Lenders in accordance with their respective
Revolving Credit Commitment Percentages and shall thereafter be reflected as Revolving
Credit Loans of the Lenders on the books and records of the Administrative Agent. Each
Lender shall fund its respective Revolving Credit Commitment Percentage of Revolving Credit
Loans as required to repay Agent Advances outstanding to the Administrative Agent upon
demand by the Administrative Agent but in no event later than 12:00 p.m. on the next
succeeding Business Day after such demand is made. No Lender’s obligation to fund its
respective Revolving Credit Commitment Percentage of an Agent Advance shall be affected by
any other Lender’s failure to fund its Revolving Credit Commitment Percentage of an Agent
Advance, nor shall any Lender’s Revolving Credit Commitment Percentage be increased as a
result of any such failure of any other Lender to fund its Revolving Credit Commitment
Percentage of an Agent Advance.

     (ii) The Borrowers shall pay to the Administrative Agent on demand the amount of such
Agent Advances to the extent amounts received from the Lenders are not sufficient to repay
in full the outstanding Agent Advances requested or required to be refunded. In addition,
if the Borrowers have not repaid such outstanding Agent Advances within one (1) Business Day
of such demand by the Administrative Agent, each Borrower hereby authorizes the
Administrative Agent to charge any account maintained by any Borrower with the
Administrative Agent (up to the amount available therein) in order to immediately pay the
Administrative Agent the amount of such Agent Advances to the extent amounts received from
the Lenders are not sufficient to repay in full the outstanding Agent Advances requested or
required to be refunded. If any portion of any such amount paid to the Administrative Agent
shall be recovered by or on behalf of any Borrower from the Administrative Agent in
bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among
all the Lenders in accordance with their respective Revolving Credit Commitment Percentages.
Each Revolving Credit Loan made in accordance with this Section 2.4(c) shall bear
interest as a Base Rate Loan commencing on the date of the refunding of the Agent Advance to
which such Revolving Credit Loan relates.

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     (iii) Each Lender acknowledges and agrees that its obligation to refund Agent Advances
in accordance with the terms of this Section 2.4(c) is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including non-satisfaction of the
conditions set forth in Article 7. Further, each Lender agrees and acknowledges
that, if prior to the refunding of any outstanding Agent Advances pursuant to this
Section 2.4, one of the events described in Section 13.1(j) or (k)
shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan
would have been made, be deemed to have purchased an undivided participating interest in the
Agent Advances to be refunded in an amount equal to its Revolving Credit Commitment
Percentage of the aggregate amount of such Agent Advance. Each Lender will immediately
transfer to the Administrative Agent, in immediately available funds, the amount of its
participation and upon receipt thereof the Administrative Agent will deliver to such Lender
a certificate evidencing such participation dated the date of receipt of such funds and for
such amount. Whenever, at any time after the Administrative Agent has received from any
Lender such Lender’s participating interest in an Agent Advance, the Administrative Agent
receives any payment on account thereof, the Administrative Agent will distribute to such
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).

     SECTION 2.5 Repayment of Loans.

     (a) Repayment on Termination Date. The Borrowers hereby agree to repay the
outstanding principal amount of (i) all Revolving Credit Loans and Agent Advances in full on the
Revolving Credit Maturity Date, and (ii) all Swingline Loans in accordance with
Section 2.2(b), together, in each case, with all accrued but unpaid interest thereon.

     (b) Mandatory Repayment of Revolving Credit Loans. In the event that (i) the Lenders
shall make any Revolving Credit Loans, (ii) the Swingline Lender shall make any Swingline Loan,
(iii) the Administrative Agent shall make any Agent Advances or (iv) the Issuing Lender shall issue
any Letter of Credit, which, in any such case, gives rise to an Overadvance, the Borrowers shall
make, on demand, a payment on the Obligations to be applied to the Revolving Credit Loans, the
Swingline Loans, the Agent Advances and as cash collateral for such Letter of Credit, as
appropriate, in an aggregate principal amount equal to such Overadvance.

     (c) Optional Prepayments. The Borrowers may at any time and from time to time prepay
Revolving Credit Loans and Swingline Loans, in whole or in part, upon at least three (3) Business
Days irrevocable prior written notice to the Administrative Agent with respect to LIBOR Rate Loans
and same Business Day irrevocable prior written notice with respect to Base Rate Loans and
Swingline Loans, specifying the date and amount of prepayment and whether the prepayment is of
LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative
Agent shall promptly notify each Lender. If any such notice is given, the amount specified in such
notice shall be due and payable on the date set forth in such notice. Partial prepayment shall be
in an aggregate amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof with
respect to Base Rate Loans, $1,000,000 or a whole multiple of

39

 

$1,000,000 in excess thereof with respect to LIBOR Rate Loans and $1,000,000 or a whole
multiple of $1,000,000 in excess thereof with respect to Swingline Loans. Each such prepayment
shall be accompanied by an amount required to be paid pursuant to Section 6.9.

     (d) Limitation on Prepayment of LIBOR Rate Loans. No Borrower may prepay any LIBOR
Rate Loan on any day other than on the last day of the Interest Period applicable thereto unless
such prepayment is accompanied by any amount required to be paid pursuant to Section 6.8.

     (e) The Other Obligations. In addition to the foregoing, the Borrowers hereby
promise, jointly and severally, to pay all Obligations (other than Obligations in respect of Bank
Products), including the principal amount of the Loans, amounts drawn under Letters of Credit and
interest and fees on the foregoing, as the same become due and payable hereunder and, in any event,
on the Revolving Credit Maturity Date. In addition to the foregoing, the Borrowers hereby promise,
jointly and severally, to pay all Obligations in respect of Bank Products as the same become due
and payable under the applicable Bank Products Documents.

     (f) Hedging Agreements. No repayment or prepayment pursuant to this Section
2.5 shall affect any of the Borrowers’ obligations under any Hedging Agreement.

     (g) Payments by the Canadian Borrower. Any payments made by the Canadian Borrower to
the Administrative Agent, directly or indirectly, pursuant to the Loan Documents shall be made from
the account of the Canadian Borrower listed in the most recent Notice of Account Designation
received by the Administrative Agent pursuant to Section 2.3(b).

     SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment.

     (a) Voluntary Reduction. The Borrowers shall have the right at any time and from time
to time, upon at least ten (10) Business Days irrevocable prior written notice to the
Administrative Agent, to permanently reduce, without premium or penalty, the Revolving Credit
Commitment, in whole or in part, at any time, in an aggregate principal amount not less than
$1,000,000 or any whole multiple of $1,000,000 in excess thereof. Any reduction of the Revolving
Credit Commitment shall be applied to the Revolving Credit Commitment of each Lender according to
its Revolving Credit Commitment Percentage. All commitment fees accrued until the effective date
of any termination of the Revolving Credit Commitment shall be paid on the effective date of such
termination.

     (b) Corresponding Payment. Each permanent reduction permitted or required pursuant to
this Section 2.6 shall be accompanied by a payment of principal sufficient to reduce the
Aggregate Revolving Credit Obligations after such reduction to the Revolving Credit Commitment as
so reduced and if the Revolving Credit Commitment as so reduced is less than the aggregate amount
of all outstanding Letters of Credit, the Borrowers shall be required to deposit cash collateral in
a cash collateral account opened by the Administrative Agent in an amount equal to one hundred five
percent (105%) of the aggregate then undrawn and unexpired amount of such Letters of Credit. Such
cash collateral shall be applied in accordance with Section 13.2(b). Any reduction of the
Revolving Credit Commitment to zero shall be accompanied by payment of all outstanding Revolving
Credit Loans, Agent Advances,

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Swingline Loans and all other Obligations (other than Bank Products) (and furnishing of cash
collateral in an amount equal to one hundred five percent (105%) of the aggregate then undrawn and
unexpired Letters of Credit then outstanding) and shall result in the termination of the Revolving
Credit Commitment, the L/C Commitment, the Swingline Commitment and the Revolving Credit Facility.
Such cash collateral shall be applied in accordance with Section 13.2(b). If the reduction
of the Revolving Credit Commitment requires the repayment of any LIBOR Rate Loan, such repayment
shall be accompanied by any amount required to be paid pursuant to Section 6.8.

     SECTION 2.7 Additional Increase of Commitments; Additional Lenders.

     (a) Increase of Revolving Credit Commitment.

     (i) The Administrative Borrower, on behalf of the Borrowers, may request the right to
effectuate increases in the Revolving Credit Commitment (any such increase, a
“Commitment Increase”), in an aggregate amount of up to $30,000,000 for all such
Commitment Increases (the “Commitment Increase Cap”), during the term of this
Agreement by delivering a Notice of Requested Commitment Increase to Administrative Agent
substantially in the form of Exhibit I (a “Notice of Requested Commitment
Increase”), provided that, in each case: (A) each Commitment Increase may not be
in an amount less than $15,000,000 and in integral multiples of $5,000,000 in excess
thereof; (B) the proposed Commitment Increase shall have been consented to in writing by the
Administrative Agent, each Lender (if any) who is increasing its Revolving Credit
Commitment and any other bank or financial institution acceptable to the Parent and the
Administrative Agent that has agreed to become a Lender in respect of all or a portion of
the Commitment Increase (a “New Lender”); and (C) the proposed Commitment Increase,
together with any prior Commitment Increase, shall not exceed the Commitment Increase Cap.
Each Notice of Requested Commitment Increase shall specify: (1) the amount of the proposed
Commitment Increase and (2) the requested date of the proposed Commitment Increase (which
shall be at least fifteen (15) days from the date of delivery of the Notice of Requested
Commitment Increase). Each Notice of Requested Commitment Increase shall be binding on all
Borrowers. Upon the effective date of any Commitment Increase, the Administrative Borrower
shall deliver to the Administrative Agent a certificate of the chief financial officer of
the Parent certifying that no Default or Event of Default then exists or would be caused
thereby. The Commitment Increase shall not be effective until the Administrative Agent
shall have received amendments to this Agreement and the other Loan Documents, commitments
of Lenders or New Lenders in an aggregate amount equal to the Commitment Increase, Lender
Agreements for each Lender or New Lender committing to the Commitment Increase, any upfront
fees to be paid to the Lenders committing to the Commitment Increase, and, if requested,
opinion letters, Revolving Credit Notes and such other agreements, documents and instruments
requested by and reasonably satisfactory to the Administrative Agent in its reasonable
discretion evidencing and setting forth the conditions of the Commitment Increase.

     (ii) If the Administrative Agent approves a proposed Commitment Increase (with such
approval not to be unreasonably withheld), the Administrative Agent shall

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deliver a copy of the Notice of Requested Commitment Increase relating thereto to each
Lender. No Lender (or any successor thereto) shall have any obligation to increase its
Revolving Credit Commitment or its other obligations under this Agreement or the other Loan
Documents, and any decision by a Lender to increase its Revolving Credit Commitment shall be
made in its sole discretion independently from any other Lender. If the Administrative Agent
receives commitments from the Lenders or the New Lenders in excess of the amount of the
proposed Commitment Increase, the Administrative Agent shall have the right, in its sole
discretion, to reduce and reallocate (within the minimum and maximum amounts specified by
each such Lender or New Lender in its notice to the Administrative Agent) the shares of the
Commitment Increase of the Lenders or New Lenders willing to fund the proposed Commitment
Increase so that the total committed shares of the proposed Commitment Increase equals the
proposed Commitment Increase. The Administrative Agent shall notify each Lender or New
Lender, as the case may be, whether its proposed share of the Commitment Increase has been
accepted and, if so, the amount of its share of the Commitment Increase, and such Lender
shall thereafter execute and deliver a Lender Agreement with respect to its respective share
of the Commitment Increase.

     (iii) Notwithstanding anything to the contrary contained herein, each Commitment
Increase meeting the conditions set forth in Section 2.7(a)(i) shall not require the
consent of any Lender other than those Lenders, if any, which have agreed to increase their
Revolving Credit Commitments in connection with the Commitment Increase and shall not
constitute an amendment, modification or waiver subject to Section 15.11 and shall
be effective as of the later of (a) the date specified in the applicable Notice of Requested
Commitment Increase and (b) the date upon which the foregoing conditions shall have been
satisfied or waived by the Administrative Agent and the Lenders which have agreed to
increase their Revolving Credit Commitments, or by the requisite Lenders in accordance with
Section 15.11 in the case of a waiver of an Event of Default, as applicable.

     (b) Effect of Commitment Increase. After giving effect to any Commitment Increase,
the outstanding Revolving Credit Loans may not be held pro rata in accordance with the new
Revolving Credit Commitment. In order to remedy the foregoing, on the effective date of each
Commitment Increase, the Lenders (including any New Lenders) shall reallocate the Revolving Credit
Loans owed to them among themselves so that, after giving effect thereto, the Revolving Credit
Loans will be held by the Lenders (including any New Lenders) on a pro rata basis in accordance
with their respective Revolving Credit Commitment Percentages hereunder (after giving effect to
such Commitment Increase). Each Lender agrees to wire immediately available funds to the
Administrative Agent in accordance with this Agreement as may be required by Administrative Agent
in connection with the foregoing. Notwithstanding the provisions of Section 15.9, the
reallocations so made by each Lender whose Revolving Credit Commitment Percentage has increased
shall be deemed to be a purchase of a corresponding amount of the Revolving Credit Loans of the
Lender or Lenders whose Revolving Credit Commitment Percentage have decreased and shall not be
considered an assignment for purposes of Section 15.9.

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     SECTION 2.8 Termination of Revolving Credit Facility. The Revolving Credit Facility
shall terminate on the Revolving Credit Maturity Date.

ARTICLE 3.

LETTER OF CREDIT FACILITY

     SECTION 3.1 L/C Commitment. Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Lenders set forth in Section 3.4(a),
agrees to issue Letters of Credit for the account of the Borrowers on any Business Day from the
Closing Date through but not including the Revolving Credit Maturity Date in such form as may be
approved from time to time by the Issuing Lender; provided, that the Issuing Lender shall
have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (a) the
L/C Obligations would exceed the L/C Commitment or (b) the outstanding Aggregate Revolving Credit
Obligations would exceed the lesser of (x) the Revolving Credit Commitment and (y) the Borrowing
Base. Each Letter of Credit shall (i) be denominated in Dollars in a minimum amount of $25,000,
(ii) be issued to support obligations of any Borrower or any of their Subsidiaries, contingent or
otherwise, incurred in the ordinary course of business, (iii) expire on a date satisfactory to the
Issuing Lender, which date shall be no later than the earlier of (A) one year from the date of
issuance of such Letter of Credit (subject to automatic renewals of Letters of Credit issued by
Wachovia so long as such renewal periods terminate no later than the fifth Business Day prior to
the Revolving Credit Maturity Date) and (B) the fifth Business Day prior to the Revolving Credit
Maturity Date and (iv) be subject to the Uniform Customs or ISP98, as set forth in the applicable
Application or as determined by the Issuing Lender and, to the extent not inconsistent therewith,
the laws of the State of North Carolina. The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any Lender to exceed any limits imposed by, any Applicable Law. References herein to
“issue” and derivations thereof with respect to Letters of Credit shall also include extensions or
modifications of any existing Letters of Credit, unless the context otherwise requires.

     SECTION 3.2 Procedure for Issuance of Letters of Credit. The Administrative Borrower
may from time to time after the Closing Date request that the Issuing Lender issue a Letter of
Credit by delivering to the Issuing Lender at the Administrative Agent’s Office an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender may request. Upon receipt of any
Application, the Issuing Lender shall process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 3.1 and Article 7, promptly
issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Administrative Borrower. The Issuing Lender
shall promptly furnish to the Administrative Borrower a copy of such Letter of Credit and promptly
notify each Lender of the issuance and, upon request by any Lender, furnish to

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such Lender a copy of such Letter of Credit and the amount of such Lender’s Letter of Credit
participation therein.

     SECTION 3.3 Commissions and Other Charges.

     (a) Letter of Credit Commission. The Borrowers shall pay to the Administrative Agent,
for the account of the Lenders, in accordance with their respective Revolving Credit Commitment
Percentages, a letter of credit commission with respect to each Letter of Credit in an amount equal
to the Applicable Margin with respect to LIBOR Rate Loans for the Revolving Credit Facility
(determined on a per annum basis) multiplied by the average daily amount of such
Lender’s L/C Obligations during the period from and including the date of the issuance of such
Letter of Credit to but excluding the date on which such Letter of Credit has expired or is
terminated. Such commission shall be payable monthly in arrears on the last Business Day of each
calendar month and on the Revolving Credit Maturity Date and thereafter on demand of the
Administrative Agent. The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Lenders all commissions received pursuant to this Section 3.3(a) in
accordance with their respective Revolving Credit Commitment Percentages.

     (b) Issuance Fee. In addition to the foregoing commission, the Borrowers shall pay
the Issuing Lender an issuance fee with respect to each Letter of Credit in an amount equal to the
average daily amount of such Lender’s L/C Obligations during the period from and including the date
of the issuance of such Letter of Credit to but excluding the date on which such Letter of Credit
has expired or is terminated multiplied by 0.15% per annum. Such issuance fee
shall be payable monthly in arrears on the last Business Day of each calendar month and on the
Revolving Credit Maturity Date and thereafter on demand of the Administrative Agent.

     (c) Other Costs. In addition to the foregoing fees and commissions, the Borrowers
shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are
incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or
otherwise administering any Letter of Credit.

     SECTION 3.4 L/C Participations.

     (a) Participations. The Issuing Lender irrevocably agrees to grant and hereby grants
to each Lender, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each Lender
irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender,
on the terms and conditions hereinafter stated, for such Lender’s own account and risk an undivided
interest equal to such Lender’s Revolving Credit Commitment Percentage in the Issuing Lender’s
obligations and rights under and in respect of each Letter of Credit issued hereunder and the
amount of each draft paid by the Issuing Lender thereunder. Each Lender unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for
which the Issuing Lender is not reimbursed in full by the Borrowers through a Revolving Credit Loan
or otherwise in accordance with the terms of this Agreement, such Lender shall pay to the Issuing
Lender upon demand at the Issuing Lender’s address for notices specified herein an amount equal to
such Lender’s Revolving Credit Commitment Percentage of the amount of such draft, or any part
thereof, which is not so reimbursed.

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     (b) Payments by Lenders. Upon becoming aware of any amount required to be paid by any
Lender to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender
shall notify each Lender of the amount and due date of such required payment and such Lender shall
pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is
paid to the Issuing Lender after the date such payment is due, such Lender shall pay to the Issuing
Lender on demand, in addition to such amount, the product of (i) such amount, multiplied
by (ii) the daily average Federal Funds Rate as determined by the Administrative Agent
during the period from and including the date such payment is due to the date on which such payment
is immediately available to the Issuing Lender, multiplied by (iii) a fraction the
numerator of which is the number of days that elapse during such period and the denominator of
which is three hundred sixty (360). A certificate of the Issuing Lender with respect to any
amounts owing under this Section 3.4(b) shall be conclusive in the absence of manifest
error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this
Section 3.4(b), if the Lenders receive notice that any such payment is due (A) prior to
1:00 p.m. on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m.
on any Business Day, such payment shall be due on the following Business Day.

     (c) Distributions to Lenders. Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any Lender its Revolving Credit Commitment
Percentage of such payment in accordance with this Section 3.4, the Issuing Lender receives
any payment related to such Letter of Credit (whether directly from any Borrower or otherwise, or
any payment of interest on account thereof, the Issuing Lender will distribute to such Lender its
pro rata share thereof; provided, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing Lender, such Lender
shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender
to it.

     SECTION 3.5 Reimbursement Obligation of the Borrowers. In the event of any drawing
under any Letter of Credit, each Borrower agrees to immediately reimburse the Issuing Lender for
amounts paid by the Issuing Lender in respect of draws under each Letter of Credit. In order to
facilitate such repayment, each Borrower hereby irrevocably requests that the Lenders make, and the
Lenders hereby severally agree to make, on the terms and conditions of this Agreement (other than
as provided in Articles 2 and 6 with respect to the amounts of, the timing and form
of requests for, and the repayment of, Revolving Credit Loans hereunder and in Section 7.2
with respect to conditions precedent to Revolving Credit Loans hereunder), with respect to any
drawing under a Letter of Credit, a Revolving Credit Loan bearing interest at the Base Rate
commencing on the day on which any drawing is made under any Letter of Credit and in the aggregate
amount of such drawing plus any amounts referred to in Section 3.3(c) incurred by the
Issuing Lender in connection with such draw, the proceeds of which shall be applied to reimburse
the Issuing Lender for the amount of the related drawing and costs and expenses. Each Lender
acknowledges and agrees that its obligation to fund a Revolving Credit Loan in accordance with this
Section 3.5 to reimburse the Issuing Lender for any draft paid under a Letter of Credit is
absolute and unconditional and shall not be affected by any circumstance whatsoever, including
non-satisfaction of the conditions set forth in Section 2.3(a) or Article 7.

     SECTION 3.6 Obligations Absolute. The Borrowers’ obligations under this Article
3 (including the Reimbursement Obligation) shall be absolute and unconditional under any and
all

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circumstances and irrespective of any set-off, counterclaim or defense to payment which any
Borrower may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit
or any other Person. Each Borrower also agrees that the Issuing Lender and the Lenders shall not
be responsible for, and each Borrower’s Reimbursement Obligation under Section 3.5 shall
not be affected by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or
forged, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or
any other party to which such Letter of Credit may be transferred or any claims whatsoever of any
Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions caused by the Issuing Lender’s gross negligence or willful
misconduct, as determined by a court of competent jurisdiction by final and non-appealable
judgment. Each Borrower agrees that any action taken or omitted by the Issuing Lender under or in
connection with any Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct, as determined by a court of competent jurisdiction by final
and non-appealable judgment, shall be binding on the Borrowers and shall not result in any
liability of the Issuing Lender or any Lender to any Borrower. The responsibility of the Issuing
Lender to any Borrower in connection with any draft presented for payment under any Letter of
Credit shall, in addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such Letter of Credit.

     SECTION 3.7 Effect of Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions of this Article
3, the provisions of this Article 3 shall apply.

     SECTION 3.8 Existing Letters of Credit. The Borrower, the Administrative Agent and
each Lender agree that, on the Closing Date, each Letter of Credit issued by Wachovia, National
City Bank, JPMorgan Chase Bank, N.A., SunTrust Bank and Branch Banking and Trust Company more
particularly described on Schedule 3.8 shall, notwithstanding the provisions of
Sections 3.1 and 3.2, be deemed to be Letters of Credit issued under and pursuant
to, and shall be subject to the terms of this Agreement as if originally issued pursuant to the
terms of this Agreement, notwithstanding any agreements, instruments and other documents providing
for the reimbursement of letter of credit draws or the payment of fees, expenses and other charges
in place as of the Closing Date (collectively, the “Existing Reimbursement and Fee
Documents”) executed in connection with such Letters of Credit. On the Closing Date, all
Existing Reimbursement and Fee Documents (other than any Applications) shall automatically
terminate and be of no further force and effect.

ARTICLE 4.

JOINT AND SEVERAL LIABILITY OF THE BORROWERS

     SECTION 4.1 Joint and Several Obligations. (a) All Obligations shall constitute
joint and several obligations of the Borrowers and shall be secured by the Administrative

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Agent’s security interest (on behalf of the Lender Group) and Lien upon all of the Collateral,
and by all other security interests and Liens heretofore, now or at any time hereafter granted by
each Borrower to the Lender Group, or any of them, to the extent provided in the Security Documents
under which such Lien arises. Each Borrower expressly represents and acknowledges that it is part
of a common enterprise with the other Borrowers and that any financial accommodations by the Lender
Group, or any of them, to any other Borrower hereunder and under the other Loan Documents are and
will be of direct and indirect interest, benefit and advantage to all Borrowers. Each Borrower
acknowledges that any Notice of Borrowing, Notice of Conversion/Continuation or other notice given
by any Borrower to the Administrative Agent or any Lender shall bind all Borrowers, and that any
notice given by the Administrative Agent or any Lender to any Borrower shall be effective with
respect to all Borrowers. Each Borrower acknowledges and agrees that each Borrower shall be
liable, on a joint and several basis, for all of the Loans and other Obligations, regardless of
which Borrower actually may have received the proceeds of any of the Loans or other extensions of
credit or the amount of such Loans or other extensions of credit received or the manner in which
the Administrative Agent or any Lender accounts among the Borrowers for such Loans or other
Obligations on its books and records, and further acknowledges and agrees that Loans and other
extensions of credit to any Borrower inure to the mutual benefit of all of the Borrowers and that
the Lender Group is relying on the joint and several liability of the Borrowers in extending the
Loans and other financial accommodations under the Loan Documents and Bank Products Documents.

     (b) Each Borrower shall be entitled to subrogation and contribution rights from and against
the other Borrowers to the extent such Borrower is required to pay to the Lender Group any amount
in excess of the Loans advanced directly to, or other Obligations incurred directly by, such
Borrower or as otherwise available under Applicable Law; provided, however, that
such subrogation and contribution rights are and shall be subject to the terms and conditions of
Sections 4.1(c) through 4.1(g).

     (c) It is the intent of the Borrowers and the Lender Group and any other Person holding any of
the Obligations that each Borrower’s maximum obligations hereunder (such Borrower’s “Maximum
Borrower Liability”) in any case or proceeding referred to below (but only in such a case or
proceeding) shall not be in excess of:

     (i) in a case or proceeding commenced by or against such Borrower under the Bankruptcy
Code on or within one (1) year from the date on which any of the Obligations of such
Borrower are incurred, the maximum amount that would not otherwise cause the Obligations of
such Borrower hereunder (or any other Obligations of such Borrower to the Lender Group and
any other Person holding any of the Obligations) to be avoidable or unenforceable against
such Borrower under (A) Section 548 of the Bankruptcy Code or (B) any state fraudulent
transfer or fraudulent conveyance act or statute applied in such case or proceeding by
virtue of Section 544 of the Bankruptcy Code; or

     (ii) in a case or proceeding commenced by or against such Borrower under the Bankruptcy
Code subsequent to one (1) year from the date on which any of the Obligations of such
Borrower are incurred, the maximum amount that would not otherwise cause the Obligations of
such Borrower hereunder (or any other Obligations of such Borrower to the Lender Group and
any other Person holding any of the Obligations)

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to be avoidable or unenforceable against such Borrower under any state fraudulent
transfer or fraudulent conveyance act or statute applied in any such case or proceeding by
virtue of Section 544 of the Bankruptcy Code; or

     (iii) in a case or proceeding commenced by or against such Borrower under any law,
statute or regulation other than the Bankruptcy Code relating to dissolution, liquidation,
conservatorship, bankruptcy, moratorium, readjustment of debt, compromise, rearrangement,
receivership, insolvency, reorganization or similar debtor relief from time to time in
effect affecting the rights of creditors generally (collectively, “Other Debtor Relief
Law”), the maximum amount that would not otherwise cause the Obligations of such
Borrower hereunder (or any other Obligations of such Borrower to the Lender Group and any
other Person holding any of the Obligations) to be avoidable or unenforceable against such
Borrower under such Other Debtor Relief Law, including any state fraudulent transfer or
fraudulent conveyance act or statute applied in any such case or proceeding. (The
substantive state, provincial or federal (United States or Canada) laws under which the
possible avoidance or unenforceability of the Obligations of any Borrower hereunder (or any
other Obligations of such Borrower to the Lender Group and any other Person holding any of
the Obligations) shall be determined in any such case or proceeding shall hereinafter be
referred to as the “Avoidance Provisions”).

Notwithstanding the foregoing, no provision of this Section 4.1(c) shall limit any
Borrower’s liability for Loans advanced directly or indirectly to it, or Letters of Credit issued
directly or indirectly for its benefit, under this Agreement.

     (d) To the extent set forth in Section 4.1(c), but only to the extent that the
Obligations of any Borrower hereunder, or the transfers made by such Borrower under any Security
Document, would otherwise be subject to avoidance under any Avoidance Provisions if such Borrower
is not deemed to have received valuable consideration, fair value, fair consideration or reasonably
equivalent value for such transfers or obligations, or if such transfers or obligations of any
Borrower hereunder would render such Borrower insolvent, or leave such Borrower with an
unreasonably small capital or unreasonably small assets to conduct its business, or cause such
Borrower to have incurred debts (or to have intended to have incurred debts) beyond its ability to
pay such debts as they mature, in each case as of the time any of the obligations of such Borrower
are deemed to have been incurred and transfers made under such Avoidance Provisions, then the
obligations of such Borrower hereunder shall be reduced to that amount which, after giving effect
thereto, would not cause the Obligations of such Borrower hereunder (or any other Obligations of
such Borrower to the Lender Group or any other Person holding any of the Obligations), as so
reduced, to be subject to avoidance under such Avoidance Provisions. This Section 4.1(d)
is intended solely to preserve the rights hereunder of the Lender Group and any other Person
holding any of the Obligations to the maximum extent that would not cause the obligations of the
Borrowers hereunder to be subject to avoidance under any Avoidance Provisions, and none of the
Borrowers nor any other Person shall have any right, defense, offset, or claim under this
Section 4.1(d) as against the Lender Group or any other Person holding any of the
Obligations that would not otherwise be available to such Person under the Avoidance Provisions.

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     (e) Each Borrower agrees that the Obligations may at any time and from time to time exceed the
Maximum Borrower Liability of such Borrower, and may exceed the aggregate Maximum Borrower
Liability of all Borrowers hereunder, without impairing this Agreement or any provision contained
herein or affecting the rights and remedies of the Lender Group hereunder.

     (f) In the event any Borrower (a “Funding Borrower”) shall make any payment or
payments under this Agreement or shall suffer any loss as a result of any realization upon any
collateral granted by it to secure its obligations hereunder, each other Borrower (each, a
“Contributing Borrower”) shall contribute to such Funding Borrower an amount equal to such
payment or payments made, or losses suffered, by such Funding Borrower determined as of the date on
which such payment or loss was made multiplied by the ratio of (i) the Maximum Borrower Liability
of such Contributing Borrower (without giving effect to any right to receive any contribution or
other obligation to make any contribution hereunder), to (ii) the aggregate Maximum Borrower
Liability of all Borrowers (including the Funding Borrowers) hereunder (without giving effect to
any right to receive, or obligation to make, any contribution hereunder). Nothing in this
Section 4.1(f) shall affect any Borrower’s joint and several liability to the Lender Group
for the entire amount of its Obligations. Each Borrower covenants and agrees that its right to
receive any contribution hereunder from a Contributing Borrower shall be subordinate and junior in
right of payment to all obligations of the Borrowers to the Lender Group hereunder.

     (g) No Borrower will exercise any rights which it may acquire by way of subrogation hereunder
or under any other Loan Document or Bank Products Documents or at law by any payment made hereunder
or otherwise, nor shall any Borrower seek or be entitled to seek any contribution or reimbursement
from any other Borrower in respect of payments made by such Borrower hereunder or under any other
Loan Document or Bank Products Documents, until all amounts owing to the Lender Group on account of
the Obligations are paid in full in cash. If any amounts shall be paid to any Borrower on account
of such subrogation or contribution rights at any time when all of the Obligations shall not have
been paid in full, such amount shall be held by such Borrower in trust for the Lender Group,
segregated from other funds of such Borrower, and shall, forthwith upon receipt by such Borrower,
be turned over to the Administrative Agent in the exact form received by such Borrower (duly
endorsed by such Borrower to the Administrative Agent, if required), to be applied against the
Obligations, whether matured or unmatured, as provided for herein.

     SECTION 4.2 Canadian Borrower. Notwithstanding anything in this Agreement or any
other Loan Document to the contrary, so long as (a) the Canadian Borrower is a CFC, (b) Section 956
of the Code is in effect and (c) a guaranty by the Canadian Borrower of, or joint and several
liability of the Canadian Borrower with respect to, all of the Obligations would result in a deemed
distribution of the “earnings and profits” of the Canadian Borrower to the Parent under Section 956
of the Code, the Obligations of the Canadian Borrower under this Article 4 shall be limited
to the Canadian Obligations.

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ARTICLE 5.

GUARANTY

     SECTION 5.1 Guaranty.

     (a) Each Subsidiary Guarantor hereby guarantees to the Administrative Agent, for the benefit
of the Secured Parties, the full and prompt payment of the Obligations, including any interest
therein (including interest as provided in this Agreement, accruing after the filing of a petition
initiating any insolvency proceedings, whether or not such interest accrues or is recoverable
against the Borrowers after the filing of such petition for purposes of the Bankruptcy Code or is
an allowed claim in such proceeding), plus reasonable attorneys’ fees and expenses if the
obligations represented by the guaranty set forth in this Article 5 (this
“Guaranty”) are collected by law, through an attorney-at-law, or under advice therefrom.

     (b) Regardless of whether any proposed guarantor or any other Person shall become in any other
way responsible to the Lender Group, or any of them, for or in respect of the Obligations or any
part thereof, and regardless of whether or not any Person now or hereafter responsible to the
Lender Group, or any of them, for the Obligations or any part thereof, whether under this Guaranty
or otherwise, shall cease to be so liable, each Subsidiary Guarantor hereby declares and agrees
that this Guaranty shall be a joint and several obligation, shall be a continuing guaranty and
shall be operative and binding until the Obligations shall have been indefeasibly paid in full in
cash (or in the case of L/C Obligations, secured through delivery of cash collateral in an amount
equal to one hundred and five percent (105%) of the L/C Obligations) and the Revolving Credit
Commitment shall have been terminated.

     (c) Each Subsidiary Guarantor absolutely, unconditionally and irrevocably waives any and all
right to assert any defense (other than the defense of payment in cash in full, to the extent of
its obligations hereunder, or a defense that such Subsidiary Guarantor’s liability is limited as
provided in Section 5.1(g)), set-off, counterclaim or cross-claim of any nature whatsoever
with respect to this Guaranty or the obligations of the Subsidiary Guarantors under this Guaranty
or the obligations of any other Person or party (including the Borrowers) relating to this Guaranty
or the obligations of any of the Subsidiary Guarantors under this Guaranty or otherwise with
respect to the Obligations in any action or proceeding brought by the Administrative Agent or any
other member of the Lender Group to collect the Obligations or any portion thereof, or to enforce
the obligations of any of the Subsidiary Guarantors under this Guaranty.

     (d) The Lender Group, or any of them, may from time to time, without exonerating or releasing
any Subsidiary Guarantor in any way under this Guaranty, (i) take such further or other security or
securities for the Obligations or any part thereof as they may deem proper, or (ii) release,
discharge, abandon or otherwise deal with or fail to deal with any Subsidiary Guarantor of the
Obligations or any security or securities therefor or any part thereof now or hereafter held by the
Lender Group, or any of them, or (iii) amend, modify, extend, accelerate or waive in any manner any
of the provisions, terms, or conditions of the Loan Documents, all as they may consider expedient
or appropriate in their sole discretion. Without limiting the generality of the foregoing, or of
Section 5.1(e), it is understood that the Lender Group, or any of them, may,

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without exonerating or releasing any Subsidiary Guarantor, give up, modify or abstain from
perfecting or taking advantage of any security for the Obligations and accept or make any
compositions or arrangements, and realize upon any security for the Obligations when, and in such
manner, and with or without notice, all as such Person may deem expedient.

     (e) Each Subsidiary Guarantor acknowledges and agrees that no change in the nature or terms of
the Obligations or any of the Loan Documents, or other agreements, instruments or contracts
evidencing, related to or attendant with the Obligations (including any novation), shall discharge
all or any part of the liabilities and obligations of such Subsidiary Guarantor pursuant to this
Guaranty; it being the purpose and intent of the Subsidiary Guarantors and the Lender Group that
the covenants, agreements and all liabilities and obligations of each Subsidiary Guarantor
hereunder are absolute, unconditional and irrevocable under any and all circumstances. Without
limiting the generality of the foregoing, each Subsidiary Guarantor agrees that until each and
every one of the covenants and agreements of this Guaranty is fully performed, and without
possibility of recourse, whether by operation of law or otherwise, such Subsidiary Guarantor’s
undertakings hereunder shall not be released, in whole or in part, by any action or thing which
might, but for this Section 5.1(e), be deemed a legal or equitable discharge of a surety or
guarantor, or by reason of any waiver, omission of the Lender Group, or any of them, or their
failure to proceed promptly or otherwise, or by reason of any action taken or omitted by the Lender
Group, or any of them, whether or not such action or failure to act varies or increases the risk
of, or affects the rights or remedies of, such Subsidiary Guarantor or by reason of any further
dealings between any Borrower, on the one hand, and any member of the Lender Group, on the other
hand, or any other guarantor or surety, and such Subsidiary Guarantor hereby expressly waives and
surrenders any defense to its liability hereunder, or any right of counterclaim or offset of any
nature or description which it may have or may exist based upon, and shall be deemed to have
consented to, any of the foregoing acts, omissions, things, agreements or waivers.

     (f) The Lender Group, or any of them, may, without demand or notice of any kind upon or to any
Subsidiary Guarantor, at any time or from time to time when any amount shall be due and payable
hereunder by any Subsidiary Guarantor, if the Borrowers shall not have timely paid any of the
Obligations (or in the case of L/C Obligations, secured through delivery of cash collateral in an
amount equal to one hundred and five percent (105%) of the L/C Obligations), set-off and
appropriate and apply to any portion of the Obligations hereby guaranteed, and in such order of
application as the Administrative Agent may from time to time elect in accordance with this
Agreement, any deposits, property, balances, credit accounts or moneys of any Subsidiary Guarantor
in the possession of any member of the Lender Group or under their respective control for any
purpose. If and to the extent that any Subsidiary Guarantor makes any payment to the
Administrative Agent or any other Person pursuant to or in respect of this Guaranty, any claim
which such Subsidiary Guarantor may have against the Borrowers by reason thereof shall be subject
and subordinate to the prior payment in full of the Obligations to the satisfaction of the Lender
Group.

     (g) The creation or existence from time to time of Obligations in excess of the amount
committed to or outstanding on the date of this Guaranty is hereby authorized, without notice to
any Subsidiary Guarantor, and shall in no way impair or affect this Guaranty or the rights of the
Lender Group herein. It is the intention of each Subsidiary Guarantor and the

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Administrative Agent that each Subsidiary Guarantor’s obligations hereunder shall be, but not
in excess of, the Maximum Guaranteed Amount (as herein defined). The “Maximum Guaranteed
Amount” with respect to any Subsidiary Guarantor, means the maximum amount which could be paid
by such Subsidiary Guarantor without rendering this Guaranty void or voidable as would otherwise be
held or determined by a court of competent jurisdiction in any action or proceeding involving any
state, provincial or federal (United States or Canada) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws relating to the insolvency of debtors.

     (h) Upon the bankruptcy or winding up or other distribution of assets of any Borrower, or of
any surety or guarantor (other than the applicable Subsidiary Guarantor) for any Obligations of the
Borrowers to the Lender Group, or any of them, the rights of the Administrative Agent against any
Subsidiary Guarantor shall not be affected or impaired by the omission of any member of the Lender
Group to prove its claim, or to prove the full claim, as appropriate, against such Borrower, or any
other Borrower or any such other guarantor or surety, and the Administrative Agent may prove such
claims as it sees fit and may refrain from proving any claim and in its discretion may value as it
sees fit or refrain from valuing any security held by it without in any way releasing, reducing or
otherwise affecting the liability to the Lender Group of each of the Subsidiary Guarantors.

     (i) Each Subsidiary Guarantor hereby absolutely, unconditionally and irrevocably expressly
waives, except to the extent such waiver would be expressly prohibited by Applicable Law, the
following: (i) notice of acceptance of this Guaranty, (ii) notice of the existence or creation of
all or any of the Obligations, (iii) presentment, demand, notice of dishonor, protest and all other
notices whatsoever (other than notices expressly required hereunder or under any other Loan
Document to which any Subsidiary Guarantor is a party), (iv) all diligence in collection or
protection of or realization upon the Obligations or any part thereof, any obligation hereunder, or
any security for any of the foregoing, (v) all rights to enforce any remedy which the Lender Group,
or any of them, may have against the Borrowers, and (vi) until the Obligations shall have been
indefeasibly paid in full in cash (or in the case of L/C Obligations, secured through delivery of
cash collateral in an amount equal to one hundred and five percent (105%) of the L/C Obligations)
and the Revolving Credit Commitment shall have been terminated, all rights of subrogation,
indemnification, contribution and reimbursement from the Borrowers for amounts paid hereunder and
any benefit of, or right to participate in, any collateral or security now or hereinafter held by
the Lender Group, or any of them, in respect of the Obligations. If a claim is ever made upon any
member of the Lender Group for the repayment or recovery of any amount or amounts received by such
Person in payment of any of the Obligations and such Person repays all or part of such amount by
reason of (A) any judgment, decree or order of any court or administrative body having jurisdiction
over such Person or any of its property, or (B) any settlement or compromise of any such claim
effected by such Person with any such claimant, including any Borrower, then in such event each
Subsidiary Guarantor agrees that any such judgment, decree, order, settlement or compromise shall
be binding upon such Subsidiary Guarantor, notwithstanding any revocation hereof or the
cancellation of any promissory note or other instrument evidencing any of the Obligations, and such
Subsidiary Guarantor shall be and remain obligated to such Person hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally been received by such
Person.

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     (j) This Guaranty is a continuing guaranty of the Obligations and all liabilities to which it
applies or may apply under the terms hereof and shall be conclusively presumed to have been created
in reliance hereon. No failure or delay by any member of the Lender Group in the exercise of any
right, power, privilege or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Administrative Agent of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy and no course of dealing between any
Subsidiary Guarantor and any member of the Lender Group shall operate as a waiver thereof. No
action by any member of the Lender Group permitted hereunder shall in any way impair or affect this
Guaranty. For the purpose of this Guaranty, the Obligations shall include all Obligations of the
Borrowers to the Lender Group, notwithstanding any right or power of any third party, individually
or in the name of the Borrowers and the Lender Group, or any of them, to assert any claim or
defense as to the invalidity or unenforceability of any such Obligation, and no such claim or
defense shall impair or affect the obligations of any Subsidiary Guarantor hereunder.

     (k) This is a guaranty of payment and not of collection. In the event the Administrative
Agent makes a demand upon any Subsidiary Guarantor in accordance with the terms of this Guaranty,
such Subsidiary Guarantor shall be held and bound to the Administrative Agent directly as debtor in
respect of the payment of the amounts hereby guaranteed. All costs and expenses, including
reasonable attorneys’ fees and expenses, incurred by the Administrative Agent in obtaining
performance of or collecting payments due under this Guaranty shall be deemed part of the
Obligations guaranteed hereby.

     (l) Each Subsidiary Guarantor is a direct or indirect Wholly-Owned Subsidiary of a Borrower.
Each Subsidiary Guarantor expressly represents and acknowledges that any financial accommodations
by the Lender Group to any Borrower, including the extension of credit, are and will be of direct
interest, benefit and advantage to such Subsidiary Guarantor.

     (m) The payment obligation of a Subsidiary Guarantor to any other Subsidiary Guarantor under
any Applicable Law regarding contribution rights among co-obligors or otherwise shall be
subordinate and subject in right of payment to the prior payment in full of the obligations of such
Subsidiary Guarantor under the other provisions of this Guaranty, and such Subsidiary Guarantor
shall not exercise any right or remedy with respect to such rights until payment and satisfaction
in full of all such obligations.

     SECTION 5.2 Special Provisions Applicable to Subsidiary Guarantors. Pursuant to
Section 10.11, certain new Subsidiaries of a Borrower are required to enter into this
Agreement by executing and delivering to the Administrative Agent a joinder agreement as provided
in Section 10.11. Upon the execution and delivery of such joinder agreement by a new
Subsidiary, such Subsidiary shall become a Subsidiary Guarantor and Credit Party hereunder with the
same force and effect as if originally named as a Subsidiary Guarantor or Credit Party herein. The
execution and delivery of any joinder agreement adding an additional Subsidiary Guarantor as a
party to this Agreement shall not require the consent of any other party hereto. The rights and
obligations of each party hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Guarantor hereunder.

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ARTICLE 6.

GENERAL LOAN PROVISIONS

     SECTION 6.1 Interest.

     (a) Interest Rate Options. Subject to the provisions of this Section 6.1, at
the election of the Borrowers, (i) Revolving Credit Loans shall bear interest at (A) the Base Rate
plus the Applicable Margin as set forth in Section 6.1(c) or (B) the LIBOR Rate
plus the Applicable Margin as set forth in Section 6.1(c) (provided that
the LIBOR Rate shall not be available until three (3) Business Days after the Closing Date) and
(ii) any Swingline Loan shall bear interest at the Base Rate plus the Applicable Margin as
set forth in Section 6.1(c). The Administrative Borrower shall select the rate of interest
and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given or
at the time a Notice of Conversion/Continuation is given pursuant to Section 6.2. Each
Loan or portion thereof bearing interest based on the Base Rate shall be a “Base Rate
Loan”, and each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a
“LIBOR Rate Loan.” Any Loan or any portion thereof as to which the Administrative Borrower
has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan.

     (b) Interest Periods. In connection with each LIBOR Rate Loan, the Administrative
Borrower, by giving notice pursuant to and in accordance with Section 2.3(a), shall elect
an interest period (each, an “Interest Period”) to be applicable to such Loan, which
Interest Period shall be a period of one (1), two (2), three (3), or six (6) months;
provided that:

     (i) the Interest Period shall commence on the date of advance of or conversion to any
LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive
Interest Period shall commence on the date on which the immediately preceding Interest
Period expires;

     (ii) if any Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; provided,
that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a
day that is not a Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the immediately preceding
Business Day;

     (iii) any Interest Period with respect to a LIBOR Rate Loan 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 relevant calendar month at the end of such Interest Period;

     (iv) no Interest Period shall extend beyond the Revolving Credit Maturity Date; and

     (v) there shall be no more than six (6) Interest Periods in effect at any time.

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     (c) Applicable Margin. The Applicable Margin provided for in Section 6.1(a)
with respect to any Loan (the “Applicable Margin”) shall be based upon the table set forth
below and shall be determined by reference to Average Excess Availability as of the last day of the
most recently ended month preceding the applicable Calculation Date and adjusted monthly,
commencing on March 1, 2008, on the date (each, a “Calculation Date”) that is the first day
of the first month after the earlier of (i) the date on which the Credit Parties provide, or (ii)
the date on which the Credit Parties are required to provide, the reports and other information
required to be provided for each month pursuant to Section 9.4(b); provided,
however, that (a) the initial Applicable Margin shall be based on Pricing Level II (as
shown below) and shall remain at no lower than Pricing Level II until the first Calculation Date
following September 1, 2008, and (b) if the Credit Parties fail to provide the reports and other
information as required by Section 9.4(b) for the most recently ended month preceding the
applicable Calculation Date, the Applicable Margin from such Calculation Date shall be based on
Pricing Level I (as shown below) until such time as such reports and other information is provided
as required by Section 9.4(b), at which time the Applicable Margin shall be determined by
reference to Average Excess Availability as of the last day of the most recently ended month
preceding such Calculation Date. The Applicable Margin shall be effective from one Calculation
Date until the next Calculation Date. Automatically upon the occurrence and during the continuance
of any Event of Default under Section 13.1(a), (b), (j) or (k), and
at the election of the Required Lenders upon the occurrence and during the continuance of any other
Event of Default, the Applicable Margin shall be based on Pricing Level I. Any adjustment in the
Applicable Margin shall be applicable to all Extensions of Credit then existing or subsequently
made or issued.

	 	 	 	 	 	 	 	 	 	 	 
	Pricing	 	 	 	Revolving Credit Facility
	Level	 	Average Excess Availability	 	LIBOR	 	Base Rate
	I
	 	Less than $40,000,000

	 	 	2.25	%	 	 	0.50	%
	II
	 	Greater than or equal to
$40,000,000 but less than
or equal to $70,000,000

	 	 	2.00	%	 	 	0.25	%
	III
	 	Greater than $70,000,000

	 	 	1.75	%	 	 	0.00	%

     Notwithstanding the foregoing, however, in the event that the information regarding Average
Excess Availability delivered pursuant to this Agreement is shown to be inaccurate, and such
inaccuracy, if corrected, would have led to the application of higher Applicable Margins for any
period (a “Margin Rate Period”) than the Applicable Margins actually applied for such
Margin Rate Period, then (a) the Parent shall immediately deliver to the Administrative Agent a
certificate calculating the correct Average Excess Availability for such Margin Rate Period, (b)
the Applicable Margins shall be determined as if the correct Applicable Margins (as shown above)
were applicable for such Margin Rate Period, and (c) the Borrowers shall immediately deliver to the
Administrative Agent full payment in respect of the accrued additional interest on the Obligations
as a result of such increased Applicable Margins for such Margin Rate Period, which payment shall
be promptly applied by the Administrative Agent to the affected Obligations.

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     (d) Default Rate. Subject to Section 13.3, (i) automatically upon the
occurrence and during the continuance of any Event of Default under Section 13.1(a),
(b), (j) or (k) and (ii) at the election of the Administrative Agent or the
Required Lenders upon the occurrence and during the continuance of any other Event of Default, (A)
the Borrowers shall no longer have the option to request LIBOR Rate Loans, Swingline Loans or
Letters of Credit, (B) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of
two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of the
applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate
then applicable to Base Rate Loans, and (C) all outstanding Base Rate Loans and other Obligations
arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to
two percent (2%) in excess of the rate then applicable to Base Rate Loans or such other Obligations
arising hereunder or under any other Loan Document. Interest shall continue to accrue on the
Obligations after the filing by or against any Borrower of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state,
provincial, federal (United States or Canada) or foreign. Such interest shall be payable on demand
of the Administrative Agent.

     (e) Interest Payment and Computation. Interest on each Base Rate Loan shall be due
and payable in arrears on the last Business Day of each calendar month commencing on the first such
day following the Closing Date; and interest on each LIBOR Rate Loan shall be due and payable on
the last day of each Interest Period applicable thereto, and if such Interest Period extends over
three (3) months, at the end of each three (3) month interval during such Interest Period.
Interest on LIBOR Rate Loans, Base Rate Loans calculated based upon the Federal Funds Rate and all
fees payable hereunder shall be computed on the basis of a three hundred sixty (360)-day year and
assessed for the actual number of days elapsed and interest on Base Rate Loans calculated based
upon the Prime Rate shall be computed on the basis of a three hundred sixty-five (365)/three
hundred sixty-six (366)-day year and assessed for the actual number of days elapsed.

     (f) Maximum Rate. In no contingency or event whatsoever shall the aggregate of all
amounts deemed interest under this Agreement charged or collected pursuant to the terms of this
Agreement exceed the highest rate permissible under any Applicable Law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a
court determines that the Lenders have charged or received interest hereunder in excess of the
highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum
rate permitted by Applicable Law and the Lenders shall at the Administrative Agent’s option (i)
promptly refund to the Borrowers any interest received by the Lenders in excess of the maximum
lawful rate or (ii) shall apply such excess to the principal balance of the Obligations on a
pro rata basis. It is the intent hereof that no Borrower pay or contract to pay,
and that neither the Administrative Agent nor any Lender receive or contract to receive, directly
or indirectly in any manner whatsoever, interest in excess of that which may be paid by such
Borrower under Applicable Law.

     (g) Interest Act (Canada); Criminal Rate of Interest; Nominal Rate of Interest.
Notwithstanding anything to the contrary contained in this Agreement or in any other Loan Document,
solely to the extent that a court of competent jurisdiction finally determines that the calculation
or determination of interest payable by the Canadian Borrower in respect of the

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Obligations pursuant to this Agreement and the other Loan Documents shall be governed by the
laws of the province of Ontario or the federal laws of Canada:

     (i) whenever interest payable by the Canadian Borrower is calculated on the basis of a
period which is less than the actual number of days in a calendar year, each rate of
interest determined pursuant to such calculation is, for the purposes of the Interest Act
(Canada), equivalent to such rate multiplied by the actual number of days in the calendar
year in which such rate is to be ascertained and divided by the number of days used as the
basis of such calculation;

     (ii) in no event shall the aggregate “interest” (as defined in Section 347 of the
Criminal Code, R.S.C. 1985, c. C-46, as the same shall be amended, replaced or re-enacted
from time to time) payable by the Canadian Borrower to the Administrative Agent or any
Lender under this Agreement or any other Loan Document exceed the effective annual rate of
interest on the “credit advances” (as defined in that section) under this Agreement or such
other Loan Document lawfully permitted under that section and, if any payment, collection or
demand pursuant to this Agreement or any other Loan Document in respect of “interest” (as
defined in that section) is determined to be contrary to the provisions of that section,
such payment, collection or demand shall be deemed to have been made by mutual mistake of
the Administrative Agent, Lenders and the Canadian Borrower and the amount of such payment
or collection shall be refunded by the Administrative Agent or the Lenders, as applicable,
to the Canadian Borrower. For the purposes of this Agreement and each other Loan Document
to which the Canadian Borrower is a party, the effective annual rate of interest payable by
the Canadian Borrower shall be determined in accordance with generally accepted actuarial
practices and principles over the term of the Loans on the basis of annual compounding for
the lawfully permitted rate of interest and, in the event of dispute, a certificate of a
Fellow of the Institute of Actuaries appointed by the Administrative Agent for the account
of the Canadian Borrower will be conclusive for the purpose of such determination in the
absence of evidence to the contrary; and

     (iii) all calculations of interest payable by the Canadian Borrower under this
Agreement or any other Loan Document are to be made on the basis of the nominal interest
rate described herein and therein and not on the basis of effective yearly rates or on any
other basis which gives effect to the principle of deemed reinvestment of interest. The
parties hereto acknowledge that there is a material difference between the stated nominal
interest rates and the effective yearly rates of interest and that they are capable of
making the calculations required to determine such effective yearly rates of interest.

     SECTION 6.2 Notice and Manner of Conversion or Continuation of Loans. Provided that
no Default or Event of Default has occurred and is then continuing, the Borrowers shall have the
option to (a) convert at any time following the third Business Day after the Closing Date all or
any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount
equal to $3,000,000 or any whole multiple of $1,000,000 in excess thereof into one (1) or more
LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of
its outstanding LIBOR Rate Loans in a principal amount equal to $3,000,000 or a whole multiple of
$1,000,000 in excess thereof into Base Rate Loans (other than Swingline

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Loans) or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrowers
desire to convert or continue Loans as provided above, the Administrative Borrower shall give the
Administrative Agent irrevocable prior written notice in the form attached as Exhibit D (a
“Notice of Conversion/Continuation”) not later than 12:00 p.m. three (3) Business Days
before the day on which a proposed conversion or continuation of such Loan is to be effective
specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to
be converted or continued, the last day of the Interest Period therefor, (B) the effective date of
such conversion or continuation (which shall be a Business Day), (C) the principal amount of such
Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted
or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.

     SECTION 6.3 Fees and Charges.

     (a) Commitment Fee. Commencing on the Closing Date, the Borrowers shall pay to the
Administrative Agent, for the account of the Lenders, a non-refundable commitment fee at a rate per
annum equal to 0.375% on the aggregate average daily unused portion of the Revolving Credit
Commitment; provided, that the amount of outstanding Swingline Loans shall not be
considered usage of the Revolving Credit Commitment for the purposes of calculating such commitment
fee. The commitment fee shall be payable in arrears on the last Business Day of each calendar
month during the term of this Agreement commencing on the first such day following the Closing
Date, and on the Revolving Credit Maturity Date. Such commitment fee shall be distributed by the
Administrative Agent to the Lenders pro rata in accordance with the Lenders’
respective Revolving Credit Commitment Percentages.

     (b) Upfront Fees. On the Closing Date, the Borrowers shall pay to the Administrative
Agent, for the account of the Lenders, the upfront fees set forth in that certain fee letter
between the Parent and the Administrative Agent dated as of the Closing Date (the “Fee
Letter”).

     (c) Administrative Agent’s and Other Fees. In order to compensate the Administrative
Agent for structuring and syndicating the Loans and for its obligations hereunder, the Borrowers
agree to pay to the Administrative Agent, for its account, the fees set forth in the Fee Letter.

     (d) Audit and Appraisal Charges.

     (i) With respect to any appraisal or evaluation performed by or on behalf of the
Administrative Agent pursuant to the terms of this Agreement, the Borrowers shall pay the
actual reasonable charges paid or incurred by the Administrative Agent in connection with
the employment of the services of one or more third Persons, in its Permitted Discretion, to
perform field examinations of the assets of the Credit Parties, to appraise the Collateral
or any other collateral securing the Obligations, or any portion thereof.

     (ii) With respect to any audit or field examination performed by or on behalf of the
Administrative Agent pursuant to the terms of this Agreement, the Borrowers shall pay all
reasonable out-of-pocket expenses and costs heretofore and from time to time

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hereafter incurred by the Administrative Agent during the course of periodic audits or
field examinations of the Collateral and the operations of the Credit Parties, or any of
them, plus a per diem charge or $850 per person per day (or, if higher, at the
Administrative Agent’s then standard rate) for the Administrative Agent’s examiners in the
field and office, or, if it elects to employ the services of one or more third Persons, in
its Permitted Discretion, such other higher fee per day, per auditor, paid or incurred by
the Administrative Agent; provided, however, that, if no Event of Default
has occurred and is continuing, the Administrative Agent shall request, in any calendar
year, no more than (in addition to any field examinations or appraisals pursuant to
Section 12.3(f) or 12.3(g)) (x) if Excess Availability has been (i) greater
than or equal to $70,000,000 during such entire calendar year, two (2) field examinations in
such calendar year or (ii) less than $70,000,000 at any point in such calendar year, three
(3) field examinations in such calendar year and (y) if Excess Availability has been (i)
greater than or equal to $70,000,000 during such entire calendar year, one (1) appraisal in
such calendar year or (ii) less than $70,000,000 at any point in such calendar year, two (2)
appraisals in such calendar year.

     SECTION 6.4 Manner of Payment.

     (a) Each payment by the Borrowers on account of the principal of or interest on the Loans or
of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the
Lenders under this Agreement or any Note shall be made not later than 1:00 p.m. on the date
specified for payment under this Agreement to the Administrative Agent at the Administrative
Agent’s Office for the account of the Lenders (other than as set forth below) pro
rata in accordance with their respective Revolving Credit Commitment Percentages (except as
specified below), in Dollars and in immediately available funds and shall be made without any
set-off, counterclaim or deduction whatsoever. Any payment received after such time shall be
deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the
Administrative Agent of each such payment, the Administrative Agent shall promptly distribute to
each Lender at its address for notices set forth herein its pro rata share of such
payment in accordance with such Lender’s Revolving Credit Commitment Percentage (except as
specified below), and shall wire advice of the amount of such credit to each Lender. Each payment
to the Administrative Agent of the Issuing Lender’s fees or Lenders’ commissions shall be made in
like manner, but for the account of the Issuing Lender or the Lenders, as the case may be. Each
payment to the Administrative Agent of Administrative Agent’s fees or expenses shall be made in
like manner but for the account of the Administrative Agent, and any amount payable to any Lender
under Section 6.8, 6.9, 6.10, 6.11 or 15.11 shall be paid
to the Administrative Agent in like manner but for the account of the applicable Lender. Subject
to Section 6.1(b)(ii), if any payment under this Agreement or any Note shall be specified
to be made upon a day which is not a Business Day, it shall be deemed made on the next succeeding
day which is a Business Day and such extension of time shall in such case be included in computing
any interest if payable along with such payment.

     (b) Prior to the occurrence and continuance of an Event of Default, the Administrative Agent
shall apply payments received or collected from any Borrower or any other Credit Party or for the
account of any Borrower or any other Credit Party (including the monetary proceeds of collections
or of realization upon any Collateral) as follows: first, to the

59

 

payment in full of any fees, indemnities or expense reimbursements then due to the
Administrative Agent from any Borrower or any other Credit Party; second, ratably, to the
payment in full of any fees, indemnities, or expense reimbursements then due to the Lenders and the
Issuing Lender from any Borrower or any other Credit Party, other than fees, indemnities and
expenses reimbursements incurred solely in connection with any Bank Products; third,
ratably, to the payment in full of interest due in respect of any Loans (and including any Agent
Advances) and L/C Obligations; fourth, to the payment in full of principal in respect of
Agent Advances; fifth, to the payment in full of principal in respect of the Swingline
Loans; sixth, ratably, to the payment in full of principal in respect of the Revolving
Credit Loans and to pay Obligations then due arising under or pursuant to any Bank Products of a
Borrower or another Credit Party with a Bank Product Provider (up to the amount of any then
effective Reserve established in respect of such Obligations); and seventh, to pay or
prepay any other Obligations, whether or not then due, in such order and manner as the
Administrative Borrower requests so long as no Event of Default exists or has occurred and is
continuing, otherwise as the Administrative Agent directs and for the Administrative Agent to hold
as cash collateral in respect of the L/C Obligations.

     (c) Notwithstanding anything in this Agreement or any other Loan Documents which may be
construed to the contrary, subsequent to the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall apply payments received or collected from any Borrower or
any other Credit Party or for the account of any Borrower or any other Credit Party (including the
monetary proceeds of collections or of realization upon any Collateral) as follows: first,
to the payment in full of any fees, indemnities or expense reimbursements then due to the
Administrative Agent from any Borrower or any other Credit Party; second, ratably, to the
payment in full of any fees, indemnities, or expense reimbursements then due to the Lenders and the
Issuing Lender from any Borrower or any other Credit Party, other than fees, indemnities and
expenses reimbursements incurred solely in connection with any Bank Products; third,
ratably, to the payment in full of interest due in respect of any Revolving Credit Loans, Swingline
Loans, Agent Advances and L/C Obligations; fourth, to the payment in full of principal in
respect of Agent Advances; fifth, to the payment in full of principal in respect of the
Swingline Loans; sixth, ratably, to the payment in full of principal in respect of the
Revolving Credit Loans and to pay or prepay Obligations then due arising under or pursuant to any
Bank Products of a Borrower or another Credit Party with a Bank Product Provider (up to the amount
of any then effective Reserve established in respect of such Obligations); seventh, to the
payment in full of cash collateral in respect of the L/C Obligations until the aggregate amount
thereof equals one hundred five (105%) percent of the aggregate undrawn amount of all then
outstanding Letters of Credit through the end of the latest expiration date of such Letters of
Credit plus the amount of any other contingent Obligations (but not including for this purpose any
Obligations arising under or pursuant to any Bank Products); and eighth, to pay or prepay
any other Obligations whether or not then due, in such order and manner as the Administrative Agent
determines.

     SECTION 6.5 Evidence of Indebtedness.

     (a) Extensions of Credit. The Extensions of Credit made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by the Administrative
Agent and each Lender shall be conclusive absent manifest error of the aggregate amount of the
Extensions of Credit made by the Lenders to the Borrowers and the

60

 

interest and payments thereon. Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the accounts and
records maintained by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent shall control in the
absence of manifest error. Upon the request of any Lender made through the Administrative Agent,
the Borrowers shall execute and deliver to such Lender (through the Administrative Agent) a
Revolving Credit Note or Swingline Note, as applicable, which shall evidence such Lender’s
Revolving Credit Loans or Swingline Loans, as applicable, in addition to such accounts or records.
Each Lender may attach schedules to its Notes and endorse thereon the date, amount and maturity of
its Loans and payments with respect thereto. Each Borrower hereby authorizes the Administrative
Agent, from time to time without prior notice to the Borrowers, at the Administrative Agent’s
option, to charge all principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Loan Documents may be charged directly to the loan account(s) of any
Borrower maintained by the Administrative Agent, which amounts thereafter shall constitute Loans
hereunder and shall accrue interest at the rate then applicable to Loans that are Base Rate Loans;
provided, however, that the Administrative Agent shall endeavor to notify the
Administrative Borrower prior to any such charge in respect of out-of-pocket fees, costs and
expenses, although the failure of the Administrative Agent to deliver such notice shall neither be
considered a breach of this Agreement nor affect the validity of the Administrative Agent’s right
to charge such fees, costs and expenses as provided herein. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations, the Administrative Agent,
any Lender or the Issuing Lender is required to surrender or return such payment or proceeds to any
Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds
shall be reinstated and continue and this Agreement shall continue in full force and effect as if
such payment or proceeds had not been received by the Administrative Agent, such Lender or the
Issuing Lender. The Credit Parties shall be liable to pay to the Administrative Agent, and do
hereby agree to indemnify and hold the Administrative Agent and the other members of the Lender
Group harmless for the amount of any payments or proceeds surrendered or returned. This
Section 6.5(a) shall remain effective notwithstanding any contrary action which may be
taken by the Administrative Agent or any other member of the Lender Group in reliance upon such
payment or proceeds. This preceding two (2) sentences of this Section 6.5(a) shall survive
the payment of the Obligations and the termination of this Agreement.

     (b) Participations. In addition to the accounts and records referred to in
Section 6.5(a), each Lender and the Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit, Agent Advances and Swingline Loans. In the event of any
conflict between the accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error.

     SECTION 6.6 Adjustments. If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its
Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of
the aggregate amount of its Loans and accrued interest thereon or other such obligations (other

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than pursuant to Section 6.9, 6.10, 6.11 or 15.2) greater than
its pro rata share thereof as provided herein, then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and such other obligations of the other Lenders, or
make such other adjustments as shall be equitable, so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them; provided that

     (a) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest, and

     (b) the provisions of this Section 6.6 shall not be construed to apply to (i) any
payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement
or (ii) any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in Swingline Loans and Letters of Credit to any
assignee or participant.

     Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so
under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against each Credit Party rights of setoff and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of each Credit Party in the
amount of such participation.

     SECTION 6.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by
the Administrative Agent. The obligations of the Lenders under this Agreement to make the
Loans and issue or participate in Letters of Credit are several and are not joint or joint and
several. Unless the Administrative Agent shall have received written notice from a Lender prior to
a proposed borrowing date that such Lender will not make available to the Administrative Agent such
Lender’s ratable portion of the amount to be borrowed on such date (which notice shall not release
such Lender from its obligations hereunder), the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.3(b), and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount. If such amount is
made available to the Administrative Agent on a date after such borrowing date, such Lender shall
pay to the Administrative Agent on demand an amount, until paid, equal to the product of (a) the
amount not made available by such Lender in accordance with the terms hereof, multiplied
by (b) the daily average Federal Funds Rate during such period as determined by the
Administrative Agent, multiplied by (c) a fraction the numerator of which is the
number of days that elapse from and including such borrowing date to the date on which such amount
not made available by such Lender in accordance with the terms hereof shall have become immediately
available to the Administrative Agent and the denominator of which is three hundred sixty (360). A
certificate of the Administrative Agent with respect to any amounts owing under this
Section 6.7 shall be conclusive, absent manifest error. If such Lender’s Revolving Credit
Commitment Percentage of such borrowing is not made available to the Administrative Agent by such
Lender within three (3) Business Days after such borrowing date, the Administrative Agent shall be
entitled to recover such amount made

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available by the Administrative Agent with interest thereon at the rate per annum applicable
to such borrowing hereunder, on demand, from any Borrower. The failure of any Lender to make
available its Revolving Credit Commitment Percentage of any Loan requested by any Borrower shall
not relieve it or any other Lender of its obligation, if any, hereunder to make its Revolving
Credit Commitment Percentage of such Loan available on the borrowing date, but no Lender shall be
responsible for the failure of any other Lender to make its Revolving Credit Commitment Percentage
of such Loan available on the borrowing date. Notwithstanding anything set forth herein to the
contrary, any Lender that fails to make available its Revolving Credit Commitment Percentage shall
not (a) have any voting or consent rights under or with respect to any Loan Document or (b)
constitute a “Lender” (or be included in the calculation of Required Lenders hereunder) for any
voting or consent rights under or with respect to any Loan Document.

     SECTION 6.8 Changed Circumstances.

     (a) Circumstances Affecting LIBOR Rate Availability. If with respect to any Interest
Period the Administrative Agent or any Lender (after consultation with the Administrative Agent)
shall determine that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in eurodollars in the applicable amounts are not being quoted as
described in the definition of LIBOR or offered to the Administrative Agent or such Lender for such
Interest Period, then the Administrative Agent shall forthwith give notice thereof to the
Administrative Borrower. Thereafter, until the Administrative Agent notifies the Administrative
Borrower that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate
Loans and the right of the Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate
Loan shall be suspended, and the Borrowers shall repay in full (or cause to be repaid in full) the
then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest
thereon, on the last day of the then current Interest Period applicable to such LIBOR Rate Loan or
convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as
of the last day of such Interest Period.

     (b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the
introduction of, or any change in, any Applicable Law or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the Lenders (or any of
their respective Lending Offices) with any request or directive (whether or not having the force of
law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful
or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its
obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly give
notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice
to the Administrative Borrower and the other Lenders. Thereafter, until the Administrative Agent
notifies the Administrative Borrower that such circumstances no longer exist, (i) the obligations
of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to convert any Loan or
continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrowers may select
only Base Rate Loans hereunder, and (ii) if any of the Lenders may not lawfully continue to
maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto as a
LIBOR Rate Loan, the applicable LIBOR

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Rate Loan shall immediately be converted to a Base Rate Loan for the remainder of such
Interest Period.

     SECTION 6.9 Indemnity. Each Borrower hereby indemnifies each of the Lenders against
any loss or expense which may arise or be attributable to each Lender’s obtaining, liquidating or
employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a
consequence of any failure by any Borrower to make any payment when due of any amount due hereunder
in connection with a LIBOR Rate Loan, (b) due to any failure of any Borrower to borrow, continue or
convert on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation
or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the
last day of the Interest Period therefor. The amount of such loss or expense shall, with respect
to any Lender, be deemed to equal the amount determined by such Lender to be the excess, if any, of
(a) the amount of interest that would have accrued on the principal amount of such LIBOR Rate Loan
had such event not occurred, at the Base Rate that would have been applicable thereto, for the
period from the date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert, or continue, for the period that would have been
the Interest Period therefor), minus (b) the amount of interest that would accrue on such principal
amount for such period at the interest rate which such Lender would be offered were it to be
offered, at the commencement of such period, Dollar deposits of a comparable amount and period in
the London interbank market. A certificate of such Lender setting forth the basis for determining
such amount or amounts necessary to compensate such Lender shall be forwarded to the Administrative
Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.

     SECTION 6.10 Increased Costs.

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

     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for the account
of, or advances, loans or other credit extended or participated in by, any Lender (except
any reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;

     (ii) subject any Lender or the Issuing Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or
any LIBOR Rate Loan made by it, or change the basis of taxation of payments to such Lender
or the Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 6.11 and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the Issuing Lender); or

     (iii) impose on any Lender or the Issuing Lender or the London interbank market any
other condition, cost or expense affecting this Agreement or LIBOR Rate Loans made by such
Lender or any Letter of Credit or participation therein;

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and the result of any of the foregoing shall be to increase the cost to such Lender of making,
converting into or maintaining any LIBOR Rate Loan (or of maintaining its obligation to make any
such Loan), or to increase the cost to such Lender or the Issuing Lender of participating in,
issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or
to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such
Lender or the Issuing Lender hereunder (whether of principal, interest or any other amount) then,
upon request of such Lender or the Issuing Lender, the Borrowers shall promptly pay to any such
Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Lender, as the case may be, for such additional costs
incurred or reduction suffered.

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

     (c) Certificates for Reimbursement. A certificate of a Lender or the Issuing Lender
setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or
its holding company, as the case may be, as specified in Section 6.10(a) or 6.10(b)
and delivered to any Borrower shall be conclusive absent manifest error. The Borrowers shall pay
such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof.

     (d) Delay in Requests. Failure or delay on the part of any Lender or the Issuing
Lender to demand compensation pursuant to this Section 6.10 shall not constitute a waiver
of such Lender’s or the Issuing Lender’s right to demand such compensation; provided that
no Borrower shall be required to compensate a Lender or the Issuing Lender pursuant to this
Section 6.10 for any increased costs incurred or reductions suffered more than nine months
prior to the date that such Lender or the Issuing Lender, as the case may be, notifies any Borrower
of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the nine-month period referred to
above shall be extended to include the period of retroactive effect thereof).

     SECTION 6.11 Taxes.

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     (a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of any Borrower hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes (including any Other Taxes);
provided that if any Borrower shall be required by Applicable Law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 6.11) the Administrative Agent, Lender or
Issuing Lender, as the case may be, receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers
shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with
Applicable Law.

     (b) Payment of Indemnified Taxes by the Borrowers. Without limiting the provisions of
Section 6.11(a), the Borrowers shall timely pay any Indemnified Taxes to the relevant
Governmental Authority in accordance with Applicable Law.

     (c) Indemnification by the Borrowers. The Borrowers shall indemnify the Administrative
Agent, each Lender and the Issuing Lender, within ten (10) days after demand therefor, for the full
amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable
to amounts payable under this Section 6.11) paid by the Administrative Agent, such Lender
or the Issuing Lender, as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Administrative Borrower by a Lender or the Issuing
Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest error.

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

     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which any Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Administrative Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by Applicable Law or reasonably
requested by the Administrative Borrower or the Administrative Agent, such properly completed and
executed documentation prescribed by Applicable Law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if requested by the
Administrative Borrower or the Administrative Agent, shall deliver such other documentation
prescribed by Applicable Law or reasonably requested by the Administrative Borrower or the
Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether
or not such Lender is subject to backup withholding

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or information reporting requirements. Without limiting the generality of the foregoing, in
the event that any Borrower is a resident for tax purposes in the United States, any Foreign Lender
shall deliver to the Administrative Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the request of the
Borrowers or the Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party,

     (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

     (iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (B) a “10 percent shareholder” of any Borrower within the meaning of section
881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form
W-8BEN, or

     (iv) any other form prescribed by Applicable Law as a basis for claiming exemption from
or a reduction in United States federal withholding tax duly completed together with such
supplementary documentation as may be prescribed by Applicable Law to permit the Borrowers
to determine the withholding or deduction required to be made.

     (f) Treatment of Certain Refunds. If the Administrative Agent, a Lender or the Issuing
Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers
has paid additional amounts pursuant to this Section 6.11, it shall pay to the Borrowers an
amount equal to such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrowers under this Section 6.11 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent,
such Lender or the Issuing Lender, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such refund); provided
that the Borrowers, upon the request of the Administrative Agent, such Lender or the Issuing
Lender, agrees to repay the amount paid over to the Borrowers (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such
Lender or the Issuing Lender in the event the Administrative Agent, such Lender or the Issuing
Lender is required to repay such refund to such Governmental Authority. This Section
6.11(f) shall not be construed to require the Administrative Agent, any Lender or the Issuing
Lender to make available its tax returns (or any other information relating to its taxes which it
deems confidential) to the Borrowers or any other Person.

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     (g) Survival. Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations contained in this Section 6.11 shall
survive the payment in full of the Obligations and the termination of the Commitments.

     SECTION 6.12 Mitigation Obligations; Replacement of Lenders.

     (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 6.10, or requires the Borrowers to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 6.11, then
such Lender shall use reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 6.10 or 6.11, as
the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

     (b) Replacement of Lenders. If (i) any Lender requests compensation under Section
6.10, (ii) the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 6.11, (iii) any
Lender defaults in its obligation to fund Loans hereunder or honor its participation obligation
with respect to Letters of Credit hereunder, or (iv) any Lender that is not the Administrative
Agent or an Affiliate of the Administrative Agent does not consent to any amendment, waiver or
consent to any Loan Document for which the consent of the Required Lenders is obtained but that
requires the consent of all Lenders, then the Borrowers may, at their sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in, and consents
required by, Section 15.9), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that

     (i) the Borrowers shall have paid to the Administrative Agent the assignment fee
specified in Section 15.9;

     (ii) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in Letters of Credit, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 6.9) from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrowers (in the case
of all other amounts);

     (iii) in the case of any such assignment resulting from a claim for compensation under
Section 6.10 or payments required to be made pursuant to Section 6.11, such
assignment will result in a reduction in such compensation or payments thereafter; and

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     (iv) such assignment does not conflict with Applicable Law.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to
require such assignment and delegation cease to apply.

ARTICLE 7.

CLOSING; CONDITIONS OF CLOSING AND BORROWING

     SECTION 7.1 Conditions to Closing. The obligation of the Lenders to close this
Agreement is subject to the satisfaction of each of the following conditions:

     (a) Executed Loan Documents. This Agreement, any requested Revolving Credit Notes or
Swingline Note and the Security Documents, together with any other applicable Loan Documents, shall
have been duly authorized, executed and delivered to the Administrative Agent by the parties
thereto, shall be in full force and effect and no Default or Event of Default shall exist
thereunder.

     (b) Closing Certificates; etc.

     (i) Officer’s Certificate of the Parent. The Administrative Agent shall have
received a certificate from a Responsible Officer, in form and substance satisfactory to the
Administrative Agent, to the effect that (A) all representations and warranties of the
Borrowers and their Subsidiaries contained in this Agreement and the other Loan Documents
are true and correct in all material respects (unless any such representation or warranty is
qualified as to materiality, in which case such representation and warranty shall be true
and correct in all respects), (B) none of the Borrowers nor any of their Subsidiaries is in
violation of any of the covenants contained in this Agreement and the other Loan Documents,
(C) after giving effect to the transactions contemplated by this Agreement, no Default or
Event of Default has occurred and is continuing and (D) the Borrowers and their Subsidiaries
have satisfied each of the closing conditions.

     (ii) General Certificate of the Borrowers and each of the Subsidiary
Guarantors. The Administrative Agent shall have received a certificate of the secretary
or assistant secretary of each Borrower and each Subsidiary Guarantor certifying (A) as to
the incumbency and genuineness of the signature of each officer of such Borrower or such
Subsidiary Guarantor executing the Loan Documents to which it is a party and (B) that
attached thereto is a true, correct and complete copy of (1) the certificate of
organization, articles of incorporation or other organizational document of such Borrower,
or such Subsidiary Guarantor and all amendments thereto, certified as of a recent date by
the appropriate Governmental Authority in its jurisdiction of formation or, in the case of
the Canadian Borrower, certified by an officer of the Canadian Borrower, (2) the bylaws,
operating agreement or other operative document of such Borrower or such Subsidiary
Guarantor as in effect on the date of such certifications, (3) resolutions duly adopted by
the Board of Directors, members or managers of such Borrower or such Subsidiary Guarantor
authorizing the borrowings contemplated hereunder and the

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execution, delivery and performance of this Agreement and the other Loan Documents to
which it is a party, and (4) each certificate required to be delivered pursuant to
Section 7.1(b)(iii).

     (iii) Certificates of Good Standing. The Administrative Agent shall have
received certificates as of a recent date of the good standing, existence or status, as
applicable, of each Borrower and each Subsidiary Guarantor under the laws of its
jurisdiction of organization and each other jurisdiction where each Borrower and each
Subsidiary Guarantor is qualified to do business.

     (iv) Tax Forms. The Administrative Agent shall have received copies of the
United States Internal Revenue Service forms required by Section 6.11(e).

     (c) Opinions of Counsel. The Administrative Agent shall have received favorable
opinions of counsel to the Borrowers and the Subsidiary Guarantors addressed to the Administrative
Agent and the Lenders with respect to the Loan Documents, the Lender Group’s security interests,
and such other matters as the Lenders shall request.

     (d) Collateral.

     (i) Filings and Recordings; Blocked Account Agreements. All filings and
recordations that are necessary to perfect the security interests of the Lender Group in the
collateral described in the Security Documents, and, unless the Administrative Agent
otherwise agrees, all Blocked Account Agreements that are required to be executed and
delivered under the Security Agreement and the Canadian Security Agreement, shall have been
received by the Administrative Agent and the Administrative Agent shall have received
evidence satisfactory thereto that upon such filings and recordations, and the execution and
delivery of such Blocked Account Agreements, such security interests constitute valid and
perfected first priority Liens therein.

     (ii) Pledged Collateral. The Administrative Agent shall have received
(A) unless the Administrative Agent otherwise agrees, original stock certificates or other
certificates evidencing the capital stock or other Equity Interests pledged pursuant to the
Security Agreement and the Canadian Pledge Agreement, together with an undated stock power
for each such certificate duly executed in blank by the registered owner thereof, and (B)
unless the Administrative Agent otherwise agrees, each original promissory note and mortgage
pledged pursuant to the Security Agreement or the Canadian Security Agreement.

     (iii) Lien Searches. The Administrative Agent shall have received the results
of a Lien search (including a search as to judgments, pending litigation and tax matters),
in form and substance reasonably satisfactory thereto, made against such entities as the
Administrative Agent may request under the Uniform Commercial Code (or applicable judicial
docket) as in effect in any state, province or territory in which any of its assets are
located, indicating among other things that its assets are free and clear of any Lien except
for Permitted Liens.

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     (iv) Evidence of Insurance. The Administrative Agent shall have received
certificates of insurance evidencing compliance by the Credit Parties with Section
10.3, together with, unless the Administrative Agent otherwise agrees, endorsements to
such policies as are required by Section 10.3, in form and substance satisfactory to
the Administrative Agent in its Permitted Discretion.

     (v) Collateral Access Agreements. Unless the Administrative Agent otherwise
agrees, and excluding those leased locations at which the Credit Parties keeps Inventory
with a value of no more than $200,000 at any one (1) location and no more than $1,000,000 in
the aggregate at all such locations, the Administrative Agent shall have received
fully-executed Collateral Access Agreements from each Credit Party’s lessors, warehousemen,
processors, customs brokers, freight forwarders, consignees or other Persons in possession
of, having a Lien upon or having rights or interests in any of the Collateral.

     (vi) Credit Card Processor Agreements. Unless the Administrative Agent
otherwise agrees, the Administrative Agent shall have received the agreements from the
Credit Parties’ credit card processors that are required to be delivered pursuant to
Section 10.13(b), duly executed by the parties thereto.

     (e) Consents; Defaults.

     (i) Governmental and Third Party Approvals. The Borrowers shall have obtained
all necessary approvals, authorizations and consents of any Person and of all Governmental
Authorities (including the Securities and Exchange Commission, the Federal Trade Commission
and all consents required in connection with any existing bond financings) and courts having
jurisdiction with respect to the Loan Documents.

     (ii) No Injunction, Etc. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any Governmental
Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of this Agreement or the other Loan Documents, or
which, in the Administrative Agent’s sole discretion, would make it inadvisable to
consummate the transactions contemplated hereby or thereby.

     (iii) No Event of Default. No Default or Event of Default shall have occurred
and be continuing.

     (iv) Material Adverse Effect. No occurrence, event or development reasonably
likely to have a Material Adverse Effect shall have occurred since October 27, 2007.

     (v) Payment at Closing; Fee Letter. The Borrowers shall have paid to the
Administrative Agent and the Lenders the fees set forth or referenced in Section 6.3
(including all fees due under the Fee Letter) and any other accrued and unpaid fees or
commissions due hereunder (including legal fees and expenses) and to any other Person such
amount as may be due thereto in connection with the transactions contemplated hereby,
including all taxes, fees and other charges in connection with the execution, delivery,
recording, filing and registration of any of the Loan Documents.

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     (f) Financial Matters.

     (i) Financial Statements. The Administrative Agent shall have received (A) the
audited Consolidated financial statements of the Parent for the Fiscal Years ended April 29,
2006, and April 28, 2007, and unaudited Consolidated (but excluding any VIE) interim
financial statements for the fiscal month ended October 27, 2007, all in form and substance
satisfactory to the Administrative Agent and prepared in accordance with GAAP, except for
required GAAP disclosures and excluding any VIE, and (B) the Parent’s calculation of the
Fixed Charge Coverage Ratio for the twelve (12) month period ended December 1, 2007, in form
and substance satisfactory to the Administrative Agent, based upon the Consolidated (but
excluding any VIE) financial statements of the Parent for such period.

     (ii) Projections. The Administrative Agent and the Lenders shall have received
projected Consolidated financial statements for the Parent and its Subsidiaries for the four
(4) year period following the Closing Date (on a month by month basis through April, 2009,
on a quarter by quarter basis through April, 2010, and on an annual basis thereafter), in
form and substance (including as to scope and underlying assumptions) satisfactory to the
Administrative Agent and prepared in accordance with GAAP, except for required GAAP
disclosures.

     (iii) Financial Condition Certificate. The Borrowers shall have delivered to
the Administrative Agent a certificate, in form and substance satisfactory to the
Administrative Agent, and certified as accurate by the chief financial officer of the
Parent, that (A) the Parent and its Subsidiaries, taken as a whole, are Solvent, (B)
attached thereto are calculations evidencing that, after giving effect to the payment of
fees and expenses associated with the closing of this Agreement, the making of the Revolving
Credit Loans and other extensions of credit and the application of the proceeds thereof to
be made on the Closing Date, Excess Availability shall exceed $45,000,000 and (C) the
financial projections previously delivered to the Administrative Agent represent the good
faith estimates in all material respects (utilizing reasonable assumptions) of the financial
condition and operations of the Borrowers and their Subsidiaries.

     (iv) Officer’s Certificate. The Administrative Agent shall have received a
certificate, in form and substance satisfactory to the Administrative Agent, from each of
the chief executive officer and the chief financial officer indicating that, as of the
Closing Date, (A) neither Person, nor the assets thereof, is subject to any state,
provincial or federal (United States or Canada) tax Liens or any judgment Liens and (B)
neither Person has been convicted of, or been indicted for, any felony.

     (g) Miscellaneous.

     (i) Notice of Borrowing. The Administrative Agent shall have received a Notice
of Borrowing from the Borrowers in accordance with Section 2.3(a), and a Notice of
Account Designation specifying the accounts to which the proceeds of any Loans made after
the Closing Date are to be disbursed.

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     (ii) Existing Debt. All Debt of the Borrowers and their Subsidiaries,
including all notes issued under those certain Note Purchase Agreements dated April 15,
1998, and December 19, 2002, but other than Debt permitted pursuant to Section 12.1,
shall be repaid in full and all security therefor released, and the Administrative Agent
shall have received evidence thereof, in form and substance satisfactory to the
Administrative Agent.

     (iii) Existing Letters of Credit. All Letters of Credit issued by Wachovia,
National City Bank, JPMorgan Chase Bank, N.A., SunTrust Bank and Branch Banking and Trust
Company listed on Schedule 3.8 shall be, from and after the Closing Date, Letters of
Credit hereunder.

     (iv) Canadian Borrower. The Canadian Borrower shall have opened a deposit
account with a commercial bank incorporated under the laws of the United States acceptable
to the Administrative Agent into which Loans made pursuant to this Agreement will be
deposited and from which any repayments and prepayments made by the Canadian Borrower under
this Agreement will be made.

     (v) Appraisals and Valuations; Field Examination.

          (A) The Administrative Agent shall have received appraisals reflecting values of the
Credit Parties’ interest in Inventory and trademarks at levels acceptable to the
Administrative Agent from appraisers acceptable to the Administrative Agent, and valuations
by the Administrative Agent’s field examiners reflecting values of the Credit Parties’
Accounts and other personal property at levels acceptable to the Administrative Agent.

          (B) The Administrative Agent shall have received an updated Collateral field
examination, in form and substance satisfactory to the Administrative Agent, dated a date
acceptable to the Administrative Agent.

     (vi) Due Diligence. The Administrative Agent shall have completed, to its
satisfaction, all legal, tax, business and other due diligence with respect to the business,
assets, liabilities, self-insurance, operations and condition (financial or otherwise) of
the Borrowers and their Subsidiaries in scope and determination satisfactory to the
Administrative Agent in its sole discretion, and shall not have become aware of any material
information or other matter that is inconsistent in a material and adverse manner with any
previous due diligence, information or matter delivered to the Administrative Agent
(including any financial information and projections previously delivered to the
Administrative Agent).

     (vii) Borrowing Base Certificate. The Administrative Agent shall have received
a duly executed Borrowing Base Certificate dated as of the Closing Date.

     (viii) Other Documents. All opinions, certificates and other instruments and
all proceedings in connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Administrative Agent. The Administrative Agent
shall have received copies of all other documents, certificates and instruments

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reasonably requested thereby, with respect to the transactions contemplated by this
Agreement.

     SECTION 7.2 Conditions to All Extensions of Credit. The obligations of the Lenders to
make any Extensions of Credit (including the initial Extension of Credit), convert or continue any
Loan or the Issuing Lender to issue or extend any Letter of Credit are subject to the satisfaction
of the following conditions precedent on the relevant borrowing continuation, conversion, issuance
or extension date:

     (a) Continuation of Representations and Warranties. The representations and
warranties contained in this Agreement and the other Loan Documents shall be true and correct in
all material respects (unless any such representation or warranty is qualified as to materiality,
in which case such representation and warranty shall be true and correct in all respects) on and as
of such borrowing, continuation, conversion, issuance or extension date with the same effect as if
made on and as of such date; except for any representation and warranty made as of an earlier date,
which representation and warranty shall remain true and correct in all material respects (unless
such representation or warranty is qualified as to materiality, in which case such representation
and warranty shall be true and correct in all respects) as of such earlier date.

     (b) Borrowing Base Certificate. The most recent Borrowing Base Certificate which
shall have been delivered to the Administrative Agent pursuant to Section 9.4(a) shall
demonstrate that, after giving effect to the making of such Extension of Credit, no Overadvance
shall exist.

     (c) No Existing Default. No Default or Event of Default shall have occurred and be
continuing (i) in the case of each Loan, on the borrowing, continuation or conversion date with
respect to such Loan or after giving effect to the Loans to be made, continued or converted on such
date or (ii) in the case of each Letter of Credit, on the issuance or extension date with respect
to such Letter of Credit or after giving effect to the issuance or extension of such Letter of
Credit on such date.

     (d) Additional Documents. The Administrative Agent shall have received each
additional document, instrument, legal opinion or other item reasonably requested by it.

ARTICLE 8.

REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES

     SECTION 8.1 Representations and Warranties. To induce the Administrative Agent and
the Lenders to enter into this Agreement and to induce the Administrative Agent and the Lenders to
make Extensions of Credit, the Credit Parties hereby represent and warrant to the Administrative
Agent and the Lenders both before and after giving effect to the transactions contemplated
hereunder that, from and after the Closing Date:

     (a) Organization; Power; Qualification. Each Credit Party and each of its
Subsidiaries is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, has the power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be conducted and is duly

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qualified and authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and authorization, except to
the extent that the failure to so qualify or be in good standing could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect. The jurisdictions in which the Credit
Parties and their Subsidiaries are organized and qualified to do business as of the Closing Date
are described on Schedule 8.1(a).

     (b) Ownership. Each Credit Party and each of its Subsidiaries as of the Closing Date
is listed on Schedule 8.1(b). As of the Closing Date, the Credit Parties and their
Subsidiaries have outstanding the Equity Interests described on Schedule 8.1(b). All
outstanding Equity Interests have been duly authorized and validly issued and are not subject to
any preemptive or similar rights. The holders of the Equity Interests of the Subsidiaries of the
Parent and the Equity Interests owned by each holder as of the Closing Date are described on
Schedule 8.1(b). As of the Closing Date, there are no outstanding rights to purchase any
Equity Interests, or any options, securities, instruments or other rights of any type or nature
whatsoever, that are convertible into, exchangeable for or otherwise provide for or permit the
issuance of Equity Interests of the Credit Parties or their Subsidiaries, except as described on
Schedule 8.1(b).

     (c) Authorization of Agreement, Loan Documents and Borrowing. Each Credit Party and
each of its Subsidiaries has the right, power and authority and has taken all necessary corporate
and other action to authorize the execution, delivery and performance of this Agreement and each of
the other Loan Documents to which it is a party in accordance with their respective terms. This
Agreement and each of the other Loan Documents have been duly executed and delivered by the duly
authorized officers of each Credit Party and each of its Subsidiaries party thereto, and each such
document constitutes the legal, valid and binding obligation of each Credit Party or each
Subsidiary thereof party thereto, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
state, provincial, territorial or federal (United States or Canada) debtor relief laws from time to
time in effect which affect the enforcement of creditors’ rights in general and the availability of
equitable remedies.

     (d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The
execution, delivery and performance by each Credit Party and each of its Subsidiaries of the Loan
Documents to which each such Person is a party, in accordance with their respective terms, the
Extensions of Credit hereunder and the transactions contemplated hereby do not and will not, by the
passage of time, the giving of notice or otherwise, (i) require any Governmental Approval or
violate any Applicable Law relating to any Credit Party or any of their Subsidiaries, (ii) conflict
with, result in a breach of or constitute a default under the articles of incorporation, bylaws or
other organizational documents of any Credit Party or any of their Subsidiaries or any indenture,
agreement or other instrument to which such Person is a party or by which any of its properties may
be bound or any Governmental Approval relating to such Person, (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now owned or hereafter
acquired by such Person other than Liens arising under the Loan Documents or (iv) require any
consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental
Authority and no consent of any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement.

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     (e) Compliance with Law; Governmental Approvals; Absence of Default. Each Credit
Party and each of its Subsidiaries (i) has all Governmental Approvals required by any Applicable
Law for it to conduct its business, each of which is in full force and effect, is final and not
subject to review on appeal and is not the subject of any pending or, to the best of its knowledge,
threatened attack by direct or collateral proceeding, (ii) is in compliance in all material
respects with each Governmental Approval applicable to it and in compliance in all material
respects with all other Applicable Laws relating to it or any of its respective properties and
(iii) for the period commencing three (3) years prior to the Closing Date and ending on each date
on which this representation is made or deemed made, has timely filed all material reports,
documents and other materials required to be filed by it under all Applicable Laws with any
Governmental Authority and has retained all material records and documents required to be retained
by it under Applicable Law. No event has occurred or has failed to occur which has not been
remedied or waived, the occurrence or non-occurrence of which constitutes a Default or an Event of
Default.

     (f) Tax Returns and Payments. Each Credit Party and each of its Subsidiaries has duly
filed or caused to be filed all material federal (United States or Canada), state, provincial,
local and other tax returns required by Applicable Law to be filed, and has paid, or made adequate
provision for the payment of, all taxes shown thereon to be due and all other material federal
(United States or Canada), state, provincial, local and other taxes, assessments and governmental
charges or levies upon it and its property, income, profits and assets which are due and payable.
Such returns accurately reflect in all material respects all liability for taxes of the Credit
Parties and their Subsidiaries for the periods covered thereby. Except as described on
Schedule 8.1(f), there is no ongoing audit or examination or, to the knowledge of any
Credit Party, other investigation by any Governmental Authority of the tax liability of any Credit
Party and any of their Subsidiaries, except for any such audit, examination or investigation that
could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. No
Governmental Authority has asserted any Lien or other claim against any Credit Party or any
Subsidiary thereof with respect to unpaid taxes which has not been discharged or resolved, other
than a Permitted Lien described in Section 12.2(a). The charges, accruals and reserves on
the books of any Credit Party and any of their Subsidiaries in respect of federal (United States or
Canada), state, provincial, local and other taxes for all Fiscal Years and portions thereof since
the organization of such Credit Party and such Subsidiaries are in the judgment of such Credit
Party adequate. None of the Credit Parties is aware of any proposed material tax assessments
against it or any other Credit Party.

     (g) Intellectual Property Matters. Each Credit Party and each of its Subsidiaries
owns or possesses rights to use all franchises, licenses, copyrights, copyright applications,
patents, patent rights or licenses, patent applications, trademarks, trademark rights, service
marks, service mark rights, trade names, trade name rights, copyrights and rights with respect to
the foregoing which are required to conduct its business. No event has occurred which permits, or
after notice or lapse of time or both would permit, the revocation or termination of any such
rights, and no Credit Party nor any Subsidiary thereof is liable to any Person for infringement
under Applicable Law with respect to any such rights as a result of its business operations.

     (h) Environmental Matters. Except for matters which could not, individually or in the
aggregate, reasonably be expected to result in liability in excess of $7,500,000:

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     (i) To the knowledge of any Credit Party, the properties owned, leased or operated by
the Credit Parties and their Subsidiaries do not contain any Hazardous Materials in amounts
or concentrations which (A) constitute or constituted a violation of applicable
Environmental Laws or (B) could give rise to any material Environmental Claim;

     (ii) Each Credit Party, each Subsidiary and such properties and all operations
conducted in connection therewith are in material compliance, and have been in material
compliance, with all applicable Environmental Laws, and, to the knowledge of any Credit
Party, there is no contamination at, under or about such properties or such operations which
could interfere with the continued operation of such properties or impair the fair saleable
value in any material respect thereof;

     (iii) No Credit Party nor any Subsidiary thereof has received any unresolved notice of
violation, alleged violation, non-compliance, liability or potential liability regarding
environmental matters, Hazardous Materials, or compliance with Environmental Laws, nor does
any Credit Party or any Subsidiary thereof have knowledge or reason to believe that any such
notice will be received or is being threatened;

     (iv) To the knowledge of any Credit Party, Hazardous Materials have not been
transported or disposed of to or from the properties owned, leased or operated by any Credit
Party or any of their Subsidiaries in violation of, or in a manner, or to a location which
could give rise to any Environmental Claims, nor have any Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of such properties in
violation of, or in a manner that could give rise to any Environmental Claims;

     (v) No Environmental Claims are pending, or, to the knowledge of any Credit Party,
threatened, to which any Credit Party or any Subsidiary thereof is or will be named as a
potentially responsible party with respect to such properties or operations conducted in
connection therewith, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to any Credit Party, any Subsidiary
thereof or such properties or such operations; and

     (vi) To the knowledge of any Credit Party, there has been no Release or threat of
Release of Hazardous Materials at or from properties owned, leased or operated by any Credit
Party or any Subsidiary thereof in violation of or in amounts or in a manner that could give
rise to an Environmental Claim or require remediation under Environmental Laws.

     (i) ERISA.

     (i) As of the Closing Date, no Credit Party nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans (any reference
herein to Employee Benefits Plans under this Section 8.1(i) shall include any
Pension

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Plans, any Multiemployer Plans and any employee benefit plans subject to Canadian
Employer Benefits Legislation) other than those identified on Schedule 8.1(i);

     (ii) Each Credit Party and each ERISA Affiliate is in material compliance with all
applicable provisions of ERISA, Canadian Employer Benefits Legislation, the Code and the
regulations and published interpretations thereunder with respect to all Employee Benefit
Plans except for any required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired and except where a failure to so comply
could not reasonably be expected to have a Material Adverse Effect. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to such plan has
been determined to be exempt under Section 501(a) of the Code, except for such plans that
have not yet received determination letters because they were established after the ending
of the applicable GUST remedial amendment period and for which the remedial amendment period
for submitting a determination letter has not yet expired, and nothing has occurred since
the issuance of such determination that could reasonably result in the revocation of such
determination. No liability has been incurred by any Credit Party or any ERISA Affiliate
which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit
Plan or any Multiemployer Plan;

     (iii) As of the Closing Date, no Pension Plan has been terminated for which the
liabilities have not been satisfied in full, nor has any Pension Plan failed to meet the
minimum funding standards of Section 412 or 430 of the Code (without regard to any waiver
granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan, nor has any Credit
Party or any ERISA Affiliate failed to make any contributions or to pay any amounts due and
owing as required by Section 412 or 430 of the Code, Section 302 of ERISA or the terms of
any Pension Plan prior to the due dates of such contributions under Section 412 or 430 of
the Code or Section 302 of ERISA, except to the extent that the failure to make such
contributions or payment could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan;

     (iv) No Credit Party nor any ERISA Affiliate has: (A) engaged in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code, (B)
incurred any liability to the PBGC which remains outstanding other than the payment of
premiums and there are no premium payments which are due and unpaid, (C) failed to make a
required contribution or payment to a Multiemployer Plan, or (D) failed to make a required
installment or other required payment under Section 412 or Section 430 of the Code;

     (v) No Termination Event has occurred or is reasonably expected to occur which could,
individually or in the aggregate, reasonably be expected to result in either a Material
Adverse Effect or a Lien under ERISA or Code Section 412 or 430, other than a Termination
Event described in clause (c) of the definition thereof and which could not

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reasonably be expected to have a Material Adverse Effect, in which case adequate
reserves in respect thereof have been established on the books of the affected Credit Party
or the affected ERISA Affiliate to the extent required by GAAP; and

     (vi) No proceeding, claim (other than a benefits claim in the ordinary course of
business), lawsuit or investigation is existing or, to the best knowledge of any Credit
Party after due inquiry, threatened concerning or involving any (A) employee welfare benefit
plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by any
Credit Party or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.

     (j) Margin Stock. No Credit Party nor any Subsidiary thereof is engaged principally
or as one of its activities in the business of extending credit for the purpose of “purchasing” or
“carrying” any “margin stock” (as each such term is defined or used, directly or indirectly, in
Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of
any of the Loans, or Letters of Credit will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U
or X of such Board of Governors.

     (k) Government Regulation. No Credit Party nor any Subsidiary thereof is an
“investment company” or a company “controlled” by an “investment company” (as each such term is
defined or used in the Investment Company Act of 1940, as amended) and no Credit Party nor any
Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to
regulation under the Federal Power Act or the Interstate Commerce Act, each as amended, or any
other Applicable Law which limits its ability to incur or consummate the transactions contemplated
hereby.

     (l) Material Contracts. Schedule 8.1(l) sets forth a complete and accurate
list of all Material Contracts of the Credit Parties and their Subsidiaries in effect as of the
Closing Date that (i) involve monetary liability of or to any Person in an amount in excess of
$7,500,000 or (ii) the failure of any Person party thereto to comply with which, or the
cancellation of which, could reasonably be expected to have a Material Adverse Effect. Other than
as set forth in Schedule 8.1(l), each Material Contract is, and after giving effect to the
consummation of the transactions contemplated by the Loan Documents will be, in full force and
effect in accordance with the terms thereof. The Credit Parties and their Subsidiaries have
delivered to the Administrative Agent a true and complete copy of each Material Contract required
to be listed on Schedule 8.1(l). No Credit Party nor any Subsidiary (nor, to the knowledge
of any Credit Party, any other party thereto) is in breach of or in default under any Material
Contract in any material respect.

     (m) Employee Relations. No Credit Party nor any of its Subsidiaries is engaged in any
unfair labor practice. There is no material unfair labor practice complaint pending against such
Credit Party or any of its Subsidiaries or, to the best knowledge of such Credit Party, threatened
against any of them, before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements that has or could reasonably be
expected to have a Material Adverse Effect is so pending against such Credit Party or any of its
Subsidiaries or, to the best knowledge of such Credit Party, threatened against any of them. Each
Credit Party and each of its Subsidiaries is not, as of the Closing Date, party to any collective
bargaining agreement nor has any labor union been recognized as the

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representative of its employees except as set forth on Schedule 8.1(m). No Credit
Party knows of any pending, threatened or contemplated strikes, work stoppage or other collective
labor dispute involving its employees or those of its Subsidiaries.

     (n) Burdensome Provisions. No Credit Party nor any Subsidiary thereof is a party to
any indenture, agreement, lease or other instrument, or subject to any corporate or partnership
restriction, Governmental Approval or Applicable Law which is so unusual or burdensome as in the
foreseeable future could be reasonably expected to have a Material Adverse Effect. The Credit
Parties do not presently anticipate that future expenditures by any Credit Party or any of its
Subsidiaries needed to meet the provisions of any statutes, orders, rules or regulations of a
Governmental Authority will be so burdensome as to have a Material Adverse Effect. No Subsidiary
of the Parent is party to any agreement or instrument or otherwise subject to any restriction or
encumbrance that restricts or limits its ability to make dividend payments or other distributions
in respect of its Equity Interests to any Credit Party or any Subsidiary thereof or to transfer any
of its assets or properties to any Credit Party or any other Subsidiary in each case other than
existing under or by reason of the Loan Documents or Applicable Law.

     (o) Financial Statements. The balance sheets, statements of operations and retained
earnings and cash flows delivered to the Administrative Agent pursuant to Section 7.1(f)(i)
or Section 9.1 are complete and correct and fairly present in all material respects on a
Consolidated basis (but excluding, with respect to any monthly financial statements, any VIE) the
assets, liabilities and financial position of the Parent and its Subsidiaries (but excluding, with
respect to any monthly financial statements, any VIE) as at such date, and the results of the
operations and cash flows for the periods then ended. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP; provided,
however that the monthly financial statements delivered pursuant to this Agreement do not
include any VIE. The Credit Parties and their Subsidiaries have no Debt, obligation or other
unusual forward or long-term commitment which is not fairly reflected in the foregoing financial
statements or in the notes thereto.

     (p) No Material Adverse Change. Since October 27, 2007, there has been no material
adverse change in the properties, business, operations, prospects, or condition (financial or
otherwise) of the Parent and its Subsidiaries and no event has occurred or condition arisen that
could reasonably be expected to have a Material Adverse Effect.

     (q) Solvency. As of the Closing Date and after giving effect to each Extension of
Credit made hereunder, the Parent and its Subsidiaries, taken as a whole, will be Solvent.

     (r) Titles to Properties. Each Credit Party and each Subsidiary thereof has such
title to the real property owned or leased by it as is necessary to the conduct of its business and
valid and legal title to all of its personal property and assets, including those reflected on the
balance sheets of the Credit Parties and their Subsidiaries delivered pursuant to Section
7.1(f)(i), except those which have been disposed of by the Credit Parties or their Subsidiaries
subsequent to such date which dispositions have been in the ordinary course of business or as
otherwise expressly permitted hereunder.

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     (s) Liens. None of the properties and assets of any Credit Party or any Subsidiary
thereof is subject to any Lien, except Permitted Liens. No financing statement under the Uniform
Commercial Code of any state or the Personal Property Security Act of any province or territory
which names any Credit Party or any Subsidiary thereof or any of their respective trade names or
divisions as debtor and which has not been terminated, has been filed in any state, province or
other jurisdiction and no Credit Party nor any Subsidiary thereof has signed any such financing
statement or any security agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect Permitted Liens and any filings made for notice purposes
only with respect to any operating lease.

     (t) Debt and Guaranty Obligations. Except as set forth on Schedule 8.1(t),
each Credit Party and each of its Subsidiaries has performed and is in material compliance with all
of the terms of its Debt and Guaranty Obligations and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which with notice or lapse of
time or both would constitute such a default or event of default on the part of any Credit Party or
any Subsidiary thereof exists with respect to any such Debt or Guaranty Obligation.

     (u) Litigation. Except for matters existing on the Closing Date which are set forth on
Schedule 8.1(u), there are no actions, suits or proceedings pending nor, to the knowledge
of any Credit Party, threatened against or in any other way relating adversely to or affecting any
Credit Party or any Subsidiary thereof or any of their respective properties in any court or before
any arbitrator of any kind or before or by any Governmental Authority for which the uninsured
liability of the Credit Parties or their Subsidiaries could reasonably be expected to equal or
exceed $5,000,000 under any individual action, suit or proceeding or $15,000,000 in the aggregate
under all actions, suits or proceedings. None of the matters disclosed on Schedule 8.1(u)
could reasonably be expected to have a Material Adverse Effect.

     (v) Absence of Defaults. No event has occurred or is continuing which constitutes a
Default or an Event of Default, or which constitutes, or which with the passage of time or giving
of notice or both would constitute, a default or event of default by any Credit Party or any
Subsidiary thereof under any Material Contract or judgment, decree or order to which any Credit
Party or any Subsidiary thereof is a party or by which any Credit Party or any Subsidiary thereof
or any of their respective properties may be bound or which would require any Credit Party or any
Subsidiary thereof to make any payment thereunder prior to the scheduled maturity date therefor.

     (w) Accuracy and Completeness of Information. All written information, reports and
other papers and data produced by or on behalf of any Credit Party or any Subsidiary thereof (other
than financial projections, which shall be subject to the standard set forth in Section
9.1(d)) and furnished to the Lenders were, at the time the same were so furnished, complete and
correct in all material respects to the extent necessary to give the recipient a true and accurate
knowledge of the subject matter. No document furnished or written statement made to the
Administrative Agent or the Lenders by any Credit Party or any Subsidiary thereof in connection
with the negotiation, preparation or execution of this Agreement or any of the Loan Documents
contains or will contain any untrue statement of a fact material to the creditworthiness of any
Credit Party or any Subsidiary thereof or omits or will omit to state a fact necessary in order to
make the statements contained therein not misleading. No Credit Party is aware of any facts

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having a Material Adverse Effect or which could reasonably be expected to have a Material
Adverse Effect.

     (x) OFAC; Patriot Act.

     (i) No Credit Party nor any Subsidiary or Affiliate thereof (i) is a Sanctioned Person,
(ii) has a substantial portion of its assets in Sanctioned Countries or (iii) derives a
substantial portion of its operating income from investments in, or transactions with
Sanctioned Persons or Sanctioned Countries. The proceeds of any Extensions of Credit will
not be used and have not been used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned Country.

     (ii) To the extent applicable, each Credit Party and each Subsidiary and Affiliate
thereof is in compliance, in all material respects, with (A) the Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the Untied States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (B) the Act. No part of the proceeds of the Loans
made hereunder will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to obtain, retain
or direct business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.

     (y) Locations of Collateral. Schedule 8.1(y) is a true, correct and complete
list of (i) the legal names and addresses of each warehouseman, filler, processor and packer at
which Inventory is stored, (ii) the address of the chief executive offices of the Credit Parties,
(iii) the address of all offices where records and books of account of the Credit Parties are kept
and (iv) the address of all locations where assets of the Credit Parties are kept. There is no
location in which any Credit Party has any Collateral (except for Inventory held for shipment by
third Persons, Inventory in transit, Inventory held for processing by third Persons or Inventory
with a value of no more than $100,000 held in temporary storage) other than those locations listed
on Schedule 8.1(y).

     (z) Insurance. Schedule 8.1(z) sets forth a description of all property,
liability, fidelity and workers’ compensation insurance maintained by or on behalf of the Parent
and its Subsidiaries, including any self-insurance, as of the Closing Date. The Credit Parties and
their Subsidiaries have insurance meeting the requirements of Section 10.3, and such
insurance policies are in full force and effect and all premiums in respect of such insurance have
been paid.

     (aa) Rent. The Credit Parties are current on all rental payments, other than rental
payments in an aggregate amount not exceeding $50,000.

     (bb) Security Documents. The provisions of the Security Documents create legal and
valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the
Secured Parties, and such Liens constitute perfected and continuing Liens on the Collateral,
securing the Obligations, enforceable against the applicable Credit Party and all third parties,
and

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having priority over all other Liens on the Collateral except in the case of (a) Permitted
Liens, to the extent any such Permitted Lien would have priority over the Liens in favor of the
Administrative Agent pursuant to any applicable law or agreement and (b) Liens perfected only by
possession (including possession of any certificate of title) to the extent the Administrative
Agent has not obtained or does not maintain possession of such Collateral.

     (cc) Withholdings and Remittances. The Canadian Borrower has withheld from each
payment made to any of its present or former employees, officers and directors, and to all persons
who are non-residents of Canada for the purposes of the Income Tax Act (Canada), all amounts
required by law to be withheld, including all payroll deductions required to be withheld, and has
remitted such withheld amounts within the prescribed periods to the appropriate Governmental
Authority. The Canadian Borrower has remitted all Canada Pension Plan contributions, workers
compensation assessments, employment insurance premiums, employer health taxes, municipal real
estate taxes and other taxes payable under Applicable Law by it and has remitted such amounts to
the proper Governmental Authority within the time required under Applicable Law.

     SECTION 8.2 Representations and Warranties Relating to Accounts. With respect to all
Accounts of each Credit Party and each Subsidiary thereof, each Credit Party hereby warrants and
represents to the Lender Group that such Accounts are bona fide existing payment obligations of
Account Debtors created by the sale and delivery of Inventory or the rendition of services to such
Account Debtors in the ordinary course of such Credit Party’s or such Subsidiary’s, as applicable,
business. As to each Account that is identified by any Credit Party as an Eligible Account in a
Borrowing Base Certificate submitted to the Administrative Agent by the Borrowers, such Account is
not ineligible by virtue of one or more of the excluding criteria set forth in the definition of
Eligible Accounts.

     SECTION 8.3 Representations and Warranties Relating to Inventory. With respect to all
Eligible Inventory, the Administrative Agent may rely upon all statements, warranties, or
representations made in any Borrowing Base Certificate in determining the classification of such
Inventory and in determining which items of Inventory listed in such Borrowing Base Certificate
meet the requirements of eligibility. Each Credit Party keeps correct and accurate records
itemizing and describing the type, quality and quantity of its and its Subsidiaries’ Inventory and
the book value thereof.

     SECTION 8.4 Survival of Representations and Warranties, Etc. All representations and
warranties set forth in this Article 8 and all representations and warranties contained in
any certificate, or in any of the other Loan Documents (including any such representation or
warranty made in or in connection with any amendment thereto) shall constitute representations and
warranties made under this Agreement. All representations and warranties made under this Agreement
shall be made or deemed to be made at and as of the Closing Date and the date of each Extension of
Credit hereunder (except those that are expressly made as of another specific date), shall survive
and shall not be waived by the execution and delivery of this Agreement, any investigation made by
or on behalf of the Lenders or any borrowing hereunder.

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ARTICLE 9.

FINANCIAL INFORMATION AND NOTICES

     Until all the Obligations have been paid and satisfied in full and the Commitments terminated,
unless consent has been obtained in the manner set forth in Section 15.11, the Credit
Parties will furnish or cause to be furnished to the Administrative Agent at the Administrative
Agent’s Office at the address set forth in Section 15.1 and to the Lenders at their
respective addresses as set forth on the Register, or such other office as may be designated by the
Administrative Agent and Lenders from time to time:

     SECTION 9.1 Financial Statements and Projections.

     (a) Monthly Financial Statements. As soon as practicable and in any event within
twenty (20) days after the end of each fiscal month of the Parent, an unaudited Consolidated (but
excluding any VIE) balance sheet of the Parent and its Subsidiaries (other than any VIE) as of the
close of such month and unaudited Consolidated (but excluding any VIE) statements of operations,
retained earnings and cash flows for the month then ended and that portion of the Fiscal Year then
ended, all in reasonable detail and, for periods following the anniversary of the Closing Date,
setting forth in comparative form the corresponding figures as of the end of and for the
corresponding period in the preceding Fiscal Year and prepared by the Parent in accordance with
GAAP (excluding required GAAP disclosures and any VIE) and, if applicable, containing disclosure of
the effect on the financial position or results of operations of any change in the application of
accounting principles and practices during the period, and certified by the chief financial
officer, principal accounting officer or treasurer of the Parent to present fairly in all material
respects the financial condition of the Parent and its Subsidiaries (other than any VIE) on a
Consolidated (but excluding any VIE) basis as of their respective dates and the results of
operations of the Parent and its Subsidiaries (other than any VIE) for the respective periods then
ended, subject to normal year end adjustments.

     (b) Quarterly Financial Statements. As soon as practicable and in any event within
forty-five (45) days after the end of each fiscal quarter of the Parent, an unaudited Consolidated
balance sheet of the Parent and its Subsidiaries as of the close of such fiscal quarter and
unaudited Consolidated statements of operations, retained earnings and cash flows for the fiscal
quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all
in reasonable detail and, for periods following the anniversary of the Closing Date, setting forth
in comparative form the corresponding figures as of the end of and for the corresponding period in
the preceding Fiscal Year and prepared by the Parent in accordance with GAAP (excluding required
GAAP disclosures) and, if applicable, containing disclosure of the effect on the financial position
or results of operations of any change in the application of accounting principles and practices
during the period, and certified by the chief financial officer, principal accounting officer or
treasurer of the Parent to present fairly in all material respects the financial condition of the
Parent and its Subsidiaries on a Consolidated basis as of their respective dates and the results of
operations of the Parent and its Subsidiaries for the respective periods then ended, subject to
normal year end adjustments.

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     (c) Annual Financial Statements. As soon as practicable and in any event within
ninety (90) days after the end of each Fiscal Year, an audited Consolidated balance sheet of the
Parent and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated statements
of operations, retained earnings and cash flows for the Fiscal Year then ended, including the notes
thereto, all in reasonable detail and, for periods following the anniversary of the Closing Date,
setting forth in comparative form the corresponding figures as of the end of and for the preceding
Fiscal Year. The audited financial statements shall be (i) prepared by the Parent in accordance
with GAAP and, if applicable, containing disclosure of the effect on the financial position or
results of operations of any change in the application of accounting principles and practices
during the year, (ii) audited by an independent certified public accounting firm acceptable to the
Administrative Agent and registered with the Public Company Accounting Oversight Board (the
“Independent Accountants”), and (iii) accompanied by a report thereon by the Independent
Accountants that is not qualified with respect to scope limitations imposed by the Parent or any of
its Subsidiaries or with respect to accounting principles followed by the Parent or any of its
Subsidiaries not in accordance with GAAP.

     (d) Annual Financial Projections. As soon as practicable and in any event no later
than thirty (30) days after the beginning of each Fiscal Year, financial projections of the Parent
and its Subsidiaries for the ensuing four (4) fiscal quarters, such financial projections to be
prepared in accordance with GAAP (but excluding any VIE) and to include, on a quarterly basis, the
following: a quarterly operating and capital budget, a projected income statement, a projected
Borrowing Base, a statement of cash flows and balance sheet and a report containing all material
assumptions used in the preparation of such financial projections, accompanied by a certificate
from the chief financial officer, principal accounting officer or treasurer of the Parent to the
effect that, to the best of such officer’s knowledge, the projections are good faith estimates
(utilizing reasonable assumptions) of the financial condition and operations of the Parent and its
Subsidiaries for such four (4) quarter period.

     SECTION 9.2 Officer’s Compliance Certificate. At each time financial statements are
delivered pursuant to Section 9.1 (a), (b) or (c) and at such other times
as the Administrative Agent shall reasonably request (including in connection with any Permitted
Acquisition), a certificate of the chief financial officer, principal accounting officer or
treasurer of the Parent in the form of Exhibit E attached hereto (an “Officer’s
Compliance Certificate”), including, each time financial statements are delivered pursuant to
Section 9.1(a), calculations showing the Fixed Charge Coverage Ratio of as of the last day
of the month for which such financial statements were delivered.

     SECTION 9.3 Accountants’ Certificate. At each time financial statements are delivered
pursuant to Section 9.1(c), a certificate of the Independent Accountants certifying such
financial statements addressed to the Administrative Agent for the benefit of the Lenders:

     (a) stating that in making the examination necessary for the certification of such financial
statements, with respect to financial matters, they obtained no knowledge of any Default or Event
of Default or, if such is not the case, specifying such Default or Event of Default and its nature
and period of existence; and

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     (b) including the calculations prepared by the Parent and reviewed by the Independent
Accountants required to establish whether or not the Parent and its Subsidiaries are in compliance
with the financial covenants set forth in Article 11 as at the end of each respective
period.

     SECTION 9.4 Other Reports.

     (a) No later than February 29, 2008, for the fiscal month ended January 26, 2008, and within
twenty (20) Business Days after the end of each fiscal month of the Parent thereafter, or more
frequently as requested by the Administrative Agent during a Cash Sweep Period or as the
Administrative Agent may otherwise request, the Borrowers shall deliver to the Administrative Agent
and the Lenders a Borrowing Base Certificate as of the last day of the preceding month or such
other date reasonably required by the Administrative Agent, which shall be in form and substance
satisfactory to the Administrative Agent setting forth, in each case as of the last day of the
immediately preceding period (i) the amount of Inventory owned by each Borrower, and specifically
setting forth all Eligible Inventory and (ii) a categorical breakdown of all Accounts of each
Borrower, and specifically setting forth all Eligible Accounts.

     (b) No later than February 29, 2008, for the fiscal month ended January 26, 2008, and within
twenty (20) Business Days after the end of each fiscal month of the Parent thereafter, or more
frequently as requested by the Administrative Agent during a Cash Sweep Period or as the
Administrative Agent may otherwise request, the Borrowers shall deliver to the Administrative
Agent, in form and substance satisfactory to the Administrative Agent, setting forth, in each case
as of the last day of the immediately preceding period:

     (i) a summary inventory report by location and type of Inventory (such types: raw
materials (including retail, upholstery and case goods); and finished goods (including
retail, upholstery and case goods)) and showing the aggregate amount of work in process,
together with a reconciliation to the previous month’s reports and the general ledger
accounts;

     (ii) a schedule showing the aggregate customer deposits of the Credit Parties as of the
end of the immediately preceding month and a list of customer notes receivable;

     (iii) (A) agings of accounts receivable together with a reconciliation to the previous
month’s aging and general ledger, specifying the name of each Account Debtor and face value
for each Account Debtor obligated on an Account of a Borrower so listed, the face amount of
such Account and all other information necessary to calculate Eligible Accounts, (B) a list
of all credits and other adjustments and (C) a list of all claims, offsets, or disputes
asserted by Account Debtors with respect to the Borrowers’ and their Subsidiaries’ Accounts;

     (iv) an accounts payable summary aging report, by due date (for example: current; 0 to
30 days past due; 31 to 60 days past due; and 61 or more days past due) of the Borrowers
which are outstanding more than sixty (60) days past due and all held checks with respect
thereto, together with the Person to whom such account payable is due and the amount
thereof;

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     (v) a schedule showing the Aggregate Revolving Credit Obligations received, directly or
indirectly, by the Canadian Borrower;

     (vi) upon the reasonable request of the Administrative Agent, lockbox and account
statements and copies of credit memos, invoices and delivery documents for Inventory; and

     (vii) such other reports as to the Collateral as the Administrative Agent shall
reasonably request.

     (c) Promptly upon the Administrative Agent’s request therefor, the Credit Parties shall
deliver copies of all reports, if any, submitted to any Credit Party or its Board of Directors by
its independent public accountants in connection with their auditing function, including any
management report and any management responses thereto; and

     (d) Promptly upon the Administrative Agent’s request therefor, the Credit Parties shall
deliver such other information regarding the operations, business affairs and financial condition
of any Credit Party or any Subsidiary thereof as the Administrative Agent or any Lender may
reasonably request.

     SECTION 9.5 Notice of Litigation and Other Matters. Prompt (but in no event later
than five (5) days after a Responsible Officer or corporate counsel of the Parent obtains knowledge
thereof) written notice of:

     (a) the commencement of all proceedings and investigations by or before any Governmental
Authority and all actions and proceedings in any court or before any arbitrator against or
involving any Credit Party or any Subsidiary thereof or any of their respective properties, assets
or businesses in which the uninsured amount in controversy exceeds $5,000,000;

     (b) any notice of any violation received by any Credit Party or any Subsidiary thereof from
any Governmental Authority, including any notice of any Environmental Claim, which in any such case
could reasonably be expected to have a Material Adverse Effect;

     (c) any known Release of Hazardous Materials on or from the property owned or operated by any
Credit Party or any of its Subsidiaries, which in any such case could reasonably be expected to
have a Material Adverse Effect;

     (d) any material labor controversy that has resulted in, or threatens to result in, a strike
or other work action against any Credit Party or any Subsidiary thereof;

     (e) any attachment, judgment, Lien, levy or order exceeding $5,000,000 that may be assessed
against or threatened against any Credit Party or any Subsidiary thereof;

     (f) (i) any Default or Event of Default or (ii) any event which constitutes or which with the
passage of time or giving of notice or both would constitute a default or event of default under
any Material Contract to which any Credit Party or any of their Subsidiaries is a party or

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by which any Credit Party or any Subsidiary thereof or any of their respective properties may
be bound;

     (g) (i) any unfavorable determination letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy
thereof), (ii) all notices received by any Credit Party or any ERISA Affiliate of the PBGC’s intent
to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii)
all notices received by any Credit Party or any ERISA Affiliate from a Multiemployer Plan sponsor
concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and
(iv) any Credit Party obtaining knowledge or reason to know that any Credit Party or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA; and

     (h) any event which makes any of the representations set forth in Article 8 inaccurate
in any material respect (unless such representation is qualified as to materiality, in which case
such representation would be inaccurate in any respect).

     SECTION 9.6 Accuracy of Information. All written information, reports, statements and
other papers and data furnished by or on behalf of the Credit Parties to the Administrative Agent
or any Lender whether pursuant to this Article 9 or any other provision of this Agreement,
or any other Loan Documents, shall, at the time the same is so furnished, be made in accordance
with in Section 8.1(x).

     SECTION 9.7 Information Materials. The Borrower Parties will cooperate with the
Administrative Agent in connection with the publication of certain materials and/or information
provided by or on behalf of any Borrower Party to the Administrative Agent and the Lenders
(collectively, “Information Materials”) pursuant to this Agreement and will designate
Information Materials (a) that are either available to the public or not material with respect to
the Parent and its Subsidiaries or any of their respective securities for purposes of United States
federal and state securities laws as “Public Information” and (b) that are not Public Information
as “Private Information”.

ARTICLE 10.

AFFIRMATIVE COVENANTS

     Until all of the Obligations have been paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner provided for in Section 15.11:

     SECTION 10.1 Preservation of Existence and Related Matters. Each Credit Party will,
and will cause each of its Subsidiaries to, except as permitted by Section 12.4, preserve
and maintain its separate corporate, partnership or limited liability company existence and all
rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify
and remain qualified as a foreign corporation, limited partnership or limited liability company, as
applicable, and authorized to do business in each jurisdiction where the nature and scope of its

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activities require it to so qualify under Applicable Law except where the failure to so
qualify could not reasonably be expected to have a Material Adverse Effect.

     SECTION 10.2 Maintenance of Property. Each Credit Party will, and will cause each of
its Subsidiaries to, in addition to the requirements of any of the Security Documents, (a) protect
and preserve all properties useful in and material to its business, including copyrights, patents,
trade names, service marks and trademarks, (b) maintain in good working order and condition
(ordinary wear and tear excepted) all buildings, equipment and other tangible real and personal
property, and (c) from time to time make or cause to be made all renewals, replacements and
additions to such property necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly conducted at all times.

     SECTION 10.3 Insurance. Each Credit Party will, and will cause each of its
Subsidiaries to, maintain insurance including public liability, property insurance, comprehensive
general liability, product liability, business interruption and fidelity coverage insurance, in
such amounts and against such risks as would be customary for companies in the same industry and of
comparable size as the Credit Parties and their Subsidiaries from financially sound and reputable
insurance companies having and maintaining an A.M. Best rating of “A” or better and being in a size
category of VI or larger or otherwise acceptable to the Administrative Agent. In addition to the
foregoing, each Credit Party further agrees to maintain and pay for insurance upon all goods
constituting Collateral wherever located, in storage or in transit in vehicles, vessels or
aircraft, including goods evidenced by documents, covering casualty, hazard, public liability and
such other risks and in such amounts as would be customary for companies in the same industry and
of comparable size as the Credit Parties, from financially sound and reputable insurance companies
having and maintaining an A.M. Best rating of “A” or better and being in a size category of VI or
larger or otherwise acceptable to the Administrative Agent to insure the Lender Group’s interest in
such Collateral. All policies (other than policies solely covering assets that do not constitute
Collateral, workers’ compensation policies, directors’ and officers’ liability insurance policies
and, if the Administrative Agent agrees, fiduciary policies) shall name the Administrative Agent as
additional insured and loss payee in case of loss, as its interest may appear, and are to contain
such other provisions as the Administrative Agent may reasonably require to protect fully the
Administrative Agent’s interest in the Collateral and any payments to be made under such policies.
Each Credit Party shall deliver the original certificates of insurance evidencing that the required
insurance is in force together with satisfactory lender’s loss payable and additional insured, as
applicable, endorsements. Each policy of insurance or endorsement shall contain a clause requiring
the insurer to give not less than thirty (30) days’ prior written notice to the Administrative
Agent in the event of cancellation or modification of the policy for any reason whatsoever. If any
Credit Party fails to provide and pay for such insurance, the Administrative Agent may, at the
Borrowers’ expense, procure the same, but shall not be required to do so. Upon the reasonable
request of the Administrative Agent, each Credit Party agrees to deliver to the Administrative
Agent, promptly as rendered, true copies of all reports made in any reporting forms to insurance
companies. Notwithstanding the foregoing requirements of this Section 10.3, the Credit
Parties may self-insure in such amounts and against such risks as would be customary for companies
in the same industry and of comparable size as the Credit Parties and their Subsidiaries or as
otherwise acceptable to the Administrative Agent in its Permitted Discretion.

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     SECTION 10.4 Accounting Methods and Financial Records. Each Credit Party will, and
will cause each of its Subsidiaries to, maintain a system of accounting, and keep such books,
records and accounts (which shall be true and complete in all material respects) as may be required
or as may be necessary to permit the preparation of financial statements in accordance with GAAP
and in compliance with the regulations of any Governmental Authority having jurisdiction over it or
any of its properties.

     SECTION 10.5 Payment and Performance of Obligations. Each Credit Party will, and will
cause each of its Subsidiaries to, pay and perform all Obligations and Guaranty Obligations, as
applicable, under this Agreement and the other Loan Documents, and pay or perform (a) all taxes,
assessments and other governmental charges that may be levied or assessed upon it or any of its
property, and (b) all other indebtedness, obligations and liabilities in accordance with customary
trade practices; provided, that such Credit Party or such Subsidiary may contest any item
described in clause (a) or (b) of this Section 10.5 in good faith so long
as adequate reserves are maintained with respect thereto as required by GAAP.

     SECTION 10.6 Compliance With Laws and Approvals. Each Credit Party will, and will
cause each of its Subsidiaries to, observe and remain in compliance in all material respects with
all Applicable Laws (including the Act) and maintain in full force and effect all Governmental
Approvals, in each case applicable to the conduct of its business.

     SECTION 10.7 Environmental Laws. Each Credit Party will, and will cause each of its
Subsidiaries to, in addition to and without limiting the generality of Section 10.6,
(a) comply with, and ensure such compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and ensure that all tenants
and subtenants, if any, obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental Laws, (b) conduct and
complete all investigations, studies, sampling and testing, and all remedial, removal and other
actions required under Environmental Laws, and promptly comply with all lawful orders and
directives of any Governmental Authority regarding Environmental Laws, and (c) defend, indemnify
and hold harmless the Administrative Agent and the Lenders, and their respective parents,
Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any
Environmental Claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or
in any way relating to the presence or Release of Hazardous Materials, or the violation of,
noncompliance with or liability under any Environmental Laws applicable to the operations of such
Credit Party or any such Subsidiary, or any orders, requirements or demands of Governmental
Authorities related thereto, including reasonable attorney’s and consultant’s fees, investigation
and laboratory fees, response costs, court costs and litigation expenses, except to the extent that
any of the foregoing directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor, as determined by a court of competent jurisdiction by final and
non-appealable judgment. The agreements in this Section 10.7 shall survive repayment of
the Obligations and all other amounts payable hereunder.

     SECTION 10.8 Compliance with ERISA, Canadian Employer Benefits Legislation and the
Code. Each Credit Party will, and will cause each of its Subsidiaries to, in addition to and
without limiting the generality of Section 10.6, (a) comply with all material applicable
provisions

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of ERISA, Canadian Employer Benefits Legislation, the Code and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans (any reference herein to
Employee Benefits Plans under this Section 10.8 shall include any Pension Plans, any
Multiemployer Plans and any employee benefit plans subject to Canadian Employer Benefits
Legislation), (b) not take any action or fail to take action the result of which could be a
material liability to the PBGC or to a Multiemployer Plan, (c) not participate in any prohibited
transaction that could result in any civil penalty under ERISA or tax under the Code and (d)
operate each Employee Benefit Plan in such a manner that will not incur any material tax liability
under Section 4980B of the Code or any material liability to any qualified beneficiary as defined
in Section 4980B of the Code and (e) furnish to the Administrative Agent upon the Administrative
Agent’s request such additional information about any Employee Benefit Plan as may be reasonably
requested by the Administrative Agent.

     SECTION 10.9 Compliance with Agreements. Each Credit Party will, and will cause each
of its Subsidiaries to, comply in all material respects with each term, condition and provision of
(a) all Material Contracts and (b) except as could not reasonably be expected to have a Material
Adverse Effect, all other leases, agreements and other instruments entered into in the conduct of
its business.

     SECTION 10.10 Visits and Inspections. Each Credit Party will, and will cause each of
its Subsidiaries to, permit representatives of the Administrative Agent or any Lender, from time to
time, to visit and inspect its properties, including for the purposes of (a) subject to the proviso
of Section 6.3(d)(ii), enabling the Administrative Agent’s internal auditors or outside
third party designees to conduct periodic field examinations and/or appraisals at such Credit
Party’s expense, (b) inspecting the Collateral, (c) inspecting material compliance with applicable
Environmental Laws by any Credit Party or any of its Subsidiaries; (d) inspecting the presence or
Release of Hazardous Materials, whether actual or alleged, on or from any property owned or
operated by any Credit Party or any of its Subsidiaries, (e) inspecting and/or copying (at such
Credit Party’ expense) any and all records pertaining thereto, (f) discussing the affairs, finances
and business of any Credit Party or with any officers, employees and directors of any Credit Party
or with the independent accountant of the Credit Parties, (g) verifying Eligible Accounts and/or
Eligible Inventory, (h) inspecting, auditing and making extracts from its books, records and files,
including management letters prepared by independent accountants and its self-insurance records and
(i) discussing with its principal officers, and its independent accountants, its business, assets,
liabilities, financial condition, results of operations and business prospects.

     SECTION 10.11 Additional Subsidiaries. Each Credit Party will, and will cause each of
its Subsidiaries to, within thirty (30) days after the creation or acquisition of any Subsidiary of
a Credit Party, cause to be executed and delivered to the Administrative Agent (a) duly executed
joinder agreements in form and substance reasonably satisfactory to the Administrative Agent
joining such Subsidiary to the Security Agreement or the Canadian Security Agreement, as
applicable, and any other applicable Security Documents; provided that (i) no Foreign
Subsidiary (other than Canada) and (ii) no Subsidiary that is not a Material Operating Subsidiary
shall be required to execute any such joinder agreements, (b) updated Schedules 8.1(a),
8.1(b) and 8.1(y) reflecting the creation or acquisition of such Subsidiary, (c) a
duly executed joinder agreement in form and substance reasonably satisfactory to the Administrative
Agent joining such Subsidiary to this Agreement as a Borrower or a Guarantor, as applicable, (d) a
duly executed pledge

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agreement in form and substance reasonably satisfactory to the Administrative Agent pledging
all direct or beneficial Equity Interests in such new Subsidiary (regardless of whether owned by a
Credit Party or a Subsidiary of a Credit Party or a minority shareholder); provided that no
Equity Interests of (i) any Subsidiary which is organized outside of the United States (other than
Canada) or (ii) any Subsidiary which is not a Material Operating Subsidiary shall be required to be
pledged, (e) favorable legal opinions addressed to the Administrative Agent and Lenders in form and
substance reasonably satisfactory thereto with respect to any such joinder agreements and pledge
agreement, (f) original stock or other certificates and stock or other transfer powers evidencing
the Equity Interests of such Credit Party in such Subsidiary pledged pursuant to such pledge
agreement, (g) all documents required by Section 10.11, and (h) any other documents and
certificates as may be requested by the Administrative Agent.

     SECTION 10.12 Use of Proceeds of Extensions of Credit. Each Credit Party will, and
will cause each of its Subsidiaries to, use the proceeds of the Extensions of Credit (a) on the
Closing Date, to repay the Debt evidenced by the Existing Credit Agreement (other than the
outstanding letters of credit issued thereunder), and for working capital and general corporate
requirements of the Borrowers and their Subsidiaries, including the payment of certain fees and
expenses incurred in connection with the transactions contemplated herein and (b) thereafter, for
working capital and general corporate requirements of the Borrowers and their Subsidiaries,
including Permitted Acquisitions.

     SECTION 10.13 The Blocked Account.

     (a) Each Credit Party will, and will cause each of its Subsidiaries to, establish and maintain
one or more blocked accounts (each, a “Blocked Account”) pursuant to a lockbox arrangement,
or other arrangement, in each case, acceptable to the Administrative Agent with Wachovia, any
Affiliate thereof or any other bank(s) as may be selected by the Credit Parties and approved by the
Administrative Agent in its reasonable discretion. The Credit Parties shall issue to each such
bank an irrevocable letter of instruction directing such bank to deposit all payments or other
remittances received in the lockbox to the Blocked Account maintained at such bank. Each such
Blocked Account bank shall agree to the Administrative Agent’s standard Blocked Account Agreement
or such variation thereof as shall be mutually satisfactory to the Administrative Agent and such
bank. During a Cash Sweep Period, all amounts which shall be deposited into any Blocked Account
shall immediately become the property of and be under the sole dominion and exclusive control of
the Administrative Agent, on behalf of the Lender Group, and no Credit Party shall have any right
to withdraw such amounts from any Blocked Account.

     (b) Each Credit Party will, and will cause each of its Subsidiaries to, take all steps to
ensure that all of their Account Debtors and all of their credit card processors forward all items
of payment to lockboxes established with the Blocked Account banks. The Credit Parties shall cause
each of their credit card processors to enter into an agreement, in form and substance satisfactory
to the Administrative Agent, with applicable Credit Party pursuant to which the applicable Credit
Party shall irrevocably instruct such credit card processor to forward all items of payment owing
to the Credit Parties directly to a Blocked Account.

     (c) In the event that any Credit Party shall at any time receive any remittances of any of the
foregoing directly or shall receive any other funds representing proceeds of the Collateral,

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each Credit Party will, and will cause each of its Subsidiaries to, hold the same as trustee
for the Administrative Agent, shall segregate such remittances from its other assets, and shall
promptly deposit the same into a Blocked Account. All cash, cash equivalents, checks, notes,
drafts or similar items of payment received by any Credit Party shall be deposited into a Blocked
Account promptly upon receipt thereof by such Credit Party.

     (d) During a Cash Sweep Period, at the sole discretion of the Administrative Agent, if the
Administrative Agent or any Affiliate of the Administrative Agent is a Blocked Account bank, on
each Business Day the Administrative Agent shall, without further consent of any Credit Party,
withdraw (or cause such Affiliate to withdraw) all immediately available funds in such Blocked
Account, deposit the same in the account maintained by the Administrative Agent as described in
Section 6.5(a), and apply the same against the Obligations in the manner provided for in
Section 6.4.

     (e) During a Cash Sweep Period, at the sole discretion of the Administrative Agent, if any
Blocked Account bank is not the Administrative Agent or any Affiliate of the Administrative Agent,
all funds in the Blocked Account of such other bank shall be deposited into the Clearing Account on
a daily basis in immediately available funds. On each Business Day on which any amount is
deposited into the Clearing Account in immediately available funds, the Administrative Agent shall
withdraw such amount from the Clearing Account, deposit the same in the account maintained by the
Administrative Agent as described in Section 6.5(a), and apply the same against the
Obligations in the manner provided for in Section 6.4.

     (f) After the Closing Date, except as otherwise permitted under the Security Agreement, no
Credit Party shall open any deposit account or securities account unless the depository bank or
securities intermediary, as applicable, for such account shall have entered into a Blocked Account
Agreement with the Administrative Agent. In addition, no Credit Party shall maintain a balance in
excess of the amount necessary to cover outstanding checks drawn on such account in any other
deposit account or securities account unless and until such Credit Party has delivered to the
Administrative Agent a Blocked Account Agreement in form and substance satisfactory to the
Administrative Agent executed by such Credit Party, the Administrative Agent and the financial
institution or securities intermediary, as applicable, where such account is located.

     SECTION 10.14 Further Assurances. Each Credit Party will, and will cause each of its
Subsidiaries to, make, execute and deliver all such additional and further acts, things, deeds and
instruments as the Administrative Agent or the Required Lenders (through the Administrative Agent)
may reasonably require to document and consummate the transactions contemplated hereby and to vest
completely in and insure the Administrative Agent and the Lenders their respective rights under
this Agreement, the Letters of Credit and the other Loan Documents.

     SECTION 10.15 Assignments and Records of Accounts. Each Credit Party will, and will
cause each of its Subsidiaries to, if so requested by the Administrative Agent following an Event
of Default, execute and deliver to the Administrative Agent, for the benefit of the Secured
Parties, formal written assignments of all of the Accounts daily, which shall include all Accounts
that have been created since the date of the last assignment, together with copies of invoices or

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invoice registers related thereto. Each Credit Party shall keep accurate and complete records
of the Accounts and all payments and collections thereon.

     SECTION 10.16 Administration of Accounts.

     (a) The Administrative Agent retains the right after the occurrence and during the continuance
of an Event of Default to notify the Account Debtors that the Accounts have been assigned to the
Administrative Agent, for the benefit of the Secured Parties, and to collect the Accounts directly
in its own name and to charge the collection costs and expenses, including attorneys’ fees, to the
Borrowers. The Administrative Agent has no duty to protect, insure, collect or realize upon the
Accounts or preserve rights in them. Each Credit Party irrevocably makes, constitutes and appoints
the Administrative Agent as such Credit Party’s true and lawful attorney and agent-in-fact to
endorse such Credit Party’s name on any checks, notes, drafts or other payments relating to, the
Accounts which come into the Administrative Agent’s possession or under the Administrative Agent’s
control as a result of its taking any of the foregoing actions. Additionally, the Administrative
Agent, for the benefit of the Secured Parties, shall have the right to collect and settle or adjust
all disputes and claims directly with the Account Debtor and to compromise the amount or extend the
time for payment of the Accounts upon such terms and conditions as the Administrative Agent may
deem advisable, and to charge the deficiencies and reasonable costs and expenses thereof, including
attorney’s fees, to the Borrowers.

     (b) If an Account includes a charge for any tax payable to any governmental taxing authority,
the Administrative Agent on behalf of the Lenders is authorized, in its sole discretion, to pay the
amount thereof to the proper taxing authority for the account of the applicable Credit Party and to
make a Base Rate Loan to the Borrowers to pay such amount. The Borrowers shall notify the
Administrative Agent if any Account includes any tax due to any governmental taxing authority and,
in the absence of such notice, the Administrative Agent shall have the right to retain the full
proceeds of the Account and shall not be liable for any taxes to any governmental taxing authority
that may be due by any Credit Party by reason of the sale and delivery creating the Account.

     (c) Whether or not a Default or Event of Default has occurred, any of the Administrative
Agent’s officers, employees or agents shall have the right, at any time or times hereafter, in the
name of the Lenders, or any designee of the Lenders or the Credit Parties, to verify the validity,
amount or other matter relating to any Accounts by mail, telephone, telegraph or otherwise. Each
Credit Party will, and will cause each of its Subsidiaries to, cooperate fully with the
Administrative Agent and the Lenders in an effort to facilitate and promptly conclude any such
verification process.

     SECTION 10.17 Lien Perfection. Each Credit Party will, and will cause each of its
Subsidiaries to, take such action as may be required to perfect or continue the perfection of the
Administrative Agent’s (on behalf of, and for the benefit of, the Lender Group) security interest
in the Collateral.

     SECTION 10.18 Location of Collateral. All Collateral, other than Inventory in transit
and Inventory sold in the ordinary course of business, will at all times be kept by the Credit
Parties at one or more of the business locations of the Credit Parties set forth in Schedule
8.1(y).

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The Inventory shall not, without the prior written approval of the Administrative Agent, be
moved from the locations set forth on Schedule 8.1(y) except as permitted in the
immediately preceding sentence and, prior to an Event of Default, (a) sales or other dispositions
of assets permitted pursuant to Section 12.5 and (b) the storage of Inventory at locations
within the continental United States or, if such Credit Party is located in Canada, within Canada
(other than the Province of Quebec) other than those specified in the first sentence of this
Section 10.18 if (i) the Administrative Borrower gives the Administrative Agent written
notice of the new storage location at least thirty (30) days prior to the storage of Inventory at
such location, (ii) the Lender Group’s security interest in such Inventory is and continues to be a
duly perfected, first priority Lien thereon, (iii) neither any Credit Party’s nor the
Administrative Agent’s right of entry upon the premises where such Inventory is stored or its right
to remove the Inventory therefrom is in any way restricted, (iv) the owner of such premises, and
any bailee, warehouseman or similar party that will be in possession of such Inventory, shall have
executed and delivered to the Administrative Agent a Collateral Access Agreement, unless the
Administrative Agent, at its option, has established appropriate Reserves with respect to such
premises, and (v) all negotiable documents and receipts in respect of any Collateral maintained at
such premises are promptly delivered to the Administrative Agent and any non-negotiable documents
and receipts in respect of any Collateral maintained at such premises are issued to the
Administrative Agent and promptly delivered to the Administrative Agent. If after the Closing Date
any Credit Party keeps Inventory with a value of more than $200,000 at any leased location, such
Credit Party shall notify the Administrative Agent and, unless the Administrative Agent otherwise
agrees, such Credit Party shall deliver to the Administrative Agent a fully-executed Collateral
Access Agreement with respect to such location.

     SECTION 10.19 Protection of Collateral. All insurance expenses and expenses of
protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral
(including all rent payable by any Credit Party to any landlord of any premises where any of the
Collateral may be located), and any and all excise, property, sales, and use taxes imposed by any
state, province, territory, federal (United States or Canada), or local authority on any of the
Collateral or in respect of the sale thereof, shall be borne and paid by the Credit Parties. If
the Credit Parties fail to promptly pay any portion thereof when due, the Administrative Agent or
the Lenders may, at their option, but shall not be required to, make a Base Rate Loan for such
purpose and pay the same directly to the appropriate Person. The Borrowers agree to reimburse the
Administrative Agent or the Lenders, as the case may be, promptly therefor with interest accruing
thereon daily at the interest rate set forth in Section 6.1(d). All sums so paid or
incurred by the Administrative Agent or the Lenders, as the case may be, for any of the foregoing
and all reasonable costs and expenses (including attorneys’ fees, legal expenses, and court costs)
which the Administrative Agent or the Lenders, as the case may be, may incur in enforcing or
protecting the Lien on or rights and interest in the Collateral or any of their rights or remedies
under this or any other agreement between the parties hereto or in respect of any of the
transactions to be consummated hereunder until paid by the Borrowers to the Administrative Agent or
the Lenders, as the case may be, with interest at the interest rate set forth in Section
6.1(d), shall be considered Obligations owing by the Borrowers to the Lender Group. Such
Obligations shall be secured by all Collateral and by any and all other collateral, security,
assets, reserves, or funds of the Credit Parties in or coming into the hands or inuring to the
benefit of the Lender Group. Neither the Administrative Agent nor the Lenders shall be liable or
responsible in any way for the safekeeping of any of the Collateral or for any loss or damage
thereto (except

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for reasonable care in the custody thereof while any Collateral is in the Lenders’ actual
possession) or for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the same shall be at the
Credit Parties’ sole risk.

ARTICLE 11.

FINANCIAL COVENANTS

     Until all of the Obligations have been paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner set forth in Section 15.11:

     SECTION 11.1 Fixed Charge Coverage Ratio. Commencing on the date Excess Availability
is less than $30,000,000, as of the end of the fiscal month for which the Parent most recently
delivered an Officer’s Compliance Certificate and as of each fiscal month end thereafter, the
Parent and its Subsidiaries (other than any VIE) on a Consolidated basis (but excluding any VIE)
will not permit the Fixed Charge Coverage Ratio to be less than 1.05 to 1.00.

     SECTION 11.2 Capital Expenditures. Unless Average Excess Availability is more than
$50,000,000 for each of the twelve (12) months of such Fiscal Year, the Credit Parties and their
Subsidiaries (excluding any VIE) shall not make or incur in the aggregate any Capital Expenditures
in excess of $30,000,000 in any Fiscal Year.

ARTICLE 12.

NEGATIVE COVENANTS

     Until all of the Obligations have been paid and satisfied in full and the Commitments
terminated, unless consent has been obtained in the manner set forth in Section 15.11:

     SECTION 12.1 Limitations on Debt. No Credit Party will, and no Credit Party will
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Debt except:

     (a) the Obligations (excluding Hedging Obligations permitted pursuant to
Section 12.1(b)) in favor of the Administrative Agent for the benefit of the Administrative
Agent and the Lenders;

     (b) Debt incurred in connection with a Lender Hedging Agreement not entered into for
speculative purposes and upon terms and conditions (including interest rate) reasonably
satisfactory to the Administrative Agent;

     (c) Debt of the Credit Parties and their Subsidiaries incurred in connection with Capitalized
Leases in an aggregate amount not to exceed $10,000,000 at any time outstanding;

     (d) purchase money Debt of the Credit Parties and their Subsidiaries in an aggregate amount
not to exceed $5,000,000 at any time outstanding;

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     (e) unsecured intercompany Debt owed by any Credit Party to another Credit Party; and

     (f) unsecured Guaranty Obligations with respect to Debt permitted pursuant to Sections
12.1(a) through 12.1(e);

     (g) other unsecured Guaranty Obligations of the Parent with respect to the rent obligations of
independent retail dealers in respect of the Parent’s furniture gallery stores, other retail
furniture dealers and other members of the Parent’s customer base in an aggregate amount not to
exceed $35,000,000 at any time outstanding; provided, however, that the Parent
shall not enter into any new Guaranty Obligations permitted under this clause (g) if an
Event of Default has occurred and is continuing;

     (h) other unsecured Guaranty Obligations of the Parent with respect to the other debt
obligations of independent retail dealers in respect of the Parent’s furniture gallery stores,
other retail furniture dealers and other members of the Parent’s customer base in an aggregate
amount not to exceed $15,000,000 at any time outstanding; provided, however, that
the Parent shall not enter into any new Guaranty Obligations permitted under this clause
(h) if an Event of Default has occurred and is continuing;

     (i) until the date one hundred twenty (120) days after the Closing Date, reimbursement
obligations of the Parent with respect to the following letters of credit issued by Fifth Third
Bank for the account of the Parent: CIS404200; OHS100352; CIS404201; CIS404082; CIS404090; and
CIS407102;

     (j) Debt of the Parent in connection with those certain $7,500,000 City of Siloam Springs,
Arkansas Variable/Fixed Rate Demand Industrial Development Revenue Bonds (La-Z-Boy Chair Company
Project), Series 1994, in an aggregate principal amount not to exceed $7,100,000, minus any
repayments, prepayments or other payments thereof;

     (k) Debt of the Parent in connection with those certain $5,350,000 City of Newton, Mississippi
Tax-Exempt Adjustable Mode Industrial Development Revenue Refunding Bonds (La-Z-Boy Chair Company
Project), Series 1991, in an aggregate principal amount not to exceed $5,350,000, minus any
repayments, prepayments or other payments thereof;

     (l) Debt of the Parent in connection with those certain $4,350,000 The Industrial Development
Board of the City of Dayton, Tennessee Tax-Exempt Adjustable Rate Industrial Development Revenue
Refunding Bonds (La-Z-Boy Chair Company Project), Series 1991, in an aggregate principal amount not
to exceed $4,350,000, minus any repayments, prepayments or other payments thereof; and

     (m) additional unsecured Debt of the Credit Parties and their Subsidiaries not otherwise
permitted under this Section 12.1 in an aggregate principal amount not in excess of
$15,000,000 at any time outstanding.

provided, that no agreement or instrument with respect to Debt permitted to be incurred by
this Section 12.1 shall restrict, limit or otherwise encumber (by covenant or otherwise)
the ability of any Credit Party or any Subsidiary thereof to make any payment to any Credit Party
or any other

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Subsidiary thereof (in the form of dividends, intercompany advances or otherwise) for the purpose
of enabling the Credit Parties to pay the Obligations.

     SECTION 12.2 Limitations on Liens. No Credit Party will, and no Credit Party will
permit any of its Subsidiaries to, create, incur, assume or suffer to exist, any Lien on or with
respect to any of its assets or properties (including shares of capital stock or other Equity
Interests), real or personal, whether now owned or hereafter acquired, except:

     (a) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien
imposed pursuant to any of the provisions of ERISA, any Canadian Employer Benefits Legislation or
any Environmental Laws or under Section 412 or 430 of the Code) not yet due or as to which the
period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or which
are being contested in good faith and by appropriate proceedings if adequate reserves are
maintained to the extent required by GAAP;

     (b) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of business, (i) which are
not overdue for a period of more than thirty (30) days or (ii) which are being contested in good
faith and by appropriate proceedings;

     (c) Liens consisting of deposits or pledges made in the ordinary course of business in
connection with, or to secure payment of, obligations under workers’ compensation, unemployment
insurance or similar legislation;

     (d) Liens constituting encumbrances in the nature of zoning restrictions, easements and rights
or restrictions of record on the use of real property, which in the aggregate are not substantial
in amount and which do not, in any case, materially detract from the value of such property or
impair the use thereof in the ordinary conduct of business;

     (e) Liens of the Administrative Agent for the benefit of the Secured Parties;

     (f) Liens not otherwise permitted by this Section 12.2 and in existence on the Closing
Date and described on Schedule 12.2;

     (g) Liens securing Debt permitted under Sections 12.1(c) and (d);
provided that (i) such Liens shall be created substantially simultaneously with the
acquisition or lease of the related asset, (ii) such Liens do not at any time encumber any property
other than the property financed by such Debt, (iii) the amount of Debt secured thereby is not
increased and (iv) the principal amount of Debt secured by any such Lien shall at no time exceed
one hundred percent (100%) of the original purchase price or principal portion of the lease payment
amount of such property at the time it was acquired;

     (h) Liens arising in connection with worker’s compensation, unemployment insurance, old age
pensions (subject to Sections 8.1(i) and 13.1(m)) and social security benefits and
similar statutory obligations which are not overdue or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in the case of any such contest (i) any
proceedings commenced for the enforcement of such Liens shall have been duly suspended; and

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(ii) such provision for the payment of such Liens has been made on the books of such Person as
may be required by generally accepted accounting principles, consistently applied;

     (i) Liens incurred or deposits made in the ordinary course of business to secure the
performance of statutory obligations, bids, leases, fee and expense arrangements with trustees and
fiscal agents and other similar obligations (exclusive of obligations incurred in connection with
the borrowing of money, any lease purchase arrangements or the payment of the deferred purchase
price of property), provided that full provision for the payment of all such obligations set forth
in clause (ii) has been made on the books of such Person as may be required by generally
accepted accounting principles, consistently applied;

     (j) with respect to the Canadian Borrower, any reservations, limitations, provisos and
conditions expressed in any original grant from the Crown; and

     (k) any easements, restrictions, mineral, oil, gas and mining rights and reservations and
defects in title with respect to real property which do not individually or in the aggregate
materially detract from the value thereof.

     SECTION 12.3 Limitations on Loans, Advances, Investments and Acquisitions. No Credit
Party will, and no Credit Party will permit any of its Subsidiaries to, purchase, own, invest in or
otherwise acquire, directly or indirectly, any capital stock or other Equity Interests, interests
in any partnership or joint venture (including the creation or capitalization of any Subsidiary),
evidence of Debt or other obligation or security, substantially all or a portion of the business or
assets of any other Person or any other investment or interest whatsoever in any other Person, or
make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or
any investment in cash or by delivery of property in, any Person except:

     (a) the Credit Parties and their Subsidiaries may hold the Equity Interests of their
respective Subsidiaries in existence as of the Closing Date and their Domestic Subsidiaries and
their Foreign Subsidiaries formed under the laws of Canada or any province thereof created or
acquired after the Closing Date so long as the Credit Parties comply with the applicable provisions
of Section 10.11;

     (b) any Credit Party may make investments in any other Credit Party (other than the Parent);

     (c) so long as no Default or Event of Default exists or would be caused thereby, the Credit
Parties may make investments in Foreign Subsidiaries in the form of (i) loans and cash
contributions in an aggregate amount not to exceed, including any loans or cash contributions made
to any Foreign Subsidiary existing on the Closing Date, $10,000,000, (ii) contributions of
Inventory, equipment or other capital assets in an aggregate amount not to exceed $25,000,000
during the term of this Agreement or (iii) guaranties in an aggregate amount not to exceed,
including any guaranties for the benefit of any Foreign Subsidiary existing on the Closing Date,
$10,000,000 at any time outstanding;

     (d) the loans and advances made by the Parent to independent retail dealers in respect of the
Parent’s furniture gallery stores existing on the Closing Date;

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     (e) investments in (i) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or, if such investment is made by the Canadian Borrower, the
government of Canada, or any agency thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper, variable or fixed rate notes maturing no more than six
(6) months from the date of acquisition thereof and issued by, or guaranteed by, a domestic
corporation rated A-1 (or the equivalent thereof) or better by Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Companies, Inc. or P-1 (or the equivalent thereof) or better by
Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one year from
the date of creation thereof issued by any of the Lenders or commercial banks incorporated under
the laws of the United States of America or, if such investment is made by the Canadian Borrower,
Canada, each having combined capital, surplus and undivided profits of not less than $500,000,000
and having a rating of “A” or better by a nationally recognized rating agency; provided,
that the aggregate amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one (1) such bank,
(iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with
commercial banks or savings banks or savings and loan associations each having membership either in
the FDIC (or, if such investment is made by the Canadian Borrower, the similar Governmental
Authority in Canada) or the deposits of which are insured by the FDIC (or, if such investment is
made by the Canadian Borrower, the similar Governmental Authority in Canada) and in amounts not
exceeding the maximum amounts of insurance thereunder or (v) repurchase agreements with a Lender or
a bank or trust company or a recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United States of America
or, if such investment is made by the Canadian Borrower, the government of Canada (such investments
described in items (i) through (v) above, “Cash Equivalents”);

     (f) investments by any Credit Party or any Subsidiary thereof in the form of acquisitions of
all or substantially all of the business or a line of business (whether by the acquisition of
capital stock or other Equity Interests, assets or any combination thereof) of any other Person, so
long as no Default or Event of Default exists or would be caused thereby and each such acquisition
meets all of the following requirements (such acquisitions being “Permitted Acquisitions”):

     (i) the Person to be acquired shall be in a substantially similar line of business as
the Credit Parties,

     (ii) evidence of approval of such acquisition by the acquiree’s board of directors or
equivalent governing body or a copy of the opinion of counsel delivered by legal counsel to
the acquiree in connection with such acquisition which evidences such approval shall be
delivered to the Administrative Agent at the time the documents referred to in clause
(vi) of this Section 12.3(f) are required to be delivered,

     (iii) a description of such acquisition in the form customarily prepared by the Parent
shall have been delivered to the Administrative Agent prior to the consummation of such
acquisition,

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     (iv) a Credit Party or any Subsidiary shall be the surviving Person and no Change of
Control shall have been effected thereby,

     (v) the Parent shall have delivered to the Administrative Agent a pro forma Officer’s
Compliance Certificate demonstrating that, upon giving effect to such Permitted Acquisition
(including any Debt incurred in connection therewith) on a pro forma basis, the Fixed Charge
Coverage Ratio shall be not less than 1.05 to 1.0 and no Default or Event of Default shall
have occurred and be continuing both before and after giving effect to such acquisition,

     (vi) the Credit Parties shall have delivered to the Administrative Agent such documents
to be delivered at the time required pursuant to Section 10.11 and shall confirm
that any such Person acquired or created in connection with such acquisition is a Subsidiary
Guarantor hereunder, and its Obligations incurred in such capacity are secured by the
Security Documents,

     (vii) the total cash consideration (after deducting cash on the balance sheet of the
Person being acquired or included in the assets being acquired and including the principal
amount of all third-party Debt assumed by such Credit Party or such Subsidiary or otherwise
owed by the Person to be acquired) for all such acquisitions shall not exceed $25,000,000,

     (viii) the Parent shall have delivered evidence to the Administrative Agent, in form
and substance reasonably satisfactory to the Administrative Agent, that, after giving pro
forma cumulative effect to all acquisitions made pursuant to this Section 12.3(f),
the negative impact of such acquisitions on the EBITDA of the Parent, for the period
commencing on the first day of the fiscal month of the Parent in which the most recent such
acquisition occurred and ending on the last day of the twelfth fiscal month thereafter,
shall not be greater than $7,500,000,

     (ix) the Credit Parties shall have delivered a Officer’s Compliance Certificate
demonstrating that the Borrowers shall have maintained Excess Availability of $30,000,000 or
more on each day during the period of three (3) consecutive months immediately preceding
such acquisition and on the date of such acquisition and will maintain Excess Availability
of $30,000,000 or more on each day during the period of three (3) consecutive months
immediately succeeding such acquisition, and

     (x) the Credit Parties shall provide such other documents and other information as may
be reasonably requested by the Administrative Agent in connection with the proposed
acquisition; provided, however, that no assets acquired in connection with a
Permitted Acquisition shall be included in the Borrowing Base without the prior written
consent of the Administrative Agent and, upon the request of the Administrative Agent,
completion of a field examination or appraisal, or both, of such assets by the
Administrative Agent and completion of any other due diligence requested by the
Administrative Agent;

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     (g) other investments by any Credit Party or any Subsidiary thereof in the form of
acquisitions of all or substantially all of the business or a line of business (whether by the
acquisition of capital stock or other Equity Interests, assets or any combination thereof) of any
other Person so long as (i) no Default or Event of Default exists or would be caused thereby, (ii)
the total cash consideration (after deducting cash on the balance sheet of the Person being
acquired or included in the assets being acquired and including the principal amount of all
third-party Debt assumed by such Credit Party or such Subsidiary or otherwise owed by the Person to
be acquired; for the avoidance of doubt, cash consideration shall not include the forgiveness of
Debt owed by the Person to be acquired to any Credit Party or any Subsidiary thereof) for all such
acquisitions shall not exceed $1,500,000 in any calendar year and (iii) the Credit Parties shall
have delivered a Officer’s Compliance Certificate demonstrating that the Borrowers shall have
maintained Excess Availability of $30,000,000 or more on each day during the period of three (3)
consecutive months immediately preceding such acquisition and on the date of such acquisition and
will maintain Excess Availability of $30,000,000 or more on each day during the period of three (3)
consecutive months immediately succeeding such acquisition; provided, however, that
no assets acquired in connection with any acquisition pursuant to this Section 12.3(g)
shall be included in the Borrowing Base without the prior written consent of the Administrative
Agent and, upon the request of the Administrative Agent, completion of a field examination or
appraisal, or both, of such assets by the Administrative Agent and completion of any other due
diligence requested by the Administrative Agent;

     (h) Hedging Agreements permitted pursuant to Section 12.1;

     (i) loans and advances to employees in the ordinary course of business made pursuant to
Section 12.8;

     (j) extensions of credit to customers in the ordinary course of business pursuant to payment
terms that are in effect on the Closing Date and are disclosed to the Administrative Agent; and

     (k) other investments (excluding investments in the form of acquisitions of all or
substantially all of the business or a line of business (whether by the acquisition of capital
stock or other Equity Interests, assets or any combination thereof) of any other Person) not
otherwise permitted pursuant to this Section 12.3 in an aggregate amount not to exceed
$2,500,000 during the term of this Agreement.

     SECTION 12.4 Limitations on Mergers and Liquidation. No Credit Party will, and no
Credit Party will permit any of its Subsidiaries to, merge, consolidate or enter into any similar
combination with any other Person or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution) except:

     (a) any Subsidiary of any Credit Party may merge (i) with any other Subsidiary of such Credit
Party or (ii) with such Credit Party; provided that in the case of clause (i), if
any Subsidiary party to such merger is a Subsidiary Guarantor, then the surviving entity shall
continue to be a Subsidiary Guarantor and, in the case of clause (ii), such Credit Party
shall be the surviving entity;

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     (b) any Subsidiary of any Credit Party may merge into the Person such Subsidiary was formed to
acquire in connection with a Permitted Acquisition;

     (c) any Subsidiary of any Credit Party may wind-up into any Credit Party or any Subsidiary of
any Credit Party; provided that if the Subsidiary winding up is a Subsidiary Guarantor,
then such Subsidiary shall wind up into such Credit Party or a Subsidiary Guarantor;

     (d) any Subsidiary that is not a Material Operating Subsidiary of the Parent may liquidate or
dissolve itself in accordance with Applicable Law; and

     (e) any Credit Party may merge into any other Credit Party (other than the Canadian Borrower);
provided that if any Credit Party party to such merger is the Parent, then the Parent shall
be the surviving entity.

     SECTION 12.5 Limitations on Sale of Assets. No Credit Party will, and no Credit Party
will permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose
of any of its property, business or assets (including the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or hereafter acquired
except:

     (a) the sale of Inventory in the ordinary course of business;

     (b) the transfer of assets to any Credit Party or any Subsidiary of the Parent, as applicable,
pursuant to Section 12.4(c);

     (c) the sale or discount without recourse of accounts receivable arising in the ordinary
course of business in connection with the compromise or collection thereof;

     (d) the sale and assignment by England of certain of its Accounts pursuant to (i) that certain
agreement for the factor of certain receivables of England between England (formerly known as
England Upholstery Manufacturing Company, Inc.) and The CIT Group/Commercial Services, Inc.
(successor in rights to Heller Financial, Inc. and BarclaysAmerican/Commercial, Inc.) dated
September 19, 1979, (ii) that certain Factoring Agreement (Collection) between England (formerly
known as England Upholstery Manufacturing Co., Inc.) and GMAC Commercial Credit, LLC (successor in
rights to NationsBanc Commercial Corporation and Citizens and Southern Commercial Corporation)
dated October 30, 1987, as amended on June 30, 1997, and January 20, 1999, and (iii) that certain
Factoring and Security Agreement between England and BB&T Factors Corporation dated December 7,
2001; and

     (e) so long as no Default or Event of Default exists or would be caused thereby, the sale or
transfer of (i) the assets, including obsolete assets, currently held for sale by a Credit Party,
with an aggregate book value not to exceed $11,500,000, (ii) other assets, including obsolete
assets, with an aggregate book value not to exceed $10,000,000 during any Fiscal Year and (iii)
other sales or transfers permitted by the Administrative Agent, in its Permitted Discretion;
provided, however, that if any asset sold or transferred pursuant to this
clause (d) was included in the Borrowing Base prior to such sale or transfer, the Borrowers
shall, within one (1) Business Day of such sale or transfer, deliver to the Administrative Agent a
updated Borrowing Base Certificate reflecting such sale or transfer.

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     SECTION 12.6 Limitations on Dividends and Distributions. No Credit Party will, and no
Credit Party will permit any of its Subsidiaries to, declare or pay any dividends upon any of its
Equity Interests, purchase, redeem, retire or otherwise acquire, directly or indirectly, any of its
Equity Interests, or make any distribution of cash, property or assets among the holders of its
Equity Interests, or make any change in its capital structure; provided that:

     (a) any Credit Party or any Subsidiary may pay dividends in units of its own Equity Interests;

     (b) any Subsidiary of a Credit Party may pay cash dividends to such Credit Party;

     (c) the Parent may purchase Equity Interests of the Parent with an aggregate value of
$10,000,000 during the term of this Agreement, so long as no Default or Event of Default shall have
occurred and is continuing or will result therefrom; and

     (d) the Parent may make other dividends and distributions to the holders of its Equity
Interests so long as (i) the Parent shall have delivered notice of its intention to make each such
dividend or distribution to the Administrative Agent at least fourteen (14) days prior to the
intended date thereof, (ii) the Parent shall have delivered to the Administrative Agent an
Officer’s Compliance Certificate (A) demonstrating, in form and substance satisfactory to the
Administrative Agent, that the Borrowers shall have maintained Excess Availability of $30,000,000
or more on at least fifty-six (56) of the sixty (60) consecutive days immediately preceding each
such dividend or distribution, (B) demonstrating, in form and substance satisfactory to the
Administrative Agent, that the Borrowers shall have maintained Excess Availability of $30,000,000
or more on each day during the period of fifty (50) consecutive days immediately preceding each
such dividend or distribution (and including the date on which such dividend or distribution is
made) and (C) certifying, in form and substance satisfactory to the Administrative Agent, that the
Borrowers expect to maintain Excess Availability of $30,000,000 or more on each day during the
period of five (5) consecutive days immediately succeeding each such dividend or distribution, such
certification in this Section 12.6(d)(i)(C) representing the good faith estimate in all
material respects (utilizing reasonable assumptions) of the financial condition and operations of
the Borrowers and their Subsidiaries, (iii) the Borrowers maintain Excess Availability of
$30,000,000 or more on each day during the period of five (5) consecutive days immediately
succeeding each such dividend or distribution and (iii) no Default or Event of Default shall have
occurred and is continuing or will result therefrom.

     SECTION 12.7 Limitations on Exchange and Issuance of Equity Interests. No Credit
Party will, and no Credit Party will permit any of its Subsidiaries to, issue, sell or otherwise
dispose of any class or series of its Equity Interests that, by its terms or by the terms of any
security into which it is convertible or exchangeable, is, or upon the happening of an event or
passage of time would be, (a) convertible or exchangeable into Debt or (b) required to be redeemed
or repurchased, including at the option of the holder, in whole or in part, or has, or upon the
happening of an event or passage of time would have, a redemption or similar payment due.

     SECTION 12.8 Transactions with Affiliates. No Credit Party will, and no Credit Party
will permit any of its Subsidiaries to, except for transactions permitted by Sections 12.3
and

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12.6, directly or indirectly (a) make any loan or advance to, or purchase or assume
any note or other obligation to or from, any of its officers, directors, partners or other
Affiliates, or to or from any member of the immediate family of any of its officers, directors,
partners or other Affiliates, except for loans and advances to employees in the ordinary course of
business not to exceed $5,000,000 in the aggregate at any one time outstanding during the term of
this Agreement, or (b) enter into, or be a party to, any other transaction not described in clause
(a) above with any of its Affiliates, except pursuant to the reasonable requirements of its
business and upon fair and reasonable terms that are no less favorable to it than it would obtain
in a comparable arm’s length transaction with a Person not its Affiliate, and, if not in the
ordinary course of business, are fully disclosed to and approved in writing by the Required Lenders
prior to the consummation thereof.

     SECTION 12.9 Certain Accounting Changes; Organizational Documents. No Credit Party
will, and no Credit Party will permit any of its Subsidiaries to (a) change its Fiscal Year end, or
make any change in its accounting treatment and reporting practices except as required by GAAP or
(b) amend, modify or change its certificate of formation, articles of organization or limited
partnership certificate (or corporate charter or other similar organizational documents) or amend,
modify or change its bylaws, regulations, operating agreement or partnership agreement (or other
similar documents) in any manner adverse in any respect to the rights or interests of the
Administrative Agent or the Lenders.

     SECTION 12.10 Amendments. No Credit Party will, and no Credit Party will permit any
of its Subsidiaries to, (a) enter into any amendment of, or agree to or accept any waiver, which
would adversely affect the rights of such Credit Party or such Subsidiary, as applicable, or any
member of the Lender Group, of the certificate of limited partnership, articles of incorporation,
bylaws, partnership agreement, operating agreement or other organizational or operative document of
such Credit Party or such Subsidiary, or (b) permit any Material Contract to be cancelled or
terminated prior to its stated maturity if such cancellation or termination could reasonably be
likely to result in a Material Adverse Effect.

     SECTION 12.11 Restrictive Agreements.

     (a) Negative Pledges. No Credit Party will, and no Credit Party will permit any of
its Subsidiaries to, enter into any Debt which contains any covenants more restrictive than the
provisions of Articles 10, 11 and 12 or any negative pledge on assets, or
which restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any
of its assets or properties other than the assets or properties securing such Debt.

     (b) Restrictions on Dividends. No Credit Party will, and no Credit Party will permit
any of its Subsidiaries to, enter into or permit to exist any agreement which impairs or limits the
ability of any Subsidiary of any Credit Party to pay dividends or distributions to a Credit Party,
except for customary restrictions and conditions contained in (i) agreements relating to the sale
of a Subsidiary or assets pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary or assets that are to be sold and such sale is permitted hereunder;
and (ii) any indenture, agreement, instrument or other arrangement relating to the assets or
business of any Subsidiary and existing prior to the consummation of the acquisition in which such
Subsidiary or its affected assets were acquired.

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     SECTION 12.12 Nature of Business. No Credit Party will, and no Credit Party will
permit any of its Subsidiaries to, engage in any line of business substantially different from
those lines of business conducted by such Credit Party or such Subsidiary on the Closing Date,
other than intellectual property licensing that does not generate more than five percent (5%) the
revenue of the Parent and its Subsidiaries in any Fiscal Year.

     SECTION 12.13 Impairment of Security Interests. No Credit Party will, and no Credit
Party will permit any of its Subsidiaries to, take or omit to take any action which might or would
have the result of materially impairing the security interests in favor of the Administrative Agent
with respect to the Collateral or grant to any Person (other than the Administrative Agent for the
benefit of the Secured Parties pursuant to the Security Documents) any interest whatsoever in the
Collateral, except for Liens permitted under Section 12.2 and asset sales permitted under
Section 12.5.

     SECTION 12.14 Sales and Leasebacks. After the Closing Date, no Credit Party will, and
no Credit Party will permit any of its Subsidiaries to, enter into any arrangement, directly or
indirectly, with any third party whereby any Credit Party or any Subsidiary thereof shall sell or
transfer any property, real or personal, whether now owned or hereafter acquired, and whereby such
Credit Party or such Subsidiary, as applicable, shall then or thereafter rent or lease as lessee
such property or any part thereof or other property which such Credit Party or such Subsidiary, as
applicable, intends to use for substantially the same purpose or purposes as the property sold or
transferred, unless (a) no Default or Event of Default exists or would be caused thereby, (b) the
net proceeds received by such Credit Party or such Subsidiary in connection with such arrangement
are at least equal to the fair market value (as determined by the management of such Person) of
such property, (c) such Credit Party or such Subsidiary reinvests the Net Cash Proceeds of such
arrangement in its business and (d) the aggregate value of the property sold or transferred in
connection with all such arrangements during the term of this Agreement shall not exceed
$15,000,000.

     SECTION 12.15 Hedging Agreements. No Credit Party will, and no Credit Party will
permit any of its Subsidiaries to, engage in any transaction involving commodity options or futures
contracts or any similar speculative transactions, except for hedging practices that are used
solely as part of normal business operations as a risk management strategy or hedge against changes
resulting from market operations in accordance with such Credit Party’s or such Subsidiary’s
customary policies and not as a means to speculate for investment purposes.

ARTICLE 13.

DEFAULT AND REMEDIES

     SECTION 13.1 Events of Default. Each of the following shall constitute an Event of
Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court or any order, rule
or regulation of any Governmental Authority or otherwise:

     (a) Default in Payment of Principal of Loans and the Reimbursement Obligation. Any
Credit Party shall default in any payment of principal of any Loan, any Note or the

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Reimbursement Obligation when and as due (whether at maturity, by reason of acceleration or
otherwise).

     (b) Other Payment Default. Any Credit Party or any Subsidiary thereof shall default
in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, any Note or the Reimbursement Obligation or the payment when and as due of
any other Obligation and such default shall continue unremedied for three (3) Business Days.

     (c) Misrepresentation. Any representation, warranty, certification or statement of
fact made or deemed made by or on behalf of any Credit Party or any Subsidiary under this
Agreement, any other Loan Document or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect (unless such representation, warranty,
certification or statement of fact is qualified as to materiality, in which case such
representation, warranty, certification or statement of fact shall at any time prove to have been
incorrect or misleading in any respect) when made or deemed made.

     (d) Default in Performance of Certain Covenants. Any Credit Party or any Subsidiary
thereof shall default in the performance or observance of any term, covenant, condition or
agreement contained in Section 9.1, 9.2, 9.5(f)(i), 10.1,
10.3, 10.10 or 10.13, or Article 11 or 12 of this
Agreement.

     (e) Failure to deliver Borrowing Base Certificate. The Borrowers shall fail to
deliver any Borrowing Base Certificate pursuant to Section 9.4(a) and such default shall
continue for the earlier of (i) a period of five (5) days from the date that a Responsible Officer
knew of the occurrence of such failure, and (ii) a period of five (5) days after written notice
thereof has been given to the Parent by the Administrative Agent.

     (f) Default in Performance of Other Covenants and Conditions. Any Credit Party or any
Subsidiary thereof shall default in the performance or observance of any term, covenant, condition
or agreement contained in this Agreement (other than as specifically provided for otherwise in this
Section 13.1) or any other Loan Document and such default shall continue for the earlier of
(i) a period of thirty (30) days from the date that a Responsible Officer or corporate counsel of
the Parent knew of the occurrence of such default, and (ii) a period of thirty (30) days after
written notice thereof has been given to the Parent by the Administrative Agent; provided,
that such thirty (30) day period shall not apply in the case of (A) any failure to observe any such
covenant which is not capable of being cured at all or within such thirty (30) day period.

     (g) Hedging Agreement; Bank Products Documents. Any Credit Party or any Subsidiary
thereof shall default (i) in the performance or observance of any term, covenant, condition or
agreement under any Hedging Agreement (including any payment obligation) or (ii) in the performance
or observance of any term, covenant, condition or agreement contained in any Bank Products Document
which shall not be cured within the applicable cure period, if any, provided for in such Bank
Products Document.

     (h) Debt Cross-Default. Any Credit Party or any Subsidiary thereof shall (i) default
in the payment of any Debt (other than the Loans or the Reimbursement Obligation) the

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aggregate outstanding amount of which Debt is in excess of $10,000,000 beyond the period of
grace if any, provided in the instrument or agreement under which such Debt was created, or (ii)
default in the observance or performance of any other agreement or condition relating to any Debt
(other than the Loans or the Reimbursement Obligation) the aggregate outstanding amount of which
Debt is in excess of $10,000,000 or contained in any instrument or agreement evidencing, securing
or relating thereto or any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if
required, any such Debt to become due prior to its stated maturity (any applicable grace period
having expired).

     (i) Material Contracts. (i) Any Credit Party or any of their Subsidiaries shall
default in the payment when due, or in the performance or observance, of any material obligation or
condition of any Material Contract (other than any failure to pay rent that does not result in the
representation and warranty set forth in Section 8.1(aa) being incorrect or misleading)
which default is not cured within any applicable cure period, unless, but only as long as, the
existence of any such default is being contested by such Credit Party or any such Subsidiary in
good faith by appropriate proceedings and adequate reserves in respect thereof have been
established on the books of such Credit Party or such Subsidiary to the extent required by GAAP or
(ii) any termination shall have occurred under any Material Contract (except for termination due to
expiration pursuant to the terms of such Material Contract), to which any Credit Party is a party,
which termination could reasonably be expected to have a Material Adverse Effect.

     (j) Change of Control. A Change of Control shall occur.

     (k) Voluntary Bankruptcy Proceeding. Any Credit Party or any Subsidiary thereof shall
(i) commence a voluntary case under the federal (United States or Canada) bankruptcy laws (as now
or hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of,
or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay
its debts as they become due, (vi) make a general assignment for the benefit of creditors, (vii)
make or send notice of a bulk transfer or (viii) take any corporate action for the purpose of
authorizing any of the foregoing.

     (l) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced
against any Credit Party or any Subsidiary thereof in any court of competent jurisdiction seeking
(i) relief under the federal (United States or Canada) bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like for any Credit Party or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case or proceeding shall
continue without dismissal or stay for a period of sixty (60) consecutive days, or

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an order granting the relief requested in such case or proceeding (including an order for
relief under such federal (United States or Canada) bankruptcy laws) shall be entered.

     (m) Failure of Agreements. Any material provision of this Agreement or any material
provision of any other Loan Document shall for any reason cease to be valid and binding on any
Credit Party or any Subsidiary thereof party thereto or any such Person shall so assert in writing,
or any Loan Document shall for any reason cease to create a valid and perfected first priority Lien
on, or security interest in, any of the collateral purported to be covered thereby, in each case
other than in accordance with the express terms hereof or thereof.

     (n) Termination Event. The occurrence of any of the following events: (i) any Credit
Party or any ERISA Affiliate shall fail to make full payment when due of all amounts which, under
the provisions of any Pension Plan or Section 412 or 430 of the Code, any Credit Party or any ERISA
Affiliate is required to pay as contributions thereto, and such failure could reasonably result in
liability in excess of $5,000,000, (ii) an accumulated funding deficiency or funding shortfall in
excess of $5,000,000 occurs or exists, whether or not waived, with respect to any Pension Plan,
(iii) a Termination Event which could reasonably result in liability in excess of $5,000,000,
either individually or in the aggregate, other than a Termination Event described in clause (c) of
the definition thereof, (iv) a Termination Event described in clause (c) of the definition thereof,
unless adequate reserves in respect thereof have been established on the books of the affected
Credit Party or the affected ERISA Affiliate to the extent required by GAAP, or (iv) any Credit
Party or any ERISA Affiliate as employers under one or more Multiemployer Plans makes a complete or
partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plan
notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring
payments in an amount exceeding $5,000,000.

     (o) Judgment. A judgment or order for the payment of money which is not fully covered
by insurance of any Borrower or any of their Subsidiaries as to which the insurance company has
acknowledged coverage and which causes the aggregate amount of the uninsured portion of all such
judgments to exceed $10,000,000 shall be entered against any Credit Party or any of their
Subsidiaries by any court and such judgment or order shall continue without discharge or stay for a
period of thirty (30) days.

     (p) Environmental. Any one or more Environmental Claims shall have been asserted
against any Credit Party or any of their Subsidiaries; any Credit Party and any of their
Subsidiaries would be reasonably likely to incur liability as a result thereof; and such liability
would be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect.

     (q) Credit Card Issuers or Processors. (i) Any credit card issuer or credit card
processor (other than with a credit card issuer or credit card processor where the sales using the
applicable card are less than ten (10%) percent of all such sales in the immediately preceding
Fiscal Year) withholds payment of amounts otherwise payable to a Credit Party in an aggregate
amount equal to more than one percent (1%) of such amounts otherwise payable to such Credit Party
to fund a reserve account or otherwise hold as collateral, or shall require a Credit Party to pay
funds into a reserve account or for such credit card issuer or credit card processor to otherwise
hold as collateral, or any Credit Party shall provide a letter of credit, guarantee, indemnity or
similar instrument to or in favor of such credit card issuer or credit card processor

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or (ii) any such credit card issuer or credit card processor shall terminate or suspend
payments to any Credit Party as a result of any default under such arrangements.

     (r) Blocked Account Agreements. At any time a Cash Sweep Period exists, any bank or
securities intermediary at which any Blocked Account is maintained shall fail to comply with any of
the material terms of any Blocked Account Agreement with respect to such Blocked Account to which
such bank or securities intermediary is a party in any case for a period of more than five (5)
Business Days.

     (s) Indictments. The indictment by any Governmental Authority, or the threatened
indictment in writing by any Governmental Authority of any Borrower, any other Credit Party or any
Responsible Officer of which any Borrower, any other Credit Party or the Administrative Agent
receives notice, in either case, as to which there is a reasonable expectation of a materially
adverse determination, in the good faith determination of the Administrative Agent, under any
criminal statute, or commencement or threatened commencement of criminal or civil proceedings
against such Borrower, other Credit Party or such Responsible Officer.

     SECTION 13.2 Remedies. Upon the occurrence of an Event of Default, with the consent
of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders,
the Administrative Agent shall, by notice to the Parent:

     (a) Acceleration; Termination of Facilities. Terminate the Commitments and declare
the principal of and interest on the Loans and the Reimbursement Obligation at the time
outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this
Agreement or any of the other Loan Documents (including all L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled
to present the documents required thereunder) and all other Obligations (other than Hedging
Obligations), to be forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of which are
expressly waived by each Credit Party, anything in this Agreement or the other Loan Documents to
the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrowers to
request borrowings or Letters of Credit thereunder; provided, that upon the occurrence of
an Event of Default specified in Section 13.1(j) or (k), the Credit Facility shall
be automatically terminated and all Obligations (other than Hedging Obligations) shall
automatically become due and payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived by each Credit Party, anything in this Agreement or in any
other Loan Document to the contrary notwithstanding.

     (b) Letters of Credit. Require with respect to all Letters of Credit as to which
presentment for honor shall not have occurred at the time of an acceleration pursuant to
Section 13.2(a), that the Borrowers shall at such time deposit in a cash collateral account
opened by the Administrative Agent an amount equal to one hundred five percent (105%) of the
aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations in
the manner set forth in Section 6.4. After all such Letters of Credit shall have expired
or been fully

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drawn upon, the Reimbursement Obligation shall have been satisfied and all other Obligations
shall have been paid in full, the balance, if any, in such cash collateral account shall be
returned to the Borrowers.

     (c) Rights of Collection. Exercise on behalf of the Lender Group all of its other
rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to
satisfy all of the Borrowers’ Obligations.

     SECTION 13.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of the
rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not
intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right
or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given hereunder or under the
other Loan Documents or that may now or hereafter exist at law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Administrative Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege or shall be construed to be
a waiver of any Event of Default. No course of dealing between any Borrower, any of its
Subsidiaries, the Administrative Agent and the Lenders or their respective agents or employees
shall be effective to change, modify or discharge any provision of this Agreement or any of the
other Loan Documents or to constitute a waiver of any Event of Default.

     SECTION 13.4 Administrative Agent May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to any Credit Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable
as herein expressed or by declaration or otherwise and irrespective of whether the Administrative
Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention
in such proceeding or otherwise:

     (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid
and to file such other documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the Administrative Agent
under Sections 3.3, 6.3 and 15.2) allowed in such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Administrative Agent any amount due for

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the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and
its agents and counsel, and any other amounts due the Administrative Agent under
Sections 6.3 and 15.2.

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

     SECTION 13.5 Collateral Enforcement Actions. If the Administrative Agent commences
any action or proceeding with respect to any of its rights or remedies (including any action of
foreclosure, enforcement, collection or execution) with respect to the Collateral (“Collateral
Enforcement Actions”), then the Credit Parties shall (a) permit the Administrative Agent (or
its agents) to access any of the locations of the Credit Parties or their Subsidiaries, (b) not
hinder or restrict the Administrative Agent from finishing any work-in process, processing,
shipping, producing, storing, completing, supplying, leasing, selling or otherwise handling,
dealing with, assembling or disposing of, in any lawful manner, the Collateral, and (c) permit the
Administrative Agent, its employees, advisers and representatives, at the cost and expense of the
Credit Parties, to enter upon and use the assets of the Credit Parties not constituting Collateral
(including equipment, processors, computers and other machinery related to the storage or
processing of records, documents or files and intellectual property) for such purposes, until the
payment in full of the Obligations and the termination of the Commitments. If the Administrative
Agent has commenced any Collateral Enforcement Action, no Credit Party shall, nor shall it permit
any of its Subsidiaries to, sell, assign or otherwise transfer any of such assets until the payment
in full of the Obligations and the termination of the Commitments.

ARTICLE 14.

THE ADMINISTRATIVE AGENT

     SECTION 14.1 Appointment and Authority. Each of the Lenders and the Issuing Lender
hereby irrevocably appoints Wachovia (Central) to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents 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 or thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article 14 are solely for the benefit of the
Administrative Agent, the Lenders and the Issuing Lender, and no Borrower nor any Subsidiary
thereof shall have rights as a third party beneficiary of any of such provisions.

     SECTION 14.2 Rights as a Lender. The Person 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 the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or
in any other advisory capacity for and generally engage in any kind of business with

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any Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the Lenders.

     SECTION 14.3 Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other Loan Documents.
Without limiting the generality of the foregoing, the Administrative Agent:

     (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Default or Event of Default has occurred and is continuing;

     (b) shall not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan
Documents that the Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Loan Documents); provided that the Administrative Agent shall
not be required to take any action that, in its opinion or the opinion of its counsel, may expose
the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law;
and

     (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
any Borrower or any Affiliate of the Borrowers that is communicated to or obtained by the Person
serving as the Administrative Agent or any of its Affiliates in any capacity.

     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 13.2 and 15.11) or
(ii) in the absence of its own gross negligence or willful misconduct, as determined by a court of
competent jurisdiction by final and non-appealable judgment. The Administrative Agent shall be
deemed not to have knowledge of any Default or Event of Default unless and until notice describing
such Default or Event of Default is given to the Administrative Agent by the Administrative
Borrower, a Lender or the Issuing Lender.

     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 or
any other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article 7 or elsewhere
herein, other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

     SECTION 14.4 Reliance by the Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any notice,

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request, certificate, consent, statement, instrument, document or other writing (including any
electronic message, internet or intranet website posting or other distribution) believed by it to
be genuine and to have been signed, sent or otherwise authenticated 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 have been made by the proper Person, and shall not incur any liability for
relying thereon. In determining compliance with any condition hereunder to the making of a Loan,
or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a
Lender or the Issuing Lender, the Administrative Agent may presume that such condition is
satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have
received notice to the contrary from such Lender or the Issuing Lender prior to the making of such
Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrowers), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

     SECTION 14.5 Delegation of Duties. The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other Loan Document 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 of its duties and exercise its rights and powers by
or through their respective Related Parties. The exculpatory provisions of this Article 14
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.

     SECTION 14.6 Resignation of Administrative Agent.

     (a) The Administrative Agent may at any time give notice of its resignation to the Lenders,
the Issuing Lender and the Parent. Upon receipt of any such notice of resignation, the Required
Lenders shall have the right, in consultation with the Parent, to appoint a successor, which shall
be a bank with an office in the United States, or an Affiliate of any such bank with an office in
the United States. If no such successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the Issuing Lender, appoint a successor Administrative Agent meeting the qualifications
set forth above; provided that if the Administrative Agent shall notify the Parent and the
Lenders that no qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (1) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by the Administrative Agent on
behalf of the Lenders or the Issuing Lender under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (2) all payments, communications and determinations provided
to be made by, to or through the Administrative Agent shall instead be made by or to each Lender
and the Issuing Lender directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section 14.6(a). Upon the acceptance of
a successor’s appointment as Administrative Agent

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hereunder, such successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations hereunder or under
the other Loan Documents (if not already discharged therefrom as provided above in this Section
14.6(a)). The fees payable by the Borrowers to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the Borrowers and such
successor. After the retiring Administrative Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Article 14 and Section 15.2 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 the retiring Administrative Agent was acting as Administrative Agent.

     (b) Any resignation by Wachovia (Central) as Administrative Agent pursuant to this
Section 14.6 shall also constitute its resignation as Issuing Lender and Swingline Lender.
Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring Issuing Lender and Swingline Lender, (ii) the retiring Issuing Lender and Swingline
Lender shall be discharged from all of their respective duties and obligations hereunder or under
the other Loan Documents, and (iii) the successor Issuing Lender shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such succession or make
other arrangement satisfactory to the retiring Issuing Lender to effectively assume the obligations
of the retiring Issuing Lender with respect to such Letters of Credit.

     SECTION 14.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and
the Issuing Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties 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 and the Issuing Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

     SECTION 14.8 No Other Duties, etc. Anything herein to the contrary notwithstanding,
none of the co-syndication agents, co-documentation agents, book manager and lead arranger listed
on the cover page or signature pages hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the
Administrative Agent, a Lender or the Issuing Lender hereunder.

     SECTION 14.9 Collateral and Guaranty Matters. The Lenders and the Issuing Lender
irrevocably authorize the Administrative Agent, at its option and in its discretion,

     (a) to release any Lien on any Collateral granted to or held by the Administrative Agent, for
the benefit of the Secured Parties, under any Loan Document (i) upon repayment of the outstanding
principal of and all accrued interest on the Loans, payment of all outstanding fees and expenses
hereunder, the termination of the Lenders’ Commitments and the expiration or

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termination (or cash collateralization or other satisfaction, in form and substance acceptable
to the Administrative Agent and the Issuing Lender) of all Letters of Credit, (ii) that is sold or
to be sold as part of or in connection with any sale permitted hereunder or under any other Loan
Document, or (iii) subject to Section 15.11, if approved, authorized or ratified in writing
by the Required Lenders or all Lenders, as the case may be;

     (b) to subordinate any Lien on any Collateral granted to or held by the Administrative Agent
under any Loan Document to the holder of any Lien on such Collateral that is permitted by
Section 12.2(g); and

     (c) to release any Subsidiary Guarantor from its obligations under this Agreement if such
Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

     Upon request by the Administrative Agent at any time, the requisite Lenders and the Issuing
Lender will confirm in writing the Administrative Agent’s authority to release or subordinate its
interest in particular types or items of property, or to release any Subsidiary Guarantor from its
obligations under this Agreement pursuant to this Section 14.9.

ARTICLE 15.

MISCELLANEOUS

     SECTION 15.1 Notices.

     (a) Method of Communication. Except as otherwise provided in this Agreement, all
notices and communications hereunder shall be in writing (for purposes hereof, the term “writing”
shall include information in electronic format such as electronic mail and internet web pages), or
by telephone subsequently confirmed in writing. Any notice shall be effective if delivered by hand
delivery or sent via electronic mail, posting on an internet web page, telecopy, recognized
overnight courier service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or sent by electronic
mail, posting on an internet web page or telecopy, (ii) on the next Business Day if sent by
recognized overnight courier service and (iii) on the third Business Day following the date sent by
certified mail, return receipt requested; provided, however, that any notice of
Default or Event of Default delivered by the Administrative Agent to any Credit Party shall, if
delivered by electronic mail, be delivered by telecopy, recognized overnight courier service or
certified mail, return receipt requested, also. A telephonic notice to the Administrative Agent as
understood by the Administrative Agent will be deemed to be the controlling and proper notice in
the event of a failure to receive a confirming written notice and, in connection with any request
for a Loan or a Letter of Credit, in the event of a discrepancy with a confirming written notice.

     (b) Addresses for Notices. Notices to any party shall be sent to it at the following
addresses, or any other address as to which all the other parties are notified in writing.

	 	 	 	 	 
	 

	 	If to the Borrowers:
	 	La-Z-Boy Incorporated
	 

	 	 	 	1284 North Telegraph Road
	 

	 	 	 	Monroe, Michigan 48162

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	 	 	 	Attention: Treasurer
	 

	 	 	 	Telephone No.: 734-241-4418
	 

	 	 	 	Telecopy No.:   734-457-2005
	 

	 	 	 	Email: MSkrzypczak@la-z-boy.com
	 
	 	 	 	 
	 

	 	With copies to:
	 	Womble Carlyle Sandridge & Rice, PLLC
	 

	 	 	 	One West Fourth Street
	 

	 	 	 	Winston-Salem, North Carolina 27101
	 

	 	 	 	Attn: Michael L. Drye, Esq.
	 

	 	 	 	Telephone No.: 336-747-6605
	 

	 	 	 	Telecopy No.:   336-726-9005
	 

	 	 	 	Email: mdrye@wcsr.com
	 
	 	 	 	 
	 

	 	If to Wachovia (Central) as
Administrative Agent:
	 	Wachovia Capital Finance Corporation
	 

	 	 	 	150 S. Wacker Drive, Suite 2200
	 

	 	 	 	Chicago, Illinois 60606
	 

	 	 	 	Attention: Portfolio Manager
	 

	 	 	 	Telephone No.: 312-332-0420
	 

	 	 	 	Telecopy No.:   312-332-0424
	 

	 	 	 	Email: daniel.laven@wachovia.com
	 
	 	 	 	 
	 

	 	With copies to:
	 	Paul, Hastings, Janofsky & Walker LLP
	 

	 	 	 	600 Peachtree St., N.E., Suite 2400
	 

	 	 	 	Atlanta, Georgia 30308
	 

	 	 	 	Attention: Chris D. Molen, Esq.
	 

	 	 	 	Telephone No.: 404-815-2210
	 

	 	 	 	Telecopy No.:   404-815-2424
	 

	 	 	 	Email: chrismolen@paulhastings.com
	 
	 	 	 	 
	 

	 	If to any Lender:
	 	To the address set forth on the Register hereto.

     (c) Administrative Agent’s Office. The Administrative Agent hereby designates its
office located at the address set forth above, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrowers and Lenders, as the Administrative
Agent’s Office referred to herein, to which payments due are to be made and at which Loans will be
disbursed and Letters of Credit issued.

     SECTION 15.2 Expenses; Indemnity.

     (a) Costs and Expenses. Each Borrower and each other Credit Party, jointly and
severally, shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent), in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of this Agreement and
the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be

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consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent,
any Lender or the Issuing Lender (including the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the Issuing Lender), in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section 15.2, or (B) in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

     (b) Indemnification by the Borrowers. Each Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and disbursements of any
counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any
third party or by any Borrower arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit
if the documents presented in connection with such demand do not strictly comply with the terms of
such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on
or from any property owned or operated by any Borrower or any of its Subsidiaries, or any
Environmental Claim related in any way to any Borrower or any of their Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought by a third party or
by a Borrower, and regardless of whether any Indemnitee is a party thereto, provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by any Borrower or any
other Credit Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if such Borrower or such Credit Party has obtained a
final and non-appealable judgment in its favor on such claim as determined by a court of competent
jurisdiction.

     (c) Reimbursement by Lenders. To the extent that the Borrowers for any reason fail to
indefeasibly pay any amount required under Section 15.2(a) or 15.2(b) to be paid by
it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender or any Related Party
of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any
such sub-agent), the Issuing Lender or such Related Party, as the case may be, such Lender’s
applicable percentage (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred
by

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or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Lender in
its capacity as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or Issuing Lender in connection with such capacity.
The obligations of the Lenders under this Section 15.2(c) are subject to the provisions of
Section 6.7.

     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
Applicable Law, no Borrower shall assert, and each Borrower hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof. No Indemnitee referred to in Section 15.2(b) shall be liable for any
damages arising from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby.

     (e) Payments. All amounts due under this Section 15.2 shall be payable
promptly after demand therefor.

     SECTION 15.3 Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender, the Issuing Lender, the Swingline Lender and each of their respective
Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted
by Applicable Law, to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender, the Issuing Lender, the Swingline Lender or any such
Affiliate to or for the credit or the account of any Borrower or any other Credit Party against any
and all of the obligations of such Borrower or such Credit Party now or hereafter existing under
this Agreement or any other Loan Document to such Lender, the Issuing Lender or the Swingline
Lender, irrespective of whether or not such Lender, the Issuing Lender or the Swingline Lender
shall have made any demand under this Agreement or any other Loan Document and although such
obligations of such Borrower or such Credit Party may be contingent or unmatured or are owed to a
branch or office of such Lender, the Issuing Lender or the Swingline Lender different from the
branch or office holding such deposit or obligated on such indebtedness. The rights of each
Lender, the Issuing Lender, the Swingline Lender and their respective Affiliates under this
Section 15.3 are in addition to other rights and remedies (including other rights of
setoff) that such Lender, the Issuing Lender, the Swingline Lender or their respective Affiliates
may have. Each Lender, the Issuing Lender and the Swingline Lender agrees to notify the
Administrative Borrower and the Administrative Agent promptly after any such setoff and
application; provided that the failure to give such notice shall not affect the validity of
such setoff and application.

     SECTION 15.4 Governing Law.

     (a) Governing Law. This Agreement and the other Loan Documents, unless otherwise
expressly set forth therein, shall be governed by, construed and enforced in accordance

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with and all issues related to the legality, validity or enforceability hereof and thereof
shall be determined under the laws of the State of North Carolina, without reference to the
conflicts of choice of law principles thereof.

     (b) Submission to Jurisdiction. Each Borrower irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State
of North Carolina sitting in Mecklenburg County and of the United States District Court sitting in
Mecklenburg County, North Carolina, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such North Carolina State court or, to the fullest extent permitted by Applicable
Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan
Document shall affect any right that the Administrative Agent, any Lender or the Issuing Lender may
otherwise have to bring any action or proceeding relating to this Agreement or any other Loan
Document against any Borrower or its properties in the courts of any jurisdiction.

     (c) Waiver of Venue. Each Borrower and each other Credit Party irrevocably and
unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it
may now or hereafter have to the laying of venue of any action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court referred to in Section
15.4(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted
by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

     (d) Service of Process. Each party hereto irrevocably consents to service of process
in the manner provided for notices in Section 15.1. Nothing in this Agreement will affect
the right of any party hereto to serve process in any other manner permitted by Applicable Law.

     SECTION 15.5 Waiver of Jury Trial; Binding Arbitration.

     (a) Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS

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BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.5.

     (b) Binding Arbitration. Upon demand of any party, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Agreement or any other Loan Document (“Disputes”), between or
among parties hereto and to the other Loan Documents shall be resolved by binding arbitration as
provided herein. Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include tort claims, counterclaims, claims
brought as class actions, claims arising from Loan Documents executed in the future, disputes as to
whether a matter is subject to arbitration, or claims concerning any aspect of the past, present or
future relationships arising out of or connected with the Loan Documents. Arbitration shall be
conducted under and governed by the Commercial Financial Disputes Arbitration Rules (the
“Arbitration Rules”) of the American Arbitration Association (the “AAA”) and the
Federal Arbitration Act. All arbitration hearings shall be conducted in Charlotte, North Carolina.
The expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. All applicable statutes of limitations shall apply
to any Dispute. A judgment upon the award may be entered in any court having jurisdiction.
Notwithstanding anything foregoing to the contrary, any arbitration proceeding demanded hereunder
shall begin within ninety (90) days after such demand therefor and shall be concluded within one
hundred twenty (120) days after such demand. These time limitations may not be extended unless a
party hereto shows cause for extension and then such extension shall not exceed a total of sixty
(60) days. The panel from which all arbitrators are selected shall be comprised of licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The single
arbitrator selected for expedited procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the hearing will be conducted. The
parties hereto do not waive any applicable federal or state substantive law except as provided
herein. Notwithstanding the foregoing, this paragraph shall not apply to any Hedging Agreement.

     (c) Preservation of Certain Remedies. Notwithstanding the preceding binding
arbitration provisions, the parties hereto and the other Loan Documents preserve, without
diminution, certain remedies that such Persons may employ or exercise freely, either alone, in
conjunction with or during a Dispute. Each such Person shall have and hereby reserves the right to
proceed in any court of proper jurisdiction or by self help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or under Applicable Law
or by judicial foreclosure and sale, including a proceeding to confirm the sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set off, and peaceful
possession of property, (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies
that may be requested by a party in a Dispute.

     SECTION 15.6 Reversal of Payments. To the extent any Borrower makes a payment or
payments to the Administrative Agent for the ratable benefit of the Lenders or the

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Administrative Agent receives any payment or proceeds of the collateral which payments or
proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state, provincial or federal (United States or Canada) law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the Obligations or part
thereof intended to be satisfied shall be revived and continued in full force and effect as if such
payment or proceeds had not been received by the Administrative Agent.

     SECTION 15.7 Injunctive Relief. Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders. Therefore, each
Borrower agrees that the Lenders, at the Lenders’ option, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving actual damages.

     SECTION 15.8 Accounting Matters. All financial and accounting calculations,
measurements and computations made for any purpose relating to this Agreement, including all
computations utilized by the Parent or any Subsidiary thereof to determine compliance with any
covenant contained herein, shall, except as otherwise expressly contemplated hereby or unless there
is an express written direction by the Administrative Agent to the contrary agreed to by the
Parent, be performed in accordance with GAAP as in effect on the Closing Date. In the event that
changes in GAAP shall be mandated by the Financial Accounting Standards Board, or any similar
accounting body of comparable standing, or shall be recommended by the Parent’s certified public
accountants, to the extent that such changes would modify such accounting terms or the
interpretation or computation thereof, such changes shall be followed in defining such accounting
terms only from and after the date the Borrowers and the Required Lenders shall have amended this
Agreement to the extent necessary to reflect any such changes in the financial covenants and other
terms and conditions of this Agreement.

     SECTION 15.9 Successors and Assigns; Register; Participations.

     (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that no Borrower nor any other Credit Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of Section 15.9(b), (ii) by way of participation in accordance with the
provisions of Section 15.9(d) or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of Section 15.9(f) (and any other attempted assignment
or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent provided in
Section 15.9(d) and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

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     (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all, or any ratable portion of all, of the Obligations, the Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan Documents;
provided that

     (i) except in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if the
applicable Commitment is not then in effect, the principal outstanding balance of the Loans
of the assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date) shall not be less than $5,000,000, unless such assignment is made to an existing
Lender or to an Affiliate thereof, in which case no minimum amount shall apply, unless each
of the Administrative Agent and, so long as no Default or Event of Default has occurred and
is continuing, the Administrative Borrower shall otherwise consent (each such consent not to
be unreasonably withheld or delayed); provided that the Administrative Borrower
shall be deemed to have given its consent five (5) Business Days after the date written
notice thereof has been delivered by the assigning Lender (through the Administrative Agent)
unless such consent is expressly refused by the Administrative Borrower prior to such fifth
(5th) Business Day;

     (ii) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement with respect to the
Loan or the Commitment assigned;

     (iii) any assignment must be approved by the Administrative Agent, the Swingline Lender
and the Issuing Lender unless the Person that is the proposed assignee is itself a Lender or
an Affiliate of a Lender; and

     (iv) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation fee of
$3,500, and the Eligible Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section
15.9(c), from and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 6.8, 6.9, 6.10, 6.11 and
15.2 with respect to facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement
that does not

123

 

comply with this Section 15.9(b) shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance with Section
15.9(d).

     (c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in Chicago, Illinois, a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the “Register”). The entries in the Register shall
be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers and any Lender, with respect to such Lender’s information
contained therein, at any reasonable time and from time to time upon reasonable prior notice.

     (d) Participations. Any Lender may at any time, without the consent of, or notice to,
any Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person or any Borrower or any Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all, or any ratable portion of all, of the Obligations, the Commitments
and the other rights and obligations of such Lender hereunder and under the other Loan Documents;
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

     Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver or modification described in
Section 15.11 that directly affects such Participant. Subject to Section 15.9(e),
each Borrower agrees that each Participant shall be entitled to the benefits of Sections
6.8, 6.9, 6.10 and 6.11 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to Section 15.9(b). To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 15.3
as though it were a Lender; provided such Participant agrees to be subject to Section
6.6 as though it were a Lender.

     (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Sections 6.9 and 6.10 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Administrative Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not
be entitled to the benefits of Section 6.11 unless the Administrative Borrower is notified
of the participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 6.11(e) as though it were a Lender.

124

 

     (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

     SECTION 15.10 Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to the directors, officers, employees and agents of the
Administrative Agent, any Lender or any of their respective Affiliates, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by, or required to be disclosed to, any
rating agency, or regulatory or similar authority (including any self-regulatory authority, such as
the National Association of Insurance Commissioners), (c) to the extent required by Applicable Laws
or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies under this Agreement or under any other Loan Document
(or any Lender Hedging Agreement) or any action or proceeding relating to this Agreement or any
other Loan Document (or any Lender Hedging Agreement) or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the same as those of
this Section 15.10, to (i) any purchasing Lender, proposed purchasing Lender, Participant
or proposed Participant or (ii) any actual or prospective counterparty (or its advisors) to any
swap or derivative transaction relating to any Borrower and any Borrower’s obligations, (g) with
the consent of the Parent, (h) to Gold Sheets and other similar bank trade publications,
such information to consist of deal terms and other information customarily found in such
publications, or (i) to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section 15.10 or (y) becomes available to the Administrative
Agent or any Lender on a non-confidential basis from a source other than a Borrower. For purposes
of this Section 15.10, “Information” means all information received from any
Borrower, any Subsidiary thereof or any of their respective Affiliates relating to any Borrower,
any Subsidiary thereof or any of their respective Affiliates or businesses, other than any such
information that is available to the Administrative Agent or any Lender on a non-confidential basis
prior to disclosure by any Borrower or any Subsidiary. Any Person required to maintain the
confidentiality of Information as provided in this Section 15.10 shall be considered to
have complied with its obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to its own
confidential information.

     SECTION 15.11 Amendments, Waivers and Consents. Except as set forth below or as
specifically provided in any Loan Document, any term, covenant, agreement or condition of this
Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing
signed by the Required Lenders (or by the Administrative Agent with the consent of the Required
Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by each
Borrower; provided, that no amendment, waiver or consent shall:

125

 

     (a) except as otherwise provided in Article 2, waive any condition set forth in
Section 7.2 without the written consent of each Lender;

     (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 13.2) or, except as otherwise provided in Section 2.7, the
amount of Loans of any Lender 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) 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 the
Reimbursement Obligation, or (subject to clause (iv) of the second proviso to this
Section 15.11) any fees or other amounts 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 waive any obligation of the Borrowers to
pay interest at the rate set forth in Section 6.1(c) during the continuance of an Event of
Default; provided that (i) only the consent of the Required Lenders shall be necessary to
waive any obligation of the Borrowers to pay interest at the rate set forth in Section
6.1(c) during the continuance of an Event of Default, and (ii) only the consent of the
Supermajority Lenders shall be necessary to amend the definition of Excess Availability (or any
defined term used therein) even if the effect of such amendment would be to reduce the rate of
interest on any Loan or L/C Obligation or to reduce any fee payable hereunder;

     (e) change Section 6.4 in a manner that would alter the pro rata
sharing of payments required thereby, or change the order of payment set forth in Section
6.4(b) or 6.4(c) without the written consent of each Lender adversely affected thereby;

     (f) change the definition of Borrowing Base or any of the defined terms (including the
definitions of Eligible Accounts and Eligible Inventory) that are used in such definition to the
extent that any such change results in more credit being made available to the Borrowers based upon
the Borrowing Base, but not otherwise, or the definition of Aggregate Commitment, without the
written consent of each Lender;

     (g) change any provision of this Section 15.11 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;

     (h) amend the definition of Eligible Assignee or Section 15.9 to permit a Credit Party
or an Affiliate of a Credit Party to be permitted to become an Eligible Assignee without the
written consent of each Lender;

     (i) release all of the Subsidiary Guarantors or release Subsidiary Guarantors comprising
substantially all of the credit support for the Obligations, in either case, from the guaranty set
forth in Section 5 or any other guaranty of the Obligations (other than as authorized in
Section 14.9), without the written consent of each Lender; or

126

 

     (j) release the La-Z-Boy Incorporated trademark or all or a material portion of the other
Collateral or release any Security Document (other than as authorized in Section 14.9 or as
otherwise specifically permitted or contemplated in this Agreement or the applicable Security
Document) without the written consent of each Lender;

provided, further that (i) no amendment, waiver or consent shall, unless in writing
and signed by the Issuing Lender in addition to the Lenders required above, affect the rights or
duties of the Issuing Lender under this Agreement or any 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 Swingline Lender in addition to the Lenders required above, affect the rights or
duties of the Swingline Lender under this Agreement; (iii) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the Lenders required above,
affect the rights or duties of the Administrative Agent under this Agreement or any other Loan
Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or extended without the
consent of such Lender.

     SECTION 15.12 Performance of Duties. Each of the Credit Party’s obligations under
this Agreement and each of the other Loan Documents shall be performed by such Credit Party at its
sole cost and expense.

     SECTION 15.13 All Powers Coupled with Interest. All powers of attorney and other
authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the
Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other
Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of
the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit
Facility has not been terminated.

     SECTION 15.14 Survival of Indemnities. Notwithstanding any termination of this
Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the
provisions of this Article 15 and any other provision of this Agreement and the other Loan
Documents shall continue in full force and effect and shall protect the Administrative Agent and
the Lenders against events arising after such termination as well as before.

     SECTION 15.15 Titles and Captions. Titles and captions of Articles, Sections,
subsections and clauses in, and the table of contents of, this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.

     SECTION 15.16 Severability of Provisions. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision or the remaining provisions hereof or thereof or
affecting the validity or enforceability of such provision in any other jurisdiction.

127

 

     SECTION 15.17 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and shall be binding upon all parties and their
successors and assigns, and all of which taken together shall constitute one and the same
agreement. Any signatures delivered by a party by facsimile transmission or by other electronic
method of transmission shall be deemed an original signature hereto. Any party delivering an
executed counterpart of this Agreement by facsimile or by other electronic method of transmission
also shall deliver an original executed counterpart of such agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.

     SECTION 15.18 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject matter hereof and
thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event
of any conflict between the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of supplemental
rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document
shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither against nor in favor
of any party, but rather in accordance with the fair meaning thereof.

     SECTION 15.19 Term of Agreement. This Agreement shall remain in effect from the
Closing Date through and including the date upon which all Obligations arising hereunder or under
any other Loan Document shall have been indefeasibly and irrevocably paid and satisfied in full and
all Commitments have been terminated. No termination of this Agreement shall affect the rights and
obligations of the parties hereto arising prior to such termination or in respect of any provision
of this Agreement which survives such termination.

     SECTION 15.20 Advice of Counsel. Each of the parties represents to each other party
hereto that it has discussed this Agreement with its counsel.

     SECTION 15.21 No Strict Construction. The parties hereto 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
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

     SECTION 15.22 Inconsistencies with Other Documents; Independent Effect of Covenants.

     (a) In the event there is a conflict or inconsistency between this Agreement and any other
Loan Document, the terms of this Agreement shall control; provided, that any provision of
the Security Documents which imposes additional burdens on any Borrower or any of their
Subsidiaries or further restricts the rights of any Borrower or any of their Subsidiaries or gives
the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or
inconsistent with this Agreement and shall be given full force and effect.

128

 

     (b) Each Borrower expressly acknowledges and agrees that each covenant contained in
Article 10, 11, or 12 shall be given independent effect. Accordingly, no
Borrower shall engage in any transaction or other act otherwise permitted under any covenant
contained in Article 10, 11, or 12 if, before or after giving effect to
such transaction or act, any Borrower shall or would be in breach of any other covenant contained
in Article 10, 11, or 12.

     SECTION 15.23 Fax Transmission. A facsimile, telecopy or other reproduction of this
Agreement may be executed by one or more parties hereto, and an executed copy of this Agreement may
be delivered by one or more parties hereto by facsimile or similar instantaneous electronic
transmission device pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties hereto agree to execute an original of this Agreement
as well as any facsimile, telecopy or other reproduction hereof.

     SECTION 15.24 USA Patriot Act. The Administrative Agent and each Lender hereby
notifies each Borrower 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 Borrowers and Subsidiary Guarantors, which information
includes the name and address of the Borrowers and Subsidiary Guarantors and other information that
will allow such Lender to identify the Borrowers and Subsidiary Guarantors in accordance with the
Act.

     SECTION 15.25 Debtor-Creditor Relationship. The relationship between the Lenders and
the Administrative Agent, on the one hand, and the Credit Parties, on the other hand, is solely
that of creditor and debtor. No member of the Lender Group has (or shall be deemed to have) any
fiduciary relationship or duty to any Credit Party arising out of or in connection with the Loan
Documents or the transactions contemplated thereby, and there is no agency or joint venture
relationship between the members of the Lender Group, on the one hand, and the Credit Parties, on
the other hand, by virtue of any Loan Document or any transaction contemplated therein.

     SECTION 15.26 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
appoints the Parent as the borrowing agent and attorney-in-fact for all Borrowers (the
“Administrative Borrower”) which appointment shall remain in full force and effect unless
and until the Administrative Agent shall have received prior written notice signed by each Borrower
that such appointment has been revoked and that another Borrower has been appointed the
Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (a) to provide the Administrative Agent with all notices with respect to
Loans and Letters of Credit obtained for the benefit of any Borrower and all other notices and
instructions under this Agreement and (b) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Loans and Letters of Credit and to exercise such other powers
as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the account maintained by the Administrative Agent as described in Section
6.5(a) and Collateral of the Borrowers in a combined fashion, as more fully set forth herein,
is done solely as an accommodation to the Borrowers in order to utilize the collective borrowing
powers of the Borrowers in the most efficient and economical manner and at their request, and that
the Lender Group shall not incur liability to any Borrower as a result of the

129

 

foregoing. Each Borrower expects to derive benefit, directly or indirectly, from the handling
of the account maintained by the Administrative Agent as described in Section 6.5(a) and
the Collateral in a combined fashion since the successful operation of each Borrower is dependent
on the continued successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify
each member of the Lender Group and hold each member of the Lender Group harmless against any and
all liability, expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of
the account maintained by the Administrative Agent as described in Section 6.5(a) and
Collateral of the Borrowers as herein provided, (b) the Lender Group’s relying on any instructions
of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder or
under the other Loan Documents, except that the Borrowers will have no liability to the relevant
Indemnitee under this Section 15.26 with respect to any liability that has been determined
by a court of competent jurisdiction by final and non-appealable judgment to have resulted solely
from the gross negligence or willful misconduct of such Indemnitee.

     SECTION 15.27 Bank Product Providers. Each Bank Product Provider shall be deemed a
third party beneficiary hereof and of the provisions of the other Loan Documents for purposes of
any reference in a Loan Document to the parties from whom the Administrative Agent is acting, it
being understood and agreed that the rights and benefits of such Bank Product Provider under the
Loan Documents consist exclusively of such Bank Product Provider’s right to share in payments and
collections of the Collateral as more fully set forth herein. In connection with any such
distribution of payments and collections, the Administrative Agent shall be entitled to assume no
amounts are due to any Bank Product Provider unless such Bank Product Provider has notified the
Administrative Agent in writing of the amount of any such liability owed to it prior to such
distribution.

[Signature pages to follow]

130

 

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

	 	 	 	 	 
	BORROWERS: 	LA-Z-BOY INCORPORATED, a Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	KINCAID FURNITURE COMPANY, INCORPORATED, a Delaware corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	ENGLAND, INC., a Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	BAUHAUS U.S.A., INC., a Mississippi corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LA-Z-BOY CANADA LIMITED, an Ontario corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	LA-Z-BOY GREENSBORO, INC., a North Carolina corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LZB MANUFACTURING, INC., a Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	SUBSIDIARY GUARANTORS: 	LADD TRANSPORTATION, INC., a North Carolina corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LA-Z-BOY LOGISTICS, INC., a Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LZB CAROLINA PROPERTIES, INC., a Michigan

corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LZB FURNITURE GALLERIES OF PARAMUS, INC., a

Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LZB FURNITURE GALLERIES OF ST. LOUIS, INC., a

Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	LZB RETAIL, INC., a Michigan corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LA-Z-BOY SHOWCASE SHOPPES, INC., an
Indiana corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LZB DELAWARE VALLEY PROPERTIES, INC., a Michigan corporation	 
	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	LZB DELAWARE VALLEY INC., a Delaware corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	MONTGOMERYVILLE HOME FURNISHINGS, INC., a

Pennsylvania corporation

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	LZB FURNITURE GALLERIES OF WASHINGTON

 D.C., INC., a
Michigan corporation
	 
	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 
	 	LZB FURNITURE GALLERIES OF KANSAS CITY,

 INC., a
Michigan corporation
	 
	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 
	 	LZB FURNITURE GALLERIES OF BOSTON, INC., a 

Michigan
corporation
	 
	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 
	 	LZBFG OF SOUTH FLORIDA, LLC, a Michigan limited

liability company
	 
	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 
	 	LZB FINANCE, INC., a Michigan corporation 	 
	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	BOCA RATON GALLERIES, LLC, a Michigan limited

liability company

 	 
	 	By:  	/s/ Louis M. Riccio, Jr. 	 
	 	 	Name:  	Louis M. Riccio, Jr. 	 
	 	 	Title:  	Senior Vice President and

Chief Financial Officer 	 
	 

Credit Agreement

 

 

	 	 	 	 	 	 	 
	ADMINISTRATIVE AGENT AND

 THE LENDERS:	 	WACHOVIA CAPITAL
FINANCE CORPORATION (CENTRAL), 

as Administrative Agent, Issuing Lender, Swingline Lender
and a Lender
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Howard Kim 	 	 
	 

	 	 	 	 

Name: Howard Kim 

Title:   Managing Director
	 	 

Credit Agreement

 

 

	 	 	 	 	 
	 	NATIONAL CITY BANK, as the Issuing
Lender

as a Lender

 	 
	 	By:  	/s/
Jennifer Obers 	 
	 	 	Name:  	Jennifer Obers 	 
	 	 	Title:  	Portfolio Manager 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	NATIONAL CITY BUSINESS CREDIT, INC.,
as
a Lender

 	 
	 	By:  	/s/
Craig G. Nutbrown	 
	 	 	Name:  	Craig G. Nutbrown	 
	 	 	Title:  	Director	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as the
Issuing Lender and a Lender

 	 
	 	By:  	/s/
John Psellas
	 
	 	 	Name:  	John Psellas	 
	 	 	Title:  	Vice President	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION,
as a Lender

 	 
	 	By:  	/s/
Eric L. Moore 	 
	 	 	Name:  	Eric L. Moore 	 
	 	 	Title:  	VP 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	BRANCH BANKING AND TRUST COMPANY,
as the Issuing Lender and a Lender

 	 
	 	By:  	/s/
JENNIFER L. CUDD 	 
	 	 	Name:  	JENNIFER L. CUDD 	 
	 	 	Title:  	SENIOR VICE PRESIDENT 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	BURDALE FINANCIAL LIMITED, as a Lender

 	 
	 	By:  	/s/
JASON SCHICK 	 
	 	 	Name:  	JASON SCHICK 	 
	 	 	Title:  	VICE PRESIDENT 	 
	 
	 	By:  	/s/
DAVID GRENDE 	 
	 	 	Name:  	DAVID GRENDE 	 
	 	 	Title:  	MANAGING DIRECTOR 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	COMERICA BANK,
as a Lender

 	 
	 	By:  	/s/
Steven J. McCormack 	 
	 	 	Name:  	Steven J. McCormack 	 
	 	 	Title:  	Vice President 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	SUNTRUST BANK, as the Issuing Lender and a Lender

 	 
	 	By:  	/s/
Stephen D. Metts 	 
	 	 	Name:  	Stephen D. Metts 	 
	 	 	Title:  	Director 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender

 	 
	 	By:  	/s/
Brian Conole 	 
	 	 	Name:  	Brian Conole 	 
	 	 	Title:  	Senior Vice President 	 
	 

Credit Agreement

 

 

	 	 	 	 	 
	 	WELLS FARGO FOOTHILL, LLC, as a Lender

 	 
	 	By:  	/s/
Jeff Royston 	 
	 	 	Name:  	Jeff Royston 	 
	 	 	Title:  	V.P. 	 
	 

Credit Agreement

 

 

EXHIBIT A-1

FORM OF REVOLVING CREDIT NOTE

			
	US $[                                        ]                     
	 	[                                                    , 20       ]

     FOR VALUE RECEIVED, the undersigned, LA-Z-BOY INCORPORATED, a Michigan corporation, KINCAID
FURNITURE COMPANY, INCORPORATED, a Delaware corporation, ENGLAND, INC., a Michigan corporation,
BAUHAUS U.S.A., INC., a Mississippi corporation, LA-Z-BOY CANADA LIMITED, an Ontario corporation,
LA-Z-BOY GREENSBORO, INC., a North Carolina corporation and LZB MANUFACTURING, INC., a Michigan
corporation (hereinafter, together with their respective successors and assigns, each of the
foregoing is referred to individually as a “Borrower” and collectively as the
“Borrowers”), hereby, jointly and severally, promises to pay to the order of
[                                        ] (hereinafter, together with its successors and assigns, the
“Lender”), at the office of Administrative Agent (as defined below), in immediately
available funds, the principal sum of [                                        ] and [                    ]/100s DOLLARS
($[                                        ]) of United States funds, or, if less, so much thereof as may from time to time
be advanced as Revolving Credit Loans by the Lender to the Borrowers under the Credit Agreement (as
defined below), plus interest as hereinafter provided. Such Revolving Credit Loans may be endorsed
from time to time on the grid attached hereto, but the failure to make such notations shall not
affect the validity of the Borrowers’ obligation to repay unpaid principal and interest hereunder.

     This Revolving Credit Note (this “Revolving Note”) is one of the Revolving Credit
Notes referred to in that certain Credit Agreement, dated as of February 6, 2008, by and among
La-Z-Boy Incorporated, a Michigan corporation (“Parent”), the Subsidiaries of Parent party
thereto, the lenders who are or may become a party thereto from time to time (the
“Lenders”) and Wachovia Capital Finance Corporation (Central), as administrative agent
(“Administrative Agent”) (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”). All capitalized terms used herein shall have the
meanings ascribed to such terms in the Credit Agreement except to the extent such capitalized terms
are otherwise defined or limited herein.

     All principal amounts and other Obligations then outstanding hereunder shall be due and
payable in full on the Revolving Credit Maturity Date, or such earlier date as the Revolving Credit
Loans shall be due and payable in full, whether by acceleration or otherwise, pursuant to the
Credit Agreement. The Borrowers also shall repay the principal outstanding hereunder from time to
time as provided in the Credit Agreement.

     The Borrowers shall be entitled to borrow, repay and re-borrow funds hereunder pursuant to the
terms and conditions of the Credit Agreement. Prepayment of the principal amount of any Revolving
Credit Loan may be made only as provided in the Credit Agreement.

     The Borrowers hereby, jointly and severally, promise to pay interest on the unpaid principal
amount hereof as provided in Article 6 of the Credit Agreement. Interest under this Revolving Note
also shall be due and payable when this Revolving Note shall become due (whether at maturity, by
reason of acceleration or otherwise). The Obligations shall bear interest payable at the default
interest rate set forth in 

Section 6.1(d) of the Credit Agreement in the manner and at the
times provided in the Credit Agreement.

 

 

     In no event shall the amount of interest due or payable hereunder exceed the maximum rate of
interest allowed by applicable law, and in the event any such payment is inadvertently made by any
Borrower or inadvertently received by the Lender, then such excess sum shall be credited as a
payment of principal, unless such Borrower shall notify the Lender in writing that it elects to
have such excess sum returned forthwith. It is the express intent hereof that the Borrowers not
pay, and the Lender not receive, directly or indirectly, in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrowers under applicable law.

     All parties now or hereafter liable with respect to this Revolving Note, whether any Borrower,
any guarantor, endorser or any other Person, hereby waive presentment for payment, demand, notice
of non-payment or dishonor, protest, notice of protest and notice of any other kind whatsoever.

     No delay or omission on the part of the Lender or any holder hereof in exercising its rights
under this Revolving Note, or delay or omission on the part of the Lender, Administrative Agent,
the Lenders or the Required Lenders, or any of them, in exercising its or their rights under the
Credit Agreement or under any other Loan Document, or course of conduct relating thereto, shall
operate as a waiver of such rights or any other right of the Lender or any holder hereof, nor shall
any waiver by the Lender, Administrative Agent, the Lenders or the Required Lenders, or any of
them, or any holder hereof, of any such right or rights on any one occasion be deemed a bar to, or
waiver of, the same right or rights on any future occasion.

     The Borrowers hereby, jointly and severally, promise to pay all costs of collection,
including, without limitation, reasonable attorneys’ fees, should this Revolving Note be collected
by or through an attorney-at-law or under advice therefrom.

     Time is of the essence in this Revolving Note.

     This Revolving Note evidences the Lender’s portion of the Revolving Credit Loans under, and is
entitled to the benefits and subject to the terms of, the Credit Agreement, which contains
provisions with respect to the acceleration of the maturity of this Revolving Note upon the
happening of certain stated events, and provisions for prepayment and repayment. This Revolving
Note is secured by and is also entitled to the benefits of the Loan Documents to the extent
provided therein and any other agreement or instrument providing collateral for the Revolving
Credit Loans, whether now or hereafter in existence, and any filings, instruments, agreements and
documents relating thereto and providing collateral for the Revolving Credit Loans.

     This Revolving Note shall be construed in accordance with and governed by the laws of the
State of North Carolina, without reference to the conflicts or choice of law principles thereof.

[Remainder of this page intentionally left blank.]

 

 

     IN WITNESS WHEREOF, a duly authorized officer of each Borrower as an authorized signatory has
executed this Revolving Note under seal as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	LA-Z-BOY INCORPORATED, a Michigan corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	KINCAID FURNITURE COMPANY, INCORPORATED, a Delaware

corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	ENGLAND, INC., a Michigan corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	BAUHAUS U.S.A., INC., a Mississippi corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	LA-Z-BOY CANADA LIMITED, an Ontario corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

Revolving
Credit Note

 

 

	 	 	 	 	 	 	 
	 	 	LA-Z-BOY GREENSBORO, INC., a North Carolina
corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	LZB MANUFACTURING, INC., a Michigan corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

Revolving
Credit Note

 

 

REVOLVING LOANS

 

	 	 	 	 	 	 	 	 	 
	DATE
	 	AMOUNT OF REVOLVING

LOAN
	 	TYPE OF REVOLVING

LOAN
	 	AMOUNT OF PRINCIPAL

PAID OR PREPAID
	 	NOTATION MADE

 

 

EXHIBIT A-2

FORM OF SWINGLINE NOTE

			
	US $[                                        ]                    
	 	[                                              , 20                    ]

     FOR VALUE RECEIVED, the undersigned, LA-Z-BOY INCORPORATED, a Michigan corporation, KINCAID
FURNITURE COMPANY, INCORPORATED, a Delaware corporation, ENGLAND, INC., a Michigan corporation,
BAUHAUS U.S.A., INC., a Mississippi corporation, LA-Z-BOY CANADA LIMITED, an Ontario corporation,
LA-Z-BOY GREENSBORO, INC., a North Carolina corporation and LZB MANUFACTURING, INC., a Michigan
corporation (hereinafter, together with their respective successors and assigns, each of the
foregoing is referred to individually as a “Borrower” and collectively as the
“Borrowers”), hereby, jointly and severally, promises to pay to the order of
[                                                            ] (hereinafter, together with its successors and assigns, the
“Swingline Lender”), at the office of Administrative Agent (as defined below), in
immediately available funds, the principal sum of [                                                            ] and [                    ]/100s DOLLARS
($[                                        ]) of United States funds, or, if less, so much thereof as may from time to time
be advanced as Swingline Loans by the Swingline Lender to the Borrowers under the Credit Agreement
(as defined below), plus interest as hereinafter provided.

     This Swingline Note (this “Swingline Note”) is the Swingline Note referred to in that
certain Credit Agreement, dated as of February 6, 2008, by and among La-Z-Boy Incorporated, a
Michigan corporation (“Parent”), the Subsidiaries of Parent party thereto, the lenders who
are or may become a party thereto from time to time (the “Lenders”) and Wachovia Capital
Finance Corporation (Central), as administrative agent (“Administrative Agent”) (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). All capitalized terms used herein shall have the meanings ascribed to such terms
in the Credit Agreement except to the extent such capitalized terms are otherwise defined or
limited herein.

     All principal amounts and other Obligations then outstanding hereunder shall be due and
payable in full on the Revolving Credit Maturity Date, or such earlier date as the Swingline Loans
shall be due and payable in full, whether by acceleration or otherwise, pursuant to the Credit
Agreement. The Borrowers also shall repay the principal outstanding hereunder from time to time as
provided in the Credit Agreement.

     The Borrowers shall be entitled to borrow, repay and re-borrow funds hereunder pursuant to the
terms and conditions of the Credit Agreement. Prepayment of the principal amount of any Swingline
Loan may be made only as provided in the Credit Agreement.

     The Borrowers hereby, jointly and severally, promise to pay interest on the unpaid principal
amount hereof as provided in Article 6 of the Credit Agreement. Interest under this Swingline Note
also shall be due and payable when this Swingline Note shall become due (whether at maturity, by
reason of acceleration or otherwise). The

 

 

Obligations shall bear interest payable at the default interest rate set forth in Section
6.1(d) of the Credit Agreement in the manner and at the times provided in the Credit Agreement.

     In no event shall the amount of interest due or payable hereunder exceed the maximum rate of
interest allowed by applicable law, and in the event any such payment is inadvertently made by any
Borrower or inadvertently received by the Swingline Lender, then such excess sum shall be credited
as a payment of principal, unless such Borrower shall notify the Swingline Lender in writing that
it elects to have such excess sum returned forthwith. It is the express intent hereof that the
Borrowers not pay, and the Swingline Lender not receive, directly or indirectly, in any manner
whatsoever, interest in excess of that which may legally be paid by the Borrowers under applicable
law.

     All parties now or hereafter liable with respect to this Swingline Note, whether any Borrower,
any guarantor, endorser or any other Person, hereby waive presentment for payment, demand, notice
of non-payment or dishonor, protest, notice of protest and notice of any other kind whatsoever.

     No delay or omission on the part of the Swingline Lender or any holder hereof in exercising
its rights under this Swingline Note, or delay or omission on the part of the Swingline Lender,
Administrative Agent, the Lenders or the Required Lenders, or any of them, in exercising its or
their rights under the Credit Agreement or under any other Loan Document, or course of conduct
relating thereto, shall operate as a waiver of such rights or any other right of the Swingline
Lender or any holder hereof, nor shall any waiver by the Swingline Lender, Administrative Agent,
the Lenders or the Required Lenders, or any of them, or any holder hereof, of any such right or
rights on any one occasion be deemed a bar to, or waiver of, the same right or rights on any future
occasion.

     The Borrowers hereby, jointly and severally, promise to pay all costs of collection,
including, without limitation, reasonable attorneys’ fees, should this Swingline Note be collected
by or through an attorney-at-law or under advice therefrom.

     Time is of the essence in this Swingline Note.

     This Swingline Note evidences the Swingline Lender’s portion of the Swingline Loans under, and
is entitled to the benefits and subject to the terms of, the Credit Agreement, which contains
provisions with respect to the acceleration of the maturity of this Swingline Note upon the
happening of certain stated events, and provisions for prepayment and repayment. This Swingline
Note is secured by and is also entitled to the benefits of the Loan Documents to the extent
provided therein and any other agreement or instrument providing collateral for the Swingline
Loans, whether now or hereafter in existence, and any filings, instruments, agreements and
documents relating thereto and providing collateral for the Swingline Loans.

 

 

     This Swingline Note shall be construed in accordance with and governed by the laws of the
State of North Carolina, without reference to the conflicts or choice of law principles thereof.

[Remainder of this page intentionally left blank.]

 

 

     IN WITNESS WHEREOF, a duly authorized officer of each Borrower as an authorized signatory has
executed this Swingline Note under seal as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	LA-Z-BOY INCORPORATED, a Michigan corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	KINCAID FURNITURE COMPANY, INCORPORATED, a Delaware

corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	ENGLAND, INC., a Michigan corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	BAUHAUS U.S.A., INC., a Mississippi corporation
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	LA-Z-BOY CANADA LIMITED, an Ontario corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

Swingline
Note

 

 

	 	 	 	 	 	 	 
	 	 	LA-Z-BOY GREENSBORO, INC., a North Carolina
corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:

Title:	 	 

(SEAL)

	 	 	 	 	 	 	 
	 	 	LZB MANUFACTURING, INC., a Michigan corporation
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

(SEAL)

Swingline
Note

 

 

EXHIBIT B

FORM OF NOTICE OF BORROWING

Date:                     , 20__

			
	To:	 	Wachovia Capital Finance Corporation (Central), as administrative agent (“Administrative
Agent”) under that certain Credit Agreement, dated as of February 6, 2008, by and among
La-Z-Boy Incorporated, a Michigan corporation (“Administrative Borrower”), the
Subsidiaries of Administrative Borrower party thereto, the lenders who are or may become party
thereto from time to time (the “Lenders”) and Administrative Agent (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Capitalized terms used herein without definition shall have the respective
meanings ascribed to such terms in the Credit Agreement.

Ladies and Gentlemen:

          The undersigned, Administrative Borrower, refers to the Credit Agreement and, on behalf of the
Borrowers, hereby gives you notice irrevocably of the borrowing specified below:

	 	1.	 	The Business Day of the proposed borrowing is                     ,
20___(the “Borrowing Date”). [Note: Notice is required by 12:00 noon
EST (i) on the Borrowing Date for Base Rate Loans and Swingline Loans and (ii)
at least three (3) Business Days prior to the Borrowing Date for LIBOR Rate
Loans]
	 
	 	2.	 	The aggregate amount of the proposed borrowing is
$[                    ].
	 
	 	3.	 	The borrowing is to be comprised of a [Revolving Credit
Loan/Swingline Loan].
	 
	 	4.	 	[The Revolving Credit Loan shall be a [LIBOR Rate Loan with an
Interest Period of [1, 2, 3 or 6 months]]/Base Rate Loan].]
	 
	 	5.	 	The proceeds of the Loans should be wired on behalf of the
Borrowers to the deposit account identified in the most recent Notice of
Account Designation.

          The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the proposed borrowing, before and after giving effect thereto and
to the application of the proceeds therefrom:

          (a) The representations and warranties contained in the Credit Agreement and the other Loan
Documents shall be true and correct in all material respects (unless any such representation or
warranty is qualified as to materiality, in which case such representation and warranty shall be
true and correct in all respects) on and as of such date with the same effect as if made on and as
of such date; except for any representation and warranty made as of an earlier date, which
representation and warranty shall remain true and correct in all material respects (unless such
representation or warranty is qualified as to materiality, in which case such representation and
warranty shall be true and correct in all respects) as of such earlier date.

          (b) No event has occurred and is continuing, or will result from such

 

 

borrowing or the applications of the proceeds thereof, which would constitute a Default or an
Event of Default under the Credit Agreement.

          (c) All conditions set forth in the Credit Agreement for the making of the proposed borrowing
have been satisfied and will remain satisfied to the date of the requested Loan.

          (d) After giving effect to the Loans requested above, the number of Interest Periods
outstanding shall not exceed six (6).

          (e) The proposed borrowing will not cause the aggregate principal amount of all outstanding
Revolving Credit Loans, plus the outstanding L/C Obligations, if any, to exceed the
Borrowing Base or the Revolving Credit Commitment.

	 	 	 	 	 
	 	LA-Z-BOY INCORPORATED, a Michigan 

corporation, as Administrative Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

EXHIBIT C

FORM OF ACCOUNT DESIGNATION

                     __, 200_

Wachovia Capital Finance Corporation (Central)

150 S. Wacker Drive, Suite 2200

Chicago, Illinois 60606

Attn: Syndicaion Agency Services

Ladies and Gentlemen:

          This Notice of Account Designation (this “Notice of Account Designation”) is delivered
to you by La-Z-Boy Incorporated, a Michigan corporation (“Administrative Borrower”),
pursuant to Section 2.3(b) of the Credit Agreement, dated as of February 6, 2008 (as amended,
restated or otherwise modified from time to time, the “Credit Agreement”; all capitalized
terms used herein without definition shall have the meanings ascribed thereto in the Credit
Agreement), by and among Administrative Borrower, the Subsidiaries of Administrative Borrower party
thereto, the lenders who are or may become a party thereto from time to time (the
“Lenders”) and Wachovia Capital Finance Corporation (Central), as administrative agent
(“Administrative Agent”).

          Administrative Agent is hereby authorized to disburse all Loan proceeds into the following
account, unless Administrative Borrower shall designate, in writing to Administrative Agent, one or
more other accounts:

Wachovia Bank, National Association

ABA #: [                                        ]

Account #: [                                        ]

          [For Closing Date: Notwithstanding the foregoing, on the Closing Date, funds borrowed under
the Credit Agreement shall be sent to the institutions and/or persons designated on the attached
payment instructions.]

[SIGNATURE PAGE TO FOLLOW]

 

 

          IN WITNESS WHEREOF, the undersigned has executed this Notice of Account Designation this ___
day of                     , 20___.

	 	 	 	 	 
	 	LA-Z-BOY INCORPORATED, as Administrative

Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Account
Designation

 

 

EXHIBIT D

FORM OF NOTICE OF EXTENSION/CONVERSION

Date:                     , 20__

			
	To:	 	Wachovia Capital Finance Corporation (Central), as administrative agent (“Administrative
Agent”) under that certain Credit Agreement, dated as of February 6, 2008, by and among
La-Z-Boy Incorporated, a Michigan corporation (“Administrative Borrower”), the
Subsidiaries of Administrative Borrower party thereto, the lenders who are or may become party
thereto from time to time (the “Lenders”) and Administrative Agent (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Capitalized terms used herein without definition shall have the respective
meanings ascribed to such terms in the Credit Agreement.

Ladies and Gentlemen:

          The undersigned, Administrative Borrower, refers to the Credit Agreement and, on behalf of the
Borrowers, hereby gives you notice irrevocably of the [conversion/continuation] of the Loans
specified herein, that:

	 	1.	 	The extension/conversion date is                     , 200_.
[Note: Notice is required by 12:00 p.m. eastern time at least three (3)
Business Days prior to the [Conversion/Continuation] Date].
	 
	 	2.	 	The aggregate amount of the Revolving Credit Loans to be
[converted/ continued] is $[                    ]].
	 
	 	3.	 	The Revolving Credit Loans are to be [converted into/continued
as] [Base Rate][LIBOR Rate] Loans.
	 
	 	4.	 	The duration of the Interest Period for the LIBOR Loans
included in the [conversion/continuation] shall be [one (1)/two (2)/three
(3)/six (6)] months.

          The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on, the proposed [conversion/continuation] date, before and after giving effect
thereto and to the application of the proceeds therefrom:

          (a) The representations and warranties contained in the Credit Agreement and the other Loan
Documents shall be true and correct in all material respects (unless any such representation or
warranty is qualified as to materiality, in which case such representation and warranty shall be
true and correct in all respects) on and as of such date with the same effect as if made on and as
of such date; except for any representation and warranty made as of an earlier date, which
representation and warranty shall remain true and correct in all material respects (unless such
representation or warranty is qualified as to materiality, in which case such representation and
warranty shall be true and correct in all respects) as of such earlier date.

          (b) No event has occurred and is continuing, or will result from such proposed
[conversion/continuation], which would constitute a Default or an Event of Default under the Credit
Agreement.

 

 

          (c) After giving effect to the proposed [conversion/continuation] requested above, the number
of Interest Periods outstanding shall not exceed six (6).

	 	 	 	 	 
	 	LA-Z-BOY INCORPORATED, as Administrative

Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Notice
of Conversion/Continuation

 

 

	 	 	 	 	 

EXHIBIT E

FORM OF OFFICER’S COMPLIANCE CERTIFICATE

     For the fiscal quarter ended                     , 200___.

     I, [                                        ], [the chief financial officer/principal account
officer/treasurer] of LA-Z-BOY INCORPORATED, a Michigan corporation (“Parent”) hereby
certifies that, to the best of my knowledge and belief, the following information is accurate as of
the date hereof, with respect to that certain Credit Agreement, dated as of February 6, 2008 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), by and among Parent, the Subsidiaries of Parent party thereto, the lenders who are
or may become a party thereto from time to time (the “Lenders”) and Wachovia Capital
Finance Corporation (Central), as administrative agent (“Administrative Agent”).
Capitalized terms used but not otherwise defined herein shall have the meanings provided in the
Credit Agreement.

     1. I have reviewed the financial statements of Parent and its Subsidiaries dated as of
                     and for the                      period[s] then ended and such statements fairly present
in all material respects the financial condition of Parent and its Subsidiaries as of the dates
indicated and the results of their operations and cash flows for the period[s] indicated.

     2. I have reviewed the terms of the Credit Agreement, and the related Loan Documents and have
made, or caused to be made under my supervision, a review in reasonable detail of the transactions
and the condition of Parent and its Subsidiaries during the accounting period covered by the
financial statements referred to in Paragraph 1 above. Such review has not disclosed the existence
during or at the end of such accounting period of any condition or event that constitutes a Default
or an Event of Default, nor do I have any knowledge of the existence of any such condition or event
as at the date of this Certificate [except, if such condition or event existed or exists, describe
the nature and period of existence thereof and what action the Credit Parties have taken, are
taking and propose to take with respect thereto].

     3. [The Fixed Charge Coverage Ratio of as of the last day of the most recent month covered by
the financial statements referred to in Paragraph 2 above, is as shown on Schedule 1
attached hereto,]1 and Parent and its Subsidiaries are in compliance with the other
covenants and restrictions contained in the Credit Agreement.

 

			
	1	 	To be included for each Officer’s Certificate delivered
with financial statements delivered pursuant to Section 9.1(a) of the Credit
Agreement.

 

 

This _______ day of                     , 20___

	 	 	 	 	 
	 	LA-Z-BOY INCORPORATED, a 

Michigan corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

“Attachment A” to Officer’s Certificate

Computation of Fixed Charge Coverage Ratio

 

 

EXHIBIT F

FORM OF ASSIGNMENT AND ASSUMPTION 

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

     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (a) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit,
guarantees, and swingline loans included in such facilities) and (b) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned
pursuant to clauses (a) and (b) above being referred to herein collectively as the “Assigned
Interest”). Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or warranty by the
Assignor.

	 	 	 	 	 	 	 
	1.

	 	Assignor:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	2.

	 	Assignee:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	 	 	[and is an
Affiliate/Approved Fund of [identify Lender]2]

	 	 	 
	3.     Borrowers:

	 	La-Z-Boy Incorporated (the “Parent”), Kincaid Furniture Company,
 Incorporated, England, Inc., Bauhaus
U.S.A., Inc., La-Z-Boy Canada 
Limited, La-Z-Boy Greensboro, Inc. and LZB Manufacturing, Inc.

4.     Administrative

 

			
	2	 	 Select as applicable.

 

 

- 2 -

	 	 	 
	Agent:

	 	Wachovia Capital Finance Corporation (Central), as the administrative agent under the

Credit Agreement

	 	 	 
	5. Credit
	 	 
	Agreement:

	 	Credit Agreement, dated as of February 6, 2008 by and among the Parent, the
Subsidiaries of the Parent parties thereto, the Lenders parties thereto from time to time
and Administrative Agent

6.      Assigned Interest:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Aggregate Amount of	 	Amount of	 	 	Percentage Assigned	 	 	 	 
	Commitment/Loans	 	Commitment/Loans	 	 	of	 	 	 	 
	for all Lenders	 	Assigned3	 	 	Commitment/Loans4	 	 	CUSIP Number	 
	$
	 	$	 	 	 	 	%	 	 	 	 	 
	$
	 	$	 	 	 	 	%	 	 	 	 	 
	$
	 	$	 	 	 	 	%	 	 	 	 	 

[7.     
Trade Date:                          ]5

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

 

			
	3	 	Amount to be adjusted by the counterparties to take
into account any payments or prepayments made between the Trade Date and the
Effective Date.
	 
	4	 	Set forth, to at least 9 decimals, as a percentage of
the Commitment/Loans of all Lenders thereunder.
	 
	5	 	To be completed if the Assignor and the Assignee intend
that the minimum assignment amount is to be determined as of the Trade Date.

 

- 3 -

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

	 	 	 	 	 
	 	 	ASSIGNOR:

[NAME OF ASSIGNOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	     Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	ASSIGNEE:

[NAME OF ASSIGNEE]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	     Title:	 	 
	 

	 	 	 	 

Consented to and Accepted:

WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL),

as Administrative Agent

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	     Title:
	 	 	 	 
	 

	 	 	 	 

[Consented
to:]6

[LA-Z-BOY INCORPORATED]

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	     Title:
	 	 	 	 
	 

	 	 	 	 

 

			
	6	 	To be added only if the consent of the Borrowers and/or
other parties (e.g. Swingline Lender, Issuing Issuer) is required by the terms
of the Credit Agreement.

 

- 4 -

ANNEX 1 to Assignment and Assumption

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

     1. Representations and Warranties.

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

     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 9.1 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a foreign Lender, attached to the
Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it
will, independently and without reliance on the Administrative Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under the Loan Documents,
and (ii) it will perform in accordance with their terms all of the obligations that by the terms of
the Loan Documents are required to be performed by it as a Lender.

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

 

- 5 -

Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date.

     3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy or other electronic transmission shall be effective as
delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and
Assumption shall be governed by, and construed in accordance with, the law of the State of North
Carolina, without reference to the conflicts or choice of law principles thereof.

 

EXHIBIT G

FORM OF BORROWING BASE CERTIFICATE

La Z Boy Incorporated

Borrowing Base Certificate

	 	 	 
	To:

	 	Wachovia Capital Finance Corp. (Central)
	 

	 	150 S Wacker Dr., Hartford Plaza
	 

	 	Suite 2200
	 

	 	Chicago, IL 60606
	 

	 	Phone: (312) 332-0420
	 

	 	Facsimile: (312) 739-5244
	 

	 	Attn: Dan Laven / Mark Dunne

RE: Borrowing Base Certificate as of:

Borrow Base

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Eligible Amount	 	 	Advance Rate	 	 	Amount Available	 
	Accounts Receivable
	 	 	—	 	 	 	85%		 	 	—	 
	Inventory
	 	 	 	 	 	 	 	 	 	 	 	 
	RM Inventory
	 	 	—	 	 	 	23%		 	 	—	 
	FG – Retail
	 	 	—	 	 	 	64%		 	 	—	 
	Finished Goods
	 	 	—	 	 	 	50%		 	 	—	 
	WIP
	 	 	—	 	 	 	0%		 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total Inventory
	 	$	—	 	 	 	 	 	 	$	—	 
	Less: Reserves
	 	 	 	 	 	 	 	 	 	 	—	 
	Fifth Third Stand By Letters of Credit Outstanding
	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Net Borrowing Base, not to exceed Revolver Commitment of
	 	$	220,000,000	 	 	 	 	 	 	$	—	 
	Less Balances Outstanding
	 	 	 	 	 	 	 	 	 	 	 	 
	Revolving Loan Balance
	 	 	 	 	 	 	 	 	 	 	—	 
	Letter of Credit Exposure Outstanding
	 	 	 	 	 	 	 	 	 	 	—	 
	Fees and Expenses
	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	Excess Availability
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	A. Accounts Receivable
	 	 	 	 	 	 	 	 	 	 	 	 
	1. Aging
	 	 	 	 	 	 	 	 	 	 	 	 
	Residential — US
	 	 	 	 	 	 	 	 	 	$	—	 
	Residential — Canada
	 	 	 	 	 	 	 	 	 	 	—	 
	England
	 	 	 	 	 	 	 	 	 	 	—	 
	Bauhaus
	 	 	 	 	 	 	 	 	 	 	—	 
	American Drew
	 	 	 	 	 	 	 	 	 	 	—	 
	Lea
	 	 	 	 	 	 	 	 	 	 	—	 
	Hammary
	 	 	 	 	 	 	 	 	 	 	—	 
	Kincaid
	 	 	 	 	 	 	 	 	 	 	—	 
	Retail
	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	2. Total Accounts Receivable Outstanding per Agings
	 	 	 	 	 	 	 	 	 	$	—	 
	Less: Variable Interest Entities (VIE)
Receivable in Aging Intercompany Accounts in the Agings 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net Accounts
Receivable Outstanding per Aging after Eliminations
	 	 	 	 	 	 	 	 	 	$	—	 
	3. Less: Ineligible Accounts Receivable 
	 	 	 	 	 	 	 	 	 	 	 	 
	a. Accounts that are unpaid more than sixty (60)
days after the due date of the original invoice
or more than one hundred twenty (120) days after
the date of the original invoice.
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Eligible Amount	 	 	Advance Rate	 	 	Amount Available	 
	Add back for Account, owed by Account Debtors
with payment terms of over 100 days, up to 60
days after the due date of the original invoice
and no more than 130 days after the original
invoice date, $5,000,000 limit on total Add
back.
	 	 	 	 	 	 	 	 	 	+	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	b. Accounts that do not conform to all of the
warranties and representations regarding the
same which are set forth in this Agreement or
any of the other Loan Documents.
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	c. Accounts (or any other Account due from the
same Account Debtor) with respect to which, in
whole or in part, a check, promissory note,
draft, trade acceptance or other instrument for
the payment of money has been received,
presented for payment and returned uncollected
for any reason;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	d. Accounts as to which any Borrower has not
performed, as of the applicable date of
calculation, all of its obligations then
required to have been performed, including the
delivery of merchandise or rendition of services
applicable to such Accounts;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	e. Accounts as to which death or judicial
declaration of incompetency of such Account
Debtor who is an individual; the filing by or
against such Account Debtor of a request or
petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication
as a bankrupt, winding-up, or other relief under
the bankruptcy, insolvency, or similar laws of
the United States or Canada.
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	f. (i) those Accounts of an Account Debtor for
whom fifty percent (50%) or more of the
aggregate Dollar amount of such Account Debtor’s
outstanding Accounts are classified as
ineligible under the criteria (other than this
clause (f)) set forth herein; or (ii) those
Accounts with respect to which the aggregate
Dollar amount of all Account, owed by the
Account Debtor thereon exceeds ten percent (10%)
of the aggregate amount of all Accounts at such
time to the extent of such excess;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	g. Accounts which (i) do not maintain chief
executive office in the United States or, with
respect to Account awed to the Canadian
Borrower, Canada; or (ii) is not organized under
the laws of the United States, with respect to
Accounts owed by an Account Debtor to the
Canadian Borrower, is not organized under the
laws of Canada; or (iii) is the government of
any foreign country; unless secured or payable
by a letter of credit or acceptance, or insured
under foreign credit insurance.
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	h. Accounts owed by (i) an Account Debtor which
is an Affiliate or employee of any Credit Party
or (ii) a VIE;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	i. Accounts are owed by Account Debtors that the
Administrative Agent does not deem to be
creditworthy in its Permitted Discretion;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	j. Accounts are owed by Account Debtors indebted
to any Borrower in any way;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	k. Accounts which are owed by an Account Debtor
to which any Borrower is indebted in any way, or
which are subject to any right of setoff by the
Account Debtor, unless the Account Debtor has
entered into an agreement acceptable to the
Administrative Agent to waive setoff rights;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	l. Accounts which are subject to any Customer
Dispute, but only to the extent of the amount in
dispute;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Eligible Amount	 	 	Advance Rate	 	 	Amount Available	 
	m. Accounts which are owed by the government of
the United States or, with respect to the
Canadian Borrower, Canada, unless all required
procedures for the effective collateral
assignment of the Accounts under the Federal
Assignment of Claims Act of 1940 (or similar
Canadian law, as applicable) and any other steps
necessary to perfect the Administrative Agent’s
security interest, for the benefit of the Lender
Group.
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	n. Accounts which are owed by any state,
municipality, territory, province or other
political subdivision of the United States or,
with respect to the Canadian Borrower, Canada,
or any department, agency, public corporation,
or other instrumentality thereof and as to which
the Administrative Agent determines in its
Permitted Discretion that its security interest
therein is not or cannot be perfected;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	o. Accounts which represent sales on a
bill-and-hold, guaranteed sale, sale and return,
sale on approval, consignment or other
repurchase or return basis;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	p. Accounts which are evidenced by a promissory
note or other instrument or by chattel paper;
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	q. Accounts which are not subject to a valid and
continuing first priority Lien in favor of the
Administrative Agent, foe the benefit of the
Secured Pasties, pursuant to the Security
Documents as to which all action necessary or
desirable to perfect such security interest
shall have been taken, and to which any Borrower
has good and marketable title, free and clear of
any Liens (other than liens in favor of the
Administrative Agent, for the benefit of the
Secured Parties); or
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	r. Accounts as to which a security agreement,
financing statement, equivalent security or Lien
instrument or continuation statement is on file
or of record in any public office, except as may
have been filed In favor of the Administrative
Agent, for the benefit of the Secured Parties,
pursuant to the Security Documents.
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	s. Other
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	5. Total Ineligible Receivables
	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	6. Total Eligible Receivables
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Rate of advance
	 	 	 	 	 	 	 	 	 	 	X 85	%
	7. Total Available Accounts Receivable
	 	 	 	 	 	 	 	 	 	=$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	B. Raw Material Inventory
	 	 	 	 	 	 	 	 	 	 	 	 
	1. Gross Raw Materials Inventory
	 	 	 	 	 	 	 	 	 	 	 	 
	2. Less: Ineligible RM:
	 	 	 	 	 	 	 	 	 	 	 	 
	a. Packaging and Supplies
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	b. Inventory located outside the United States
of America
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	c. Other ineligibles at reasonable discretion of
Agent
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	3. Total Ineligible RM
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	4. Total Eligible RM Inventory
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Rate of advance.
	 	 	 	 	 	 	 	 	 	 	X 22.9	%
	 
	 	 	 	 	 	 	 	 	 	 	 
	C. FG — Retail
	 	 	 	 	 	 	 	 	 	 	 	 
	1. Gross FG — Retail
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	2. Less: Ineligible FG — Retail
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	a. Shrink Reserve — retail
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	b. Reconciliation Differences — retail
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	c. Profit in retail inventory — eliminated in
consolidation
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	d. Other ineligibles at reasonable discretion of
Agent
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	3. Total Ineligible FG — Retail
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	4. Total Eligible FG — Retail
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Eligible Amount	 	 	Advance Rate	 	 	Amount Available	 
	Rate of advance
	 	 	 	 	 	 	 	 	 	 	X 64.2	%
	 
	 	 	 	 	 	 	 	 	 	 	 
	5 Total Available FG — Retail
	 	 	 	 	 	 	 	 	 	=$	—	 
	D. Finished Goods
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	1. Gross Finished Goods
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	2. Less: Ineligible Finished Goods

	 	 	 	 	 	 	 	 	 	 	 	 
	a. Any inventory at VIE’s
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	b. Consigned Inventory
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	c. Foreign Finished Goods Inventory
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	d. Rejected FG
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	e. Estimated In — Transit Inventory
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	f. Other Ineligibles at reasonable discretion of
Agent
	 	 	 	 	 	 	 	 	 	-	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	3. Total Ineligible Finished Goods
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	4. Total Eligible Finished Goods
	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	Rate of advance
	 	 	 	 	 	 	 	 	 	 	X 50.4	%
	5. Total Available Finished Goods
	 	 	 	 	 	 	 	 	 	=$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 

In connection with the foregoing, we hereby acknowledge and agree that, as of the date hereof, the
Agreement remains in full force and effect, is binding upon an and enforceable against us in
accordance with its terms, and we certify to you that, as of the date hereof, there exists no Event
of Default under said Agreement or even which, with the passage of time or the giving of notice, or
both, would so constitute an Event of Default. We hereby restate and renew each and every
representation and warranty made by as in the Agreement in connection therewith, effective as of
the date hereof

La Z Boy Incorporated

	 	 	 	 	 
	 

	 	 	 	 
	By:

	 	Mike Riccio
	 	 
	Title:

	 	Chief Financial Officer	 	 

 

 

EXHIBIT H

FORM OF LENDER AGREEMENT

     THIS LENDER AGREEMENT, dated                                         , 200           
          (this “Agreement”), is made by the
undersigned in connection with that certain Credit Agreement, dated as of February 6, 2008, by and
among La-Z-Boy Incorporated, a Michigan corporation (“Administrative Borrower”), the
Subsidiaries of Administrative Borrower party thereto, the lenders who are or may become a party
thereto from time to time (the “Lenders”) and Wachovia Capital Finance Corporation
(Central), as administrative agent (“Administrative Agent”) (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”). Capitalized
terms used herein but not defined herein shall have the meanings ascribed to such terms in the
Credit Agreement.

     WHEREAS, Administrative Borrower has requested to amend the Credit Agreement to increase the
Revolving Credit Commitment in accordance with the terms and conditions of the Credit Agreement;
and

     WHEREAS, the undersigned desires to become a party to the Credit Agreement, as a “Lender,” or
increase its existing Revolving Credit Commitment in accordance with the terms hereof, as the case
may be.

     NOW, THEREFORE, the undersigned hereby agrees as follows:

     1. [The undersigned agrees to be bound by the provisions of the Credit Agreement, and agrees
that it shall, on the date this Agreement is accepted by Administrative Agent, become a Lender for
all purposes of the Credit Agreement to the same extent as if originally a party thereto, with the
Revolving Credit Commitment as set forth below its name on its signature page hereto] OR [The
undersigned Lender agrees that effective upon [                                        ] it is increasing its existing
Revolving Credit Commitment as set forth below its name on the signature page hereto].

     2. The undersigned (a) represents and warrants that it is legally authorized to enter into
this Agreement; (b) confirms that it has received a copy of the Credit Agreement, together with
such other documents and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Agreement; (c) agrees that it has made and will, independently and
without reliance upon Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement or any instrument or document furnished
pursuant hereto or thereto; (d) appoints and authorizes Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any
instrument or documents furnished pursuant hereto or thereto as are delegated to Administrative
Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the

- 10 -

 

Credit Agreement and will perform in accordance with its terms all the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Lender.

     3. [The undersigned’s address for notices for the purposes of the Credit Agreement is as
follows:

	 	 	 	 	 
	 

	 	Domestic Lending Office:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 

	 	 	 	 
	 

	 	Attn:                                                            ]	 	 

     4. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and
their respective successors and permitted assigns. Wherever 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 shall be prohibited by or invalid under any 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. This
Agreement may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopy
or by other electronic transmission shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement shall be governed by, and construed in accordance
with, the law of the State of North Carolina, without reference to the conflicts or choice of law
principles thereof.

[Remainder of Page Intentionally Left Blank]

- 11 -

 

     IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered by
a duly authorized officer on the date first above written.

	 	 	 	 	 
	 	[INSERT NAME OF LENDER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[[Additional] Revolving Credit Commitment: $___]

[Pro Rata Share of aggregate Revolving Credit Commitment: _%]

Accepted and approved this                      day

of                     , 200                    

WACHOVIA CAPITAL FINANCE

CORPORATION (CENTRAL), as

Administrative Agent

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

Accepted and approved this                      day

of                     , 200                    

LA-Z-BOY INCORPORATED,

as Administrative Borrower

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

 

 

EXHIBIT I

FORM OF NOTICE OF REQUESTED COMMITMENT INCREASE

                                        , 200         

Wachovia Capital Finance Corporation (Central)

150 S. Wacker Drive, Suite 2200

Chicago, Illinois 60606

Ladies and Gentlemen:

     Reference is made to that certain Credit Agreement, dated as of February 6, 2008, by and among
La-Z-Boy Incorporated, a Michigan corporation (“Administrative Borrower”), the Subsidiaries
of Administrative Borrower party thereto, the lenders who are or may become a party thereto from
time to time (the “Lenders”) and Wachovia Capital Finance Corporation (Central), as
administrative agent (“Administrative Agent”) (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”). Capitalized terms used
herein but not defined herein shall have the meanings ascribed to such terms in the Credit
Agreement. The undersigned hereby gives notice, pursuant to Section 2.7 of the Credit Agreement,
that it hereby requests a Commitment Increase to the Revolving Credit Commitment, and in connection
therewith sets forth below the information relating to such requested Commitment Increase, as
required by Section 2.7 of the Credit Agreement:

          1. Administrative Borrower, on behalf of the Borrowers, hereby requests the following
Commitment Increase in the amount of $[                                        ] to the Revolving Credit Commitment.

     2. The date of the requested Commitment Increase is [                                        , 20                    ].

          The undersigned hereby certifies, on behalf of the Borrowers, that the following statements
are true on the date hereof:

          (a) The representations and warranties contained in the Credit Agreement and the other Loan
Documents shall be true and correct in all material respects (unless any such representation or
warranty is qualified as to materiality, in which case such representation and warranty shall be
true and correct in all respects) on and as of such date with the same effect as if made on and as
of such date; except for any representation and warranty made as of an earlier date, which
representation and warranty shall remain true and correct in all material respects (unless such
representation or warranty is qualified as to materiality, in which case such representation and
warranty shall be true and correct in all respects) as of such earlier date;

          (b) No law, regulation, order judgment, or decree of any Governmental Authority exists, and no
action, suit, investigation, litigation or proceeding is pending or, to the knowledge of any
Borrower, threatened in any court or before any arbitrator or Governmental Authority, which (i)
purports to enjoin, prohibit, restrain or otherwise affect the making of the Commitment Increase
requested hereby or (ii) has or has a reasonable likelihood of having a Material Adverse Effect.

 

 

          (c) No Default or Event of Default has occurred and is continuing, or would result from such
proposed Commitment Increase.

          Administrative Borrower, on behalf the Borrowers, has caused this Notice of Requested
Commitment Increase to be executed and delivered by its duly authorized representatives, this
                     day of                                         , 20         .

	 	 	 	 	 
	 	LA-Z-BOY INCORPORATED, as 

Administrative Borrower

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 3.8

Letters of Credit

	 	 	 	 	 	 	 	 	 
	Issuer	 	LC Number	 	Beneficiary	 	Amount	 	Term
	Wachovia (Revolver)	 	SM208849	 	Washington
International Ins. Company
	 	339,000.00	 	5/24/07-6/24/08
	 
	Wachovia (Uncommitted)	 	968-006442	 	1st Citizens Bank &
Trust Company as Trustee (IRB) 
	 	5,581,834.00	 	9/5/08-10/5/09
	 
	Wachovia (Uncommitted)	 	968-010644	 	1st Citizens Bank &
Trust Company as Trustee (IRB)
	 	4,531,250.00	 	9/5/08-10/5/09
	 
	National City	 	SCL011552	 	Bureau Work Comp Pennsylvania
	 	200,000.00	 	11/30/07- 11/15/08
	 
	BB&T	 	4060050940-00021	 	South Carolina Work Comp
	 	250,000.00	 	9/16/07-
	 
	SunTrust	 	F847067	 	Arkansas Work Comp
	 	200,000.00	 	8/26/07-
	 
	SunTrust	 	F847637	 	Virginia Work Comp
	 	1,500,000.00	 	12/22/06-12/22/07
	 
	JP  Morgan	 	CPCS626810	 	Siloam Springs,
	 	 	 	 
		 	(Orig LC 344)	 	Arkansas (IRB)
	 	7,107,684.64	 	6/15/07-6/15/08
	 	 	 	 	 
	 	19,709,768.64	 	 

Page 1

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(a)

Jurisdictions of Organization and Qualification

LA-Z-BOY INCORPORATED

     Organized in MI

     Qualified in AL, AR, CA, CO, CT, FL, GA, ID, IL, IN, IA, MA, MN, MS, MO, MT,

     NE, NJ, NY, NC, ND, OH, OK, OR, PA, SC, TN, TX, UT, WV

KINCAID FURNITURE COMPANY, INCORPORATED

     Organized in DE

     Qualified in NJ, NC, OH

ENGLAND, INC.

     Organized in MI

     Qualified in NJ, NC, TN, CA

BAUHAUS U.S.A., INC.

     Organized in MS

     Qualified in NJ

LA-Z-BOY CANADA LIMITED

     Organized in Ontario, Canada

     Qualified in Alberta, Canada

LA-Z-BOY GREENSBORO, INC.

     Organized in NC

     Qualified in CA, NJ, TN, VA

LZB MANUFACTURING, INC.

     Organized in MI

     Qualified in AR, CA, MS, MO, NC, SC, TN, UT

LADD TRANSPORTATION, INC.

     Organized in NC

     Qualified in AL, MS, NJ, SC, TN, VA, UT

LA-Z-BOY LOGISTICS, INC.

     Organized in MI

     Qualified in CA, MO, NJ, NC, TN, UT

LZB CAROLINA PROPERTIES, INC.

     Organized in MI

     Qualified in NC

Schedule 8.1(a)

1

 

Credit Agreement — La-Z-Boy Incorporated

LZB FURNITURE GALLERIES OF PARAMUS, INC.

     Organized in MI

     Qualified in CT, NJ, NY

LZB FURNITURE GALLERIES OF ST. LOUIS, INC.

     Organized in MI

     Qualified in IL, MO

LZB RETAIL, INC.

     Organized in MI

LA-Z-BOY SHOWCASE SHOPPES, INC.

     Organized in IN

     Qualified in IL

LZB DELAWARE VALLEY PROPERTIES, INC.

     Organized in MI

LZB DELAWARE VALLEY, INC.

     Organized in DE

LZB FURNITURE GALLERIES OF WASHINGTON, D.C., INC.

     Organized in MI

     Qualified in MD, VA

LZB FURNITURE GALLERIES OF KANSAS CITY, INC.

     Organized in MI

     Qualified in KS, MO

LZB FURNITURE GALLERIES OF BOSTON, INC.

     Organized in MI

     Qualified in MA

MONTGOMERYVILLE HOME FURNISHINGS, INC.

     Organized in PA

     Qualified in NJ

LZBFG OF SOUTH FLORIDA, LLC

     Organized in MI

     Qualified in FL

BOCA RATON GALLERIES, LLC

     Organized in MI

     Qualified in FL

Schedule 8.1(a)

2

 

Credit Agreement — La-Z-Boy Incorporated

 LZB FINANCE, INC.

     Organized in MI

     Qualified in CA, IL

ST. CLAIR INSURANCE COMPANY

     Organized in the Cayman Islands

ALEXVALE FURNITURE, INC.

     Organized in NC

     Qualified in NJ

4131576 MANITOBA LTD.

     Organized in Manitoba

E.L.K. AIR PARTNERS, L.L.C.

     Organized in MI

CENTURION FURNITURE PLC

     Organized in the U.K.

LA-Z-BOY ASIA CO. LTD.

     Organized in Thailand

LA-Z-BOY (THAILAND) LTD.

     Organized in Thailand

LA-Z-BOY GERMANY GMBH

     Organized in Germany

LA-Z-BOY MUEBLES, S. DE R.L. DE C.V.

     Organized in Mexico

LZB SERVICIOS DE MEXICO, S. DE R.L. DE C.V.

     Organized in Mexico

PENNSYLVANIA HOUSE, INC.

     Organized in NC

     Qualified in CA, MD, NJ, PA

AMERICAN DREW, INC.

     Organized in NC – inactive

LEA INDUSTRIES OF VIRGINIA, INC.

     Organized in VA – inactive

Schedule 8.1(a)

3

 

Credit Agreement — La-Z-Boy Incorporated

 LEA INDUSTRIES, INC.

     Organized in TN – inactive

     Qualified in NC, VA

KENBRIDGE FURNITURE, INC.

     Organized in NC – inactive

VIRGINIA CONTRACT FURNITURE COMPANY, INCORPORATED (VA):

     Organized in VA

     Qualified in CA, NC

NORTH CAROLINA CONTRACT SALES CORPORATION (NC):

     Organized in NC

     Qualified in FL, MA, NJ, VA, Washington, D.C.

LZB ALABAMA PROPERTIES, INC.

     Organized in MI

     Qualified in AL

LA-Z-BOY IMPORT SOURCING, INC.

     Organized in MI

LA-Z-BOY GLOBAL LIMITED

     Organized in MI

     Qualified in NC, China

BEDFORD CHAIR COMPANY, INC.

     Organized in VA

     Qualified in NJ, NC

LZB FURNITURE GALLERIES OF PITTSBURGH, LLC

     Organized in MI

     Qualified in PA

LZB FURNITURE GALLERIES OF ROCHESTER, INC.

     Organized in MI

     Qualified in NY

LZB LELAND, LLC

     Organized in MI

     Qualified in MS

Schedule 8.1(a)

4

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(b)

Subsidiaries and Capitalization

LA-Z-BOY INCORPORATED:

     Publicly held

KINCAID FURNITURE COMPANY, INCORPORATED:

     1,000 shares issued and outstanding, owned by La-Z-Boy Incorporated

ENGLAND, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

BAUHAUS U.S.A., INC.:

     2,500 shares issued and outstanding, owned by La-Z-Boy Incorporated

LA-Z-BOY CANADA LIMITED:

     14,004,001 common shares and 1,000 preferred shares issued and outstanding, owned by
La-Z-Boy Incorporated

LA-Z-BOY GREENSBORO, INC.:

     100 shares issued and outstanding, owned by La-Z-Boy Incorporated

LZB MANUFACTURING, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

LADD TRANSPORTATION, INC.:

     1,000 shares issued and outstanding represented by certificate Number One, owned by La-Z-Boy
Greensboro, Inc. (successor to LADD Furniture, Inc.)

LA-Z-BOY LOGISTICS, INC.:

     1,000 shares issued and outstanding, owned by La-Z-Boy Incorporated

LZB CAROLINA PROPERTIES, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

LZB FURNITURE GALLERIES OF PARAMUS, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

LZB FURNITURE GALLERIES OF ST. LOUIS, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

LZB RETAIL, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

Schedule 8.1(b)

1

 

Credit Agreement — La-Z-Boy Incorporated

LA-Z-BOY SHOWCASE SHOPPES, INC.:

     950 shares issued and outstanding, owned by La-Z-Boy Incorporated

LZB DELAWARE VALLEY PROPERTIES, INC.:

     1 share issued and outstanding, owned by LZB Finance, Inc.

LZB DELAWARE VALLEY INC. (DE):

     1 share issued and outstanding, represented by certificate Number One, owned by LZB Finance,
Inc.

LZB FURNITURE GALLERIES OF WASHINGTON, D.C., INC.:

     1 share issued and outstanding, owned by LZB Retail, Inc.

LZB FURNITURE GALLERIES OF KANSAS CITY, INC.:

     1 share issued and outstanding, owned by LZB Retail, Inc.

LZB FURNITURE GALLERIES OF BOSTON, INC.:

     1 share issued and outstanding, owned by LZB Retail, Inc.

MONTGOMERYVILLE HOME FURNISHINGS, INC.:

     1 share issued and outstanding, represented by certificate Number Two, owned by LZB Delaware
Valley, Inc.

LZBFG OF SOUTH FLORIDA, LLC:

     Sole member is LZB Furniture Galleries of Washington D.C., Inc.

BOCA RATON GALLERIES, LLC:

     Sole member is LZBFG of South Florida, LLC

ST. CLAIR INSURANCE COMPANY:

     500,000 shares issued and outstanding, owned by La-Z-Boy Incorporated

LZB FINANCE, INC.:

     1,000 shares issued and outstanding, owned by La-Z-Boy Incorporated

ALEXVALE FURNITURE, INC.:

     680,285 shares issued and outstanding, owned by La-Z-Boy Incorporated

4131576 MANITOBA LTD.:

     100 Class A Common shares issued and outstanding, owned by La-Z-Boy Canada Limited

E.L.K. AIR PARTNERS, L.L.C.:

     Members are Ervin Industries, Inc. (40%), La-Z-Boy Incorporated (50%) and Kapnick & Company,
Inc. (10%).

Schedule 8.1(b)

2

 

Credit Agreement — La-Z-Boy Incorporated

CENTURION FURNITURE PLC:

     7,434,759 ordinary and 75,000,000 deferred shares issued and outstanding, owned by La-Z-Boy
Incorporated

LA-Z-BOY ASIA CO. LTD.:

     100,000 shares issued and outstanding, 50.5% of which are owned by La-Z-Boy Incorporated

LA-Z-BOY (THAILAND) LTD.:

     820,000 shares issued and outstanding, 51% of which are owned by La-Z-Boy Incorporated

LA-Z-BOY EUROPE B.V.:

     1,000,000 Class L shares and 1,000,000 Class S shares issued and outstanding. La-Z-Boy
Incorporated owns 50% of each class. This joint venture is in the process of being
liquidated.

LA-Z-BOY GERMANY GMBH:

     25,000 shares issued and outstanding, all of which are owned by La-Z-Boy Europe B.V.

LA-Z-BOY MUEBLES, S. DE R.L. DE C.V.:

     2,970 shares issued and outstanding, 99% of which are owned by La-Z-Boy Incorporated

LZB SERVICIOS DE MEXICO, S. DE R.L. DE C.V.:

     2,970 shares issued and outstanding, 99% of which are owned by LZB Manufacturing, Inc.

PENNSYLVANIA HOUSE, INC.:

     16,000 shares issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

AMERICAN DREW, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

LEA INDUSTRIES OF VIRGINIA, INC.:

     1,000 shares issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

LEA INDUSTRIES, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

KENBRIDGE FURNITURE, INC.:

     1,000 shares issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

VIRGINIA CONTRACT FURNITURE COMPANY, INCORPORATED:

     1,000 shares issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

Schedule 8.1(b)

3

 

Credit Agreement — La-Z-Boy Incorporated

 NORTH CAROLINA CONTRACT SALES CORPORATION:

     100 shares issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

LZB ALABAMA PROPERTIES, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Greensboro, Inc.

LA-Z-BOY IMPORT SOURCING, INC.:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

LA-Z-BOY GLOBAL LIMITED:

     1 share issued and outstanding, owned by La-Z-Boy Incorporated

BEDFORD CHAIR COMPANY, INC.:

     10 shares issued and outstanding, owned by La-Z-Boy Incorporated

LZB FURNITURE GALLERIES OF PITTSBURGH, LLC:

     Sole member is LZB Retail, Inc.

LZB FURNITURE GALLERIES OF ROCHESTER, INC.:

     1 share issued and outstanding, owned by LZB Retail, Inc.

LZB LELAND, LLC:

     Sole member is LZB Manufacturing, Inc.

Schedule 8.1(b)

4

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(f)

Tax Audits

None.

Schedule 8.1(f)

1

 

Credit Agreement – La-Z-Boy Incorporated

Schedule 8.1(i)

ERISA Plans

	1	 	La-Z-Boy Incorporated Master Pension Plan
	 
	2	 	La-Z-Boy Incorporated Retirement Savings Plan (i.e. 401(k))
	 
	3	 	La-Z-Boy Incorporated Employees’ Profit Sharing Plan
	 
	4	 	Pension Plan for Employees of Sam Moore Furniture Industries Inc.
	 
	5	 	La-Z-Boy Incorporated Short-Term Disability Plan
	 
	6	 	La-Z-Boy Incorporated Retail Division Short Term Disability Plan
	 
	7	 	La-Z-Boy Incorporated Long Term Disability Plan
	 
	8	 	La-Z-Boy Incorporated Extended Disability Plan
	 
	9	 	La-Z-Boy Incorporated Medical Spending Account Plan
	 
	10	 	La-Z-Boy Incorporated Dependent Care Assistance Plan
	 
	11	 	La-Z-Boy Incorporated Medical Plan
	 
	12	 	La-Z-Boy Incorporated Retail Division Medical Plan
	 
	13	 	La-Z-Boy Incorporated Medical Plan for Greensboro Employees
	 
	14	 	La-Z-Boy Incorporated Health Benefit Plan for Redlands California Employees
	 
	15	 	La-Z-Boy Incorporated Dental Care Plan
	 
	16	 	La-Z-Boy Incorporated Retail Division Dental Care Plan
	 
	17	 	La-Z-Boy Incorporated Dental Care Plan for Greensboro Employees
	 
	18	 	La-Z-Boy Incorporated Premium Only Plan
	 
	19	 	La-Z-Boy Incorporated Retail Division Premium Only Plan
	 
	20	 	La-Z-Boy Incorporated Vision Plan
	 
	21	 	Group Travel and Accident Plan
	 
	22	 	England, Inc. Group Health Benefit Plan — Blue Cross Blue Shield of Tennessee
	 
	23	 	England, Inc. Dental Plan — Assurant Employee Benefits Company
	 
	24	 	England, Inc. Life Insurance Plan (Basic) — Metropolitan Life Insurance Company
	 
	25	 	England, Inc. Life Insurance Plan (Supplemental) — Metropolitan Life Insurance Company
	 
	26	 	England, Inc. Short Term & Long Term Disability — Metropolitan Life Insurance Company
	 
	27	 	England, Inc. Serious Illness Disability — Assurant Employee Benefits
	 
	28	 	La-Z-Boy Incorporated Retirement Savings Plan
	 
	29	 	England, Inc. Cafeteria Plan

Schedule 8.1(i)

1

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(l)

Material Contracts

	1.	 	Lease by LZB Furniture Galleries of Boston, Inc. of premises at 1398 Worcester St. (Route 9),
Natick, MA 01760 from Baker Natick Promenade, LLC
	 
	2.	 	Lease by LZB Furniture Galleries of Boston, Inc. of premises at 701 Technology Center Drive,
Stoughton, MA 02072 from Technology Center Drive, LLC
	 
	3.	 	Lease by LZB Furniture Galleries of Paramus, Inc. of premises at 233 Buckland Hills Drive,
Manchester, CT 06040 from Northern Hills, LLC
	 
	4.	 	Lease by LZB Furniture Galleries of Paramus, Inc. of premises at 1750 Boston Post Road,
Milford, CT 06460 from Post Road 1750, LLC
	 
	5.	 	Lease by LZB Furniture Galleries of Paramus, Inc. of premises at 3050 Berlin Turnpike,
Newington, CT from Cole LZ Newington CT, LLC
	 
	6.	 	Lease by LZB Furniture Galleries of Washington D.C., Inc. of premises at 6181 Dobbin Road,
Columbia, MD 21045 from AAK Dobbin LLC
	 
	7.	 	Lease by LZB Furniture Galleries of Washington D.C., Inc. of premises at 1791 Crossroads
Drive, Odenton, MD 21113 from STRS/Arundel Crossing III

	8.	 	Industrial Development Revenue Bonds

City of Siloam Springs, Arkansas

$7,500,000

Series 1994

Maturity Date: June 1, 2014
	 
	9.	 	Industrial Development Revenue Refunding Bonds

City of Dayton, Tennessee

$4,350,000

Series 1991

Maturity Date: June 1, 2011
	 
	10.	 	Industrial Development Revenue Refunding Bonds

City of Newton, Mississippi

$5,350,000

Series 1991

Maturity Date: June 1, 2009

Schedule 8.1(l)

1

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(m)

Labor and Collective Bargaining Agreements

None.

Schedule 8.1(m)

1

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(t)

Debt and Guaranty Obligations

	1.	 	A dealer of La-Z-Boy Incorporated (“La-Z-Boy”) is in a dispute with the former owner of
its business. The former owner made demand on La-Z-Boy pursuant to a guaranty from
La-Z-Boy concerning certain of the dealer’s obligations. La-Z-Boy intends to withhold
payment under the guaranty until the dispute is resolved. It is expected to be heard in
arbitration in February or March 2008, with a ruling issued shortly thereafter.

Schedule 8.1(t)

1

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(u)

Litigation

None.

Schedule 8.1(u)

1

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(y)

Locations of Collateral

Owned Real Property:

Owned Plants / Warehouses:

	 	 	 	 	 	 	 	 	 
	La-Z-Boy Greensboro, Inc.
	 	 	 	 	 	 	 	 
	389 Armory Road

	 	North Wilkesboro, NC
	 	 	28659	 	 	Wilkes county
	Highway 268 East

	 	North Wilkesboro, NC
	 	 	28659	 	 	Wilkes county
	 
	 	 	 	 	 	 	 	 
	Bauhaus U.S.A., Inc.
	 	 	 	 	 	 	 	 
	One Bauhaus Drive1

	 	Saltillo, MS
	 	 	38866	 	 	Lee county
	1509 Paul Edmonson Drive

	 	Iuka, MS
	 	 	38852	 	 	Tishomingo county
	275 6th Avenue

	 	Sherman, MS
	 	 	38869	 	 	Pontotoc county
	 
	 	 	 	 	 	 	 	 
	England, Inc.
	 	 	 	 	 	 	 	 
	402 Old Knoxville Highway2

	 	New Tazewell, TN
	 	 	37825	 	 	Claiborne county
	4686 Frontier Way

	 	Stockton, CA
	 	 	95215	 	 	San Joaquin county
	 
	 	 	 	 	 	 	 	 
	Kincaid Furniture Company, Incorporated	 	 	 	 	 	 
	240 Pleasant Hill Road3

	 	Hudson, NC
	 	 	28638	 	 	Caldwell county
	 
	 	 	 	 	 	 	 	 
	LZB Manufacturing, Inc.
	 	 	 	 	 	 	 	 
	133 Scanlan Street

	 	Newton, MS
	 	 	39345	 	 	Newton county
	300 North Newton Dr. (Sewing Center)

	 	Newton, MS
	 	 	39345	 	 	Newton county
	9482 Eastside Drive (Dimension plant)

	 	Newton, MS
	 	 	39345	 	 	Newton county
	301 Tennessee Street

	 	Redlands, CA
	 	 	92373	 	 	San Bernardino county
	4301 Howard Bush Drive

	 	Neosho, MO
	 	 	64850	 	 	Newton county
	350 West 10th North

	 	Tremonton, UT
	 	 	84337	 	 	Box Elder county
	500 Walnut Grove Road

	 	Dayton, TN
	 	 	37321	 	 	Rhea county
	2601 N. Country Club Road

	 	Siloam Springs, AR
	 	 	72761	 	 	Benton county

Owned Retail Stores:

	 	 	 	 	 
	Name of Credit Party	 	Store Address	 	County
	LZB Furniture Galleries of
Kansas City, Inc.

	 	3889 S. Jackson Dr., Independence, MO 64057
	 	Jackson County
	 
	 	 	 	 
	Montgomeryville Home
Furnishings, Inc.

	 	494 Route 38, Maple Shade, NJ 08052
	 	Burlington County
	 
	 	 	 	 
	LZBFG of South Florida, LLC

	 	6500 N. Federal Hwy, Boca Raton, FL 33487
	 	Palm Beach County
	LZBFG of South Florida, LLC

	 	6300 Lake Worth Rd, Lake Worth, FL 33463
	 	Palm Beach County
	LZBFG of South Florida, LLC

	 	2600 Sawgrass Mill Circle, Sunrise, FL 33323
	 	Broward County

 

			
	1	 	Chief Executive Office of Bauhaus U.S.A., Inc.
	 
	2	 	Chief Executive Office for England, Inc., La-Z-Boy
Logistics, Inc. and LADD Transportation, Inc.
	 
	3	 	Chief Executive Office of Kincaid Furniture Company,
Incorporated

Schedule 8.1(y)

1

 

Credit
Agreement — La-Z-Boy Incorporated

	 	 	 	 	 
	Name of Credit Party	 	Store Address	 	County
	LZB Furniture Galleries of
St. Louis, Inc.

	 	11201 St. Charles Rock Road, Bridgeton, MO
63044
	 	St. Louis County
	LZB Furniture Galleries of
St. Louis, Inc.

	 	14177 Manchester Road, Manchester, MO 63011
	 	St. Louis County
	 
	 	 	 	 
	LZB Furniture Galleries of
Washington, D.C., Inc.

	 	7252 W. Broad Street, Richmond, VA 23294
	 	Independent city
	LZB Furniture Galleries of
Washington, D.C., Inc.

	 	11000 Midlothian Turnpike, Richmond, VA 23235
	 	Independent city
	LZB Furniture Galleries of
Washington, D.C., Inc.

	 	21320 Signal Hill Plaza, Sterling, VA 20164
	 	Loudoun County
	LZB Furniture Galleries of
Washington, D.C., Inc.

	 	12100 Jefferson Farm Pl., Waldorf, MD 20601
	 	Charles County
	 
	 	 	 	 
	Owned Offices:
	 	 	 	 
	 
	 	 	 	 
	La-Z-Boy Incorporated

	 	1284 N. Telegraph Road, Monroe,
MI 481624
	 	Monroe County

Leased Real Property:

Leased Warehouses:

	 	 	 	 	 	 	 
	Outside warehouse location	 	Tenant name	 	Warehouseman name	 	Warehouseman address
	3503 Enterprise Ave., Webb City, MO

64801; 3001 Davis Blvd., Joplin, MO

64801

	 	LZB Manufacturing,
Inc.
	 	Standard
Transportation
Services, Inc.
	 	Warehouse Division, 1801

Roosevelt Avenue, P.O. Box

2725, Joplin, MO 64803
	 
	 	 	 	 	 	 
	1791 N. Broadway; Dayton, TN 37321

	 	LZB Manufacturing,
Inc.
	 	Warehouse Services
Unlimited, Inc.
	 	P.O. Box 52, Dayton, TN 37321
	 
	 	 	 	 	 	 
	4381 Doniphan Drive, Neosho, MO

	 	LZB Manufacturing,
Inc.
	 	Eugene S. Schwartz,
Trustee of the
Eugene S. Schwartz
Revocable Trust
	 	300 Nelson Avenue, Neosho, MO

64850
	 
	 	 	 	 	 	 
	512 King Edwards, Cleveland, TN

	 	LZB Manufacturing,
Inc.
	 	Warehouse Concepts,

LLC
	 	2765 Michigan Ave., NE

Cleveland, TN 37323
	 
	 	 	 	 	 	 
	13827 Carmenita Rd, Unit D; Santa
Fe
 Springs, CA 90670

	 	LZB Manufacturing,
Inc.
	 	Watkins and Shepard
Trucking, Inc.
	 	1500 Blaine St., Helena, MT

59601

 

			
	4	 	Chief Executive Office for La-Z-Boy Incorporated, LZB
Carolina Properties, Inc., LZB Delaware Valley, Inc., LZB Delaware Valley
Properties, Inc., LZB Finance, Inc., LZB Manufacturing, Inc., LZB Retail, Inc.,
Boca Raton Galleries, LLC, LZB Furniture Galleries of Boston, Inc., LZB
Furniture Galleries of Kansas City, Inc., LZB Furniture Galleries of Paramus,
Inc., LZB Furniture Galleries of St. Louis, Inc., LZBFG of South Florida, LLC
and LZB Furniture Galleries of Washington D.C., Inc.

Schedule 8.1(y)

2

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 
	Outside warehouse location	 	Tenant name	 	Warehouseman name	 	Warehouseman address
	1224 Pecan Ave, Philadelphia, MS 

39350

	 	LZB Manufacturing,
Inc.
	 	City of
Philadelphia,
Mississippi
	 	525 Main Street, Philadelphia,

MS 39350
	 
	 	 	 	 	 	 
	107 Old Decatur Rd.; Union, MS 39365

	 	LZB Manufacturing,
Inc.
	 	Apache Products

Company
	 	107 Service Road, Anderson, SC

29625
	 
	 	 	 	 	 	 
	5015 East Raines Road; Memphis, TN

38118

	 	LZB Manufacturing,
Inc.
	 	Expeditors
	 	5396 Distriplex Farms Dr.

Memphis, TN 38141
	 
	 	 	 	 	 	 
	2203 Sherrill Drive; Statesville,
NC 
28625

	 	La-Z-Boy
Greensboro, Inc.
	 	NK-Statesville

Property LLC
	 	c/o Newkirk Realty Trust,
Inc., 7 
Bullfinch Place, Ste.
500, P.O. 
Box 9507, Boston, MA
02114
	 
	 	 	 	 	 	 
	2424 Norwood St., Lenoir, NC 28645

	 	Kincaid Furniture

Company,

Incorporated
	 	Schwarz & Schwarz,
Inc.
	 	P.O. Box 1104, Asheboro, NC

27204
	 
	 	 	 	 	 	 
	800 S. Weber Rd., Bolingbrook, IL
60490

	 	La-Z-Boy Showcase
Shoppes, Inc.
	 	MLRP Kopperud Phase
II, LLC
	 	c/o ML Realty Partners, LLC,

One Pierce Place, Itasca, IL

60143
	 
	 	 	 	 	 	 
	800 Centerpoint Blvd., New Castle,
DE 
197205

	 	Montgomeryville
Home Furnishings,
Inc.
	 	Centerpoint 800, LLC
	 	1201 North Market St., Ste.
1605, 
Wilmington, DE 19801
	 
	 	 	 	 	 	 
	900 International Parkway, Sunrise,
FL 
33325

	 	LZBFG of South
Florida, LLC
	 	AMB/NDP Local, L.P.
	 	c/o AMP Property, L.P., Sixty

State Street, Ste. 1200,
Boston, 
MA 02109
	 
	 	 	 	 	 	 
	1791 Crossroads Dr., Odenton, MD
21113

	 	LZB Furniture
Galleries of
Washington, D.C.,
Inc.
	 	Arundel Crossing
III, L.L.C.
	 	c/o Opus Properties, L.L.C.,
10350 Bren Road, Minnetonka,
MN 55343
	 
	 	 	 	 	 	 
	7702 E. Funston, Wichita, KS 67207

	 	LZB Furniture
Galleries of Kansas
City, Inc.
	 	Thomas Transfer &
Storage Co. Inc.
	 	7701 E. Osie, Wichita, KS 67207

Leased Stores:

See attached.

Leased Offices:

	 	 	 	 	 	 	 
	Office location	 	Tenant name	 	Landlord name	 	Landlord address
	4900 Hickory Blvd., Hickory, NC 28601

	 	Kincaid Furniture

Company,

Incorporated
	 	Gregory A. Kaziah
(d/b/a
Ashley/Brooke)
	 	Property Group,
LLC, 4996
Hickory
Blvd., Hickory, NC

 

			
	5	 	Chief Executive Office of Montgomeryville Home
Furnishings, Inc.

Schedule 8.1(y)

3

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 
	Office location	 	Tenant name	 	Landlord name	 	Landlord address
	4310 Regency Drive, Suite 101, High

Point, NC 272656

	 	La-Z-Boy
Greensboro, Inc.
	 	J&A Regency, LLC
and 4 Smiths
Regency, LLC
	 	c/o North State
Property 
Company,
3288 Robinhood

Road,
Winston-Salem, NC

27103
	 
	 	 	 	 	 	 
	724 Hoffman Street, Hammond, IN

463277

	 	La-Z-Boy Showcase
Shoppes, Inc.
	 	Forcey Properties

MLRP Kopperud Phase

II LLC
	 	One Pierce Place

Ithasca, IL 60143
	 
	 	 	 	 	 	 
	13145 Lake Front Drive, Earth City, 

MO, 63045

	 	LZB Furniture
Galleries of St.
Louis, Inc.
	 	13185 LF Corporation
	 	75 Remittance
Drive, Suite 
1589 Chicago, IL 60675
	 
	 	 	 	 	 	 
	N-240 Holiday Inn Drive, Cambridge,

ON N3C 3X4, Canada8

	 	La-Z-Boy Canada

Limited
	 	H. De Groot Real
Estate Limited
	 	590 Eastgate Walk

Waterloo, ON

N2K 2W2

Other locations: Elk Air Partners, L.L.C.

No. 116 Moo 1, Tambol Banchang, Amphoe, Panusnikom, Chonburi, Thailand.

Irvin Industries offices, 333 Industrial Drive, Adrian, MI 49221-7801 – books and records relating
to ELK Air Partners, L.L.C.

Freight Forwarders:

	 	 	 	 	 
	 	 	Freight	 	 
	 	 	Forwarder	 	 
	Entities using forwarder	 	Name	 	Freight Forwarder Address
	Kincaid Furniture
Company,
 Incorporated,
LZB Manufacturing,
 Inc.

	 	Agility

(Geologistics)
	 	3505 Naturally Fresh Boulevard,
Suite 340
Atlanta, Georgia, 30349
	 
	 	 	 	 
	La-Z-Boy Greensboro, Inc.

	 	Global Link
Logistics, Inc.
	 	101 University Avenue, Suite 230

  Palo Alto, CA 94301
	 
	 	 	 	 
	La-Z-Boy Greensboro, Inc.

	 	Expeditors
	 	1015 Third Ave, 12th Floor

Seattle WA 98104
	 
	 	 	 	 
	La-Z-Boy Greensboro, Inc.

	 	CH Robinson
	 	14701 Charlson Road

Eden Prairie, MN 55347-5076
	 
	 	 	 	 
	La-Z-Boy Greensboro,
Inc.,
 Kincaid Furniture
Company, Incorporated,
LZB Manufacturing,
Inc.

	 	Schenker DB

Logistics
	 	1800 Nicholas Blvd

Elk Grove Village IL 60007
	 
	 	 	 	 
	La-Z-Boy Greensboro, Inc.

	 	Schenker Charleston
	 	7221 Investment Drive

N. Charleston, SC 29418

 

			
	6	 	Chief Executive Office of La-Z-Boy Greensboro, Inc.
	 
	7	 	Chief Executive Office of La-Z-Boy Showcase Shoppes,
Inc.
	 
	8	 	Chief Executive Office of La-Z-Boy Canada Limited

Schedule 8.1(y)

4

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 
	 	 	Freight	 	 
	 	 	Forwarder	 	 
	Entities using forwarder	 	Name	 	Freight Forwarder Address
	Kincaid Furniture
Company,
 Incorporated,
La-Z-Boy
 Greensboro,
Inc.

	 	American Global

(test shipments)
	 	53 Perimeter Center East, Suite 450

Atlanta, GA 30346
	 
	 	 	 	 
	Bauhaus U.S.A., Inc.

	 	Evergreen Marine
	 	Evergreen Shipping Agency
(America) Corporation 
(Atlanta
Office)
100 Galleria Parkway N.W.,
Suite 1020

Atlanta, Georgia 30339
	 
	 	 	 	 
	Bauhaus U.S.A., Inc.

	 	UTI
	 	Suites 1000 And 1500
100
Oceangate, Long Beach
Los Angeles, Ca 90802
	 
	 	 	 	 
	England, Inc.

	 	Jas Forwarding, Inc.
	 	One Lakeview Place

25 Century Blvd., # 603

Nashville, TN 37214

Schedule 8.1(y)

5

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(y)

Locations of Collateral

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Zip	 	 	 	 	 	 	 	Zip
	City, State	 	Code	 	Landlord	 	Landlord Address	 	City, State	 	Code
	Nashua, NH

	 	03060	 	 	Linear Retail Nashua#l, LLC
	 	Five Burlington Woods Drive
	 	Burlington, MA
	 	01803	 
	Nashua, NH

	 	03060	 	 	Linear Retail Nashua#l, LLC
	 	Five Burlington Woods Drive
	 	Burlington, MA
	 	01803	 
	Natick, MA

	 	01760	 	 	Baker Natick Promenade, LLC
	 	209 Royal Tern Rd. N
	 	Ponte Vedra, FL
	 	32082	 
	Plymouth, MA

	 	02360	 	 	Plymouth Gateway, LLC
	 	200 Oak Point Drive
	 	Middleboro, MA
	 	02346	 
	Saugus, MA

	 	01906	 	 	Petco Animal Supplies, Inc
	 	9125 Rehco Road
	 	San Diego, CA
	 	92121	 
	Stoughton, MA

	 	02072	 	 	Technology Center Drive, LLC
	 	407 Squire Road
	 	Revere, MA
	 	02151	 
	Warwick, RI

	 	02886	 	 	Duke Associates, LLC
	 	110 Faunce Corner Mall Road
	 	North Dartmouth, MA
	 	02747	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Arlington 

Heights,
IL

	 	60004	 	 	Plaza 83 Venture, c/o Edward
Schwartz & Co
	 	3190 Doolitte Drive
	 	Northbrook, IL
	 	60062	 
	Bolingbrook, IL

	 	60440	 	 	Gateway East, LLC
	 	707 Skokie Blvd, Suite 400
	 	Northbrook, IL
	 	60062	 
	Bloomingdale, IL

	 	60108	 	 	RMS Properties, Inc
	 	331B West Golf Road
	 	Schaumburg, IL
	 	60195	 
	Crystal Lake, IL

	 	60014	 	 	Twin Ponds Development,
L.L.C., c/o The Harlem Irving
Co.
	 	4104 N Harlem Ave.
	 	Norridge, IL
	 	60706	 
	Glen View, IL

	 	60026	 	 	Willow Associates, L.L.C., c/o
The Harlem Irving Co.
	 	4104 N Harlem Ave.
	 	Norridge, IL
	 	60706	 
	Gurnee, IL

	 	60031	 	 	Circuit City Stores, Inc
	 	9950 Mayland Drive
	 	Richmond, VA
	 	23233-1464	 
	Lake Zurich, IL

	 	60047	 	 	Deerpath Commons Retail Center
LLC
	 	745 Ela Road
	 	Lake Zurich, IL
	 	60047	 
	Lombard, IL

	 	60148	 	 	Forcey Properties
	 	668 E 900N
	 	Westville, IN
	 	46391	 

Schedule 8.1(y)

1

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Zip	 	 	 	 	 	 	 	Zip
	City, State	 	Code	 	Landlord	 	Landlord Address	 	City, State	 	Code
	Merrillville, IN

	 	46410	 	 	Forcey Properties
	 	668 E 900N
	 	Westville, IN
	 	46391	 
	Naperville, IL

	 	60540	 	 	Fox River Commons Shopping
Center, LLC, c/o The DiMucci
Co.
	 	285 W Dundee Road
	 	Palatine, IL
	 	60074	 
	Oak Brook, IL

	 	60523	 	 	The Shops at Oak Brook Place,
c/o CREIT Management
	 	130 Bloor Street West, Suite
1001
	 	Toronto, Ontario,
Canada
	 	M5S IN5

	 
	Orland Park, IL

	 	60462	 	 	Forcey Properties
	 	668 E 900N
	 	Westville, IN
	 	46391	 
	South Elgin, IL

	 	60177	 	 	V-Land South Elgin Crossing,
LLC, c/o V-Land Corporation
	 	321 North Clark Street,
Suite 2440
	 	Chicago, IL
	 	60610	 
	Schaumburg, IL

	 	60195	 	 	RMS Properties
	 	288 E Geneva Road
	 	Wheaton, IL
	 	60187	 
	Vernon Hills, IL

	 	60061	 	 	Forcey Properties
	 	668 E 900N
	 	Westville, IN
	 	46391	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Wichita, KS

	 	67206	 	 	SSS Realty Co., LLC
	 	30137 N. 72nd Place
	 	Scottsdale, AZ
	 	85266	 
	Overland Park, KS

	 	66210	 	 	Village of Overland Pointe LLC
	 	9990 College Blvd., Suite 110
	 	Overland Park, KS
	 	66210	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Brookfield, CT

	 	06804	 	 	Landmark Heights, LLC
	 	24 Lindencrest Drive
	 	Danbury, CT
	 	06811	 
	Manchester, CT

	 	06040	 	 	Northern Hills, LLC
	 	1109 Rose Lane
	 	Virginia Beach, VA
	 	23451-3859	 
	Milford, CT

	 	06460	 	 	Post Road 1750, LLC
	 	245 Cherry Street
	 	Milford, CT
	 	06460	 
	Nanuet, NY

	 	10954	 	 	SF Properties, LLC
	 	500 Bradley Hill Road
	 	Blauvelt, NY
	 	10913	 
	Newington, CT

	 	06111	 	 	Cole LZ Newington CT, LLC
	 	2555 East Camelback Road,
Suite 400
	 	Phoenix, AZ
	 	85016	 
	Paramus, NJ

	 	07652	 	 	Neptune Associates, L.P.
	 	Thirty Five Plaza East 65, 

Route 4
	 	Paramus, NJ
	 	07652	 
	Scarsdale, NY

	 	10583	 	 	691 Central Park Ave, LLC, c/o
Weinberg Brothers
	 	365 White Plains Road
	 	Eastchester, NY
	 	10709	 

Schedule 8.1(y)

2

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Zip	 	 	 	 	 	 	 	Zip
	City, State	 	Code	 	Landlord	 	Landlord Address	 	City, State	 	Code
	New York, NY

	 	10012	 	 	VNO 387 West Broadway LLC, c/o
Vornado Realty Trust
	 	888 Seventh Ave
	 	New York, NY
	 	10019	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Newark, DE

	 	19713	 	 	Center Pointe Associates, L.P.
	 	105 Foulk Road
	 	Wilmington, DE
	 	19803	 
	Bargaintown, NJ

	 	08234	 	 	EN 321, LLC
	 	1763 Springfield Ave,
	 	Maplewood, NJ
	 	07040	 
	Langhorne, PA

	 	19047	 	 	The Snyder Family Trust
	 	625 Resolano Drive
	 	Pacific Palisades,
CA
	 	90272	 
	Marlton, NJ

	 	08053	 	 	73 Designers LLC, c/o Penn
Real Estate Group, Ltd
	 	4427 Spruce Street
	 	Philadelphia, PA
	 	19104	 
	Montgomeryville, PA

	 	18936	 	 	Integral Development Associates
	 	510 Township Line Road
	 	Blue Bell, PA
	 	19422	 
	Springfield, PA

	 	19064	 	 	Provco Partners, c/o Radnor
Recreational
	 	919 Conestoga Road, Bldg 2
Suite 106
	 	Rosemont, PA
	 	19010	 
	Turnersville, NJ

	 	08012	 	 	Milton Gottlieb as Trustee
	 	1209-1/2 De La Vina
	 	Santa Barbara, CA
	 	93101	 
	Wilmington, DE

	 	19803	 	 	Delle Donne & Associates, Inc.
	 	650 Naamans Road
	 	Claymont, DE
	 	19703	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Ft. Lauderdale

	 	33308	 	 	West, LLC
	 	1100 International Parkway
	 	Sunrise, FL
	 	33323-2840	 
	Jensen Beach, FL

	 	34957	 	 	Seven J’s Investments, Ltd
	 	2049 SW Poma Drive
	 	Palm City, FL
	 	34990	 
	Palm Beach Gardens,
FL

	 	33410	 	 	RCA Center II of Florida, LLC
	 	4300 Catalfumo Way
	 	Palm Beach Gardens,
FL
	 	33410	 
	Pembroke Pines, FL

	 	33026	 	 	FPIP II, Ltd, c/o Morgan Real
Estate, Inc
	 	3696 N. Federal Highway,
Suite 200
	 	Ft. Lauderdale, FL
	 	33308	 
	Wellington, FL

	 	33414	 	 	City Furniture, Inc.
	 	6701 North Hiatus Road
	 	Tamarac, FL
	 	33321	 

Schedule 8.1(y)

3

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Zip	 	 	 	 	 	 	 	Zip
	City, State	 	Code	 	Landlord	 	Landlord Address	 	City, State	 	Code
	O’Fallon, IL

	 	63366	 	 	Megan Crossings, L.L.C.
	 	9109 Watson Road, Suite 300
	 	St. Louis, MO
	 	63126	 
	O’Fallon, IL

	 	62269	 	 	Commercial Real Estate
Investors, L.P.
	 	1331 Park Plaza Drive #4
	 	O’Fallon, IL
	 	62269	 
	St. Louis, MO

	 	63123	 	 	LMB Properties, L.L.C.
	 	134 Frontenac Forest
	 	St. Louis, MO
	 	63131	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Alexandria, VA

	 	22315	 	 	Kingstowne Parcel O., L.P.,
c/o Halle Enterprises
	 	2900 Linden Lane, Suite 300
	 	Silver Spring, MD
	 	20910	 
	Annapolis, MD

	 	21401	 	 	AF Limited Partnership, c/o
Nellis Corp.
	 	6001 Montrose Road, Suite 600
	 	Rockville, MD
	 	20852	 
	Chesapeake, VA

	 	23320	 	 	William J. Roach, Jr., c/o
Harvey Lindsay Commercial Real
Estate
	 	1400 Dominion Tower, 999
Waterside Dr.
	 	Norfolk, Virginia
	 	23510-3300	 
	Columbia, MD

	 	21045	 	 	AAK Dobbin LLC
	 	5850 Waterloo Road, Suite 230
	 	Columbia, MD
	 	21045	 
	Fairfax, VA

	 	22030	 	 	10900 Lee Highway Associates,
LP, c/o Schooler Asset
Management
	 	7514 Wisconsin Ave Suite 100
	 	Bethesda, MD
	 	20814	 
	Fredericksburg, VA

	 	22407	 	 	Fredericksburg 35, LLC, c/o
Rapport Management Co.
	 	8405 Greensboro Drive, Suite
830
	 	McLean, VA
	 	22102-5118	 
	Gainesville, VA

	 	20155	 	 	Atlas Walk L.C., c/o The
Peterson Companies
	 	12500 Fair Lakes Circle,
Suite 430
	 	Fairfax, VA
	 	22033	 
	Newport News

	 	23606	 	 	Glenbrook Properties-Muller
Lane, LLC
	 	6508 Old Farm Court
	 	Rockville, MD
	 	20852	 
	Rockville, MD

	 	20852	 	 	K and G Enterprises
	 	4405 East-West Highway
	 	Bethesda, MD
	 	20814	 
	Virginia, VA

	 	23452	 	 	Nelms Lane Associates, L.L.C.,
c/o NAI Harvey Lindsay
	 	999 Waterside Drive, Suite
1400
	 	Norfolk, VA
	 	23510	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Bel Air, MD

	 	24014	 	 	KCGG Bel Air LLC
	 	101 Hulbert Road
	 	Syracuse, NY
	 	13224	 
	Glen Burnie, MD

	 	21061	 	 	The Sunbrite Laundry, Inc
	 	563 Broadwater Road
	 	Arnold, MD
	 	21012	 
	Baltimore, MD

	 	21237	 	 	VEI Pulaski, LLC
	 	1408 Bare Hills Road, Suite 210
	 	Baltimore, MD
	 	21209	 

Schedule 8.1(y)

4

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Zip	 	 	 	 	 	 	 	Zip
	City, State	 	Code	 	Landlord	 	Landlord Address	 	City, State	 	Code
	Towson, MD

	 	21204	 	 	S & S Auto Properties, LLP
	 	
4212 Ridge Road
	 	Baltimore, MD
	 	21236	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Toronto, Canada

	 	 	 	 	 	Desjardins Financial Security
Life Assurance Company	 	 	 	 	 	 	 	 

Schedule 8.1(y)

5

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 8.1(z)

Insurance

	 	 	 
	Coverage	 	Insurer
	Property

	 	Am.Guarantee & Liability Co.(Zurich)
	 
	 	 
	Crime

	 	St. Paul Fire & Marine
	 
	 	 
	General Liability (excluding Product)

	 	Travelers
	 
	 	 
	Foreign Liability (including Canada)

	 	St. Paul Fire & Marine
	 
	 	 
	Excess Liability Umbrella

	 	AIG
	 
	 	 
	Excess Liability Umbrella

	 	Fireman’s Fund
	 
	 	 
	Excess Workers’ Comp Liability -all except
CA

	 	Midwest Employers Casualty
	 
	 	 
	Excess Workers’ Comp Liability — California

	 	Midwest Employers Casualty (CA)
	 
	 	 
	Misc. Workers’ Comp — Misc. States

	 	Travelers
	 
	 	 
	Ocean Cargo

	 	Fireman’s Fund
	 
	 	 
	LZB Retail Package Policy —

  (Property-Crime-Liability-Umbrella)

	 	Travelers
	 
	 	 
	LZB Retail Excess Liability Umbrella

	 	Travelers
	 
	 	 
	LZB Retail Workers’ Comp — All Other States

	 	Travelers
	 
	 	 
	LZB Retail Workers’ Comp — MA Only

	 	Travelers
	 
	 	 
	LZB Retail Employment Practices Liability

	 	Travelers
	 
	 	 
	LZB (MFG) Workers Comp — CA

	 	St. Clair Insurance
	 
	 	 
	LZB (MFG) Workers Comp — All Other States

	 	St. Clair Insurance
	 
	 	 
	Workers’ Comp — Retail

	 	St. Clair Insurance (per occurrence)
	 
	 	 
	LZB Retail Employment Practice Liability

	 	St. Clair Insurance (per occurrence)
	 
	 	 
	 

	 	St. Clair Insurance (annual aggregate)
	 
	 	 
	LZB Motor Truck Cargo

	 	St. Clair Insurance

Schedule 8.1(z)

6

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 
	Coverage	 	Insurer
	Directors & Officers Liability

	 	Chubb Insurance
	 
	 	 
	Excess Directors & Officers

	 	St. Paul
	 
	 	 
	Fiduciary Liability

	 	St. Paul
	 
	 	 
	Excess Fiduciary

	 	Chubb Insurance

Schedule 8.1(z)

7

 

Credit Agreement — La-Z-Boy Incorporated

Schedule 12.2

Existing Liens

     England, Inc.:

	 	 	 	 	 	 	 	 	 
	Jurisdiction	 	Secured Party	 	Filing Number	 	Filing Date	 	Collateral Description
	Michigan Department
of State

	 	The CIT
Group/Commercial
Services, Inc.
	 	99874B

Continuation

Statement filed:

2003150563-1
	 	12/23/98

Continuation

Statement filed:

8/6/03
	 	All accounts, general
intangibles,
instruments,
documents, books and
records
	 
	 	 	 	 	 	 	 	 
	Michigan Department
of State

	 	Branch Banking and
Trust Company
	 	D860862
	 	1/10/02
	 	All accounts,
accounts receivable,
general intangibles,
chattel paper,
contracts, contract
rights, instruments,
documents,
acceptances, bills,
notes and all other
forms of obligations
at any time owing to
the Debtor; all cash
and non-cash proceeds
of the foregoing
items, including
returned, rejected
and repossessed goods
	 
	 	 	 	 	 	 	 	 
	Michigan Department
of State

	 	GMAC Commercial

Credit LLC
	 	36291C

Continuation

Statement filed:

2006196508-5
	 	4/17/02

Continuation

Statement filed:

11/27/06
	 	All present and
future accounts,
instruments, contract
rights, chattel
paper, documents,
general intangibles
and the proceeds
thereof, all
returned, reclaimed
or repossessed goods,
and all books and
records pertaining to
the foregoing
	 
	 	 	 	 	 	 	 	 
	Michigan Department
of State

	 	GMAC Commercial

Credit LLC
	 	36896C

Continuation

Statement filed:

2006196481-7
	 	4/30/02

Continuation

Statement filed:

11/27/06
	 	All present and
future accounts,
instruments, contract
rights, chattel
paper, documents,
general intangibles
and the proceeds
thereof, all
returned, reclaimed
or repossessed goods,
and all books and
records pertaining to
the foregoing

 

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 	 	 
	Jurisdiction	 	Secured Party	 	Filing Number	 	Filing Date	 	Collateral Description
	Michigan Department
of State

	 	The CIT
Group/Commercial
Services, Inc.
	 	46703C

Continuation

Statement filed:

2007068158-9
	 	10/16/02

Continuation

Statement filed:

4/30/07
	 	All (a) accounts,
instruments,
documents, chattel
paper (including
electronic chattel
paper), general
intangibles
(including all
payment intangibles
and other rights to
payment), and any
other obligations
owing to Debtor, (b)
unpaid seller’s
rights (including
rescission, replevin,
reclamation,
repossession and
stoppage in transit),
(c) rights to any
inventory represented
by the foregoing,
including returned
goods, (d) reserves
and credit balances,
(e) guaranties,
collateral,
supporting
obligations and
letter of credit
rights, (f) insurance
policies, proceeds or
rights, (g) tax refunds, (h) cash and
non-cash proceeds,
and (i) books and
records in any way
related to the
foregoing
	 
	 	 	 	 	 	 	 	 
	Michigan Department
of State

	 	The CIT
Group/Commercial
Services, Inc.
	 	2003220124-6
	 	11/17/03
	 	In lieu financing
statements to
continue filings from
Tennessee Secretary
of State:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	All present and
future accounts sold
and assigned from
time to time by
Debtor to Secured
party; all contract
rights, instruments,
documents, chattel
paper, general
intangibles, returned
or repossessed goods
and all books and
records (including,
without limitation,
credit files,
computer programs,
print-outs, and other
computer materials
and records), which
in each case arise
out of or are related
to such accounts or
the sale or other
disposition of goods
or services giving
rise to such
accounts; all sums
standing to the
credit of such Debtor
and in any property
of Debtor in Secured
Party’s possession;
and all proceeds of
the foregoing

 

 

Credit Agreement — La-Z-Boy Incorporated

	 	 	 	 	 	 	 	 	 
	Jurisdiction	 	Secured Party	 	Filing Number	 	Filing Date	 	Collateral Description
	Michigan Department
of State

	 	GMAC Commercial

Credit LLC
	 	2004149833-3
	 	7/27/04
	 	In lieu financing
statements to
continue filings from
Tennessee Secretary
of State:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	All present and
future accounts,
instruments, contract
rights, chattel
paper, documents,
general intangibles
and the proceeds
thereof; and all
returned, reclaimed
or repossessed goods
and all books and
records pertaining to
the foregoingexv10w12

 

Exhibit 10.12

	BLAKE DAWSON WALDRON
LAWYERS
Farmin Agreement
Ausam Resources Pty Ltd
ABN 12 090 935 738
Mosaic Oil NL
ABN 56 003 329 084
Santos (BOL) Pty Ltd
ABN 35 000 670 575
Level 32 Exchange Plaza 2 The Esplanade
PERTH WA 6000
Telephone: (08)93668000
Fax: (08) 9366 8111 Ref: ACXB 09-1397-4409

 

 

	CONTENTS
1. INTERPRETATION 2
1.1 Definitions 2
1.2 Monetary Amounts 5
2. CONDITION PRECEDENT 5
3. FARM IN 6
3.1 Farmin Interest 6
3.2 Excluded Equipment 1
3.3 Stage 1 Farmin Obligations 7
3.4 Earning of Stage 1 Farmin Interest 8
3.5 Stage 2 Farmin Obligations 8
3.6 Earning of Stage 2 Farmin Interest 9
3.7 Funding of Further Expenditures 9
3.8 Valuation of Farmin Interest 9
4. CASH CALLS 9
5. RIGHTS AND OBLIGATIONS DURING EARNING PERIOD 9
5.1 Ausam’s Rights 9
5.2 Mosaic’s Obligations 10
5.3 Mutual Obligations 11
6. GAS MARKETING 11
7. JOA AND TRANSFERS 11
7.1 Ausam to assume obligations under JOA 11
7.2 Ausam to become a Party to the JOA 11
7.3 Transfer of Stage 1 and Stage 2 Farmin Interest 11
7.4 Access to Permit Information 12
8. WARRANTIES 12
8.1 Warranties from Mosaic 12
8.2 Warranties from Santos 13
8.3 Warranties from all Parties 13
8.4 Liability for Breach of Warranty 14
8.5 No Warranty as to Prospects 14
8.6 Easements for Pipeline 15
8.7 Indemnity 15
9. APPROVAL AND REGISTRATION 15
10. GOODS AND SERVICES TAX 16

 

 

	11. CONFIDENTIALITY 17
12. FORCE MAJEURE 17
13. GENERAL 17
13.1 Communications 17
13.2 Legal costs and stamp duty 18
13.3 Costs of implementation 18
13.4 Governing law and jurisdiction 19
13.5 Waivers 19
13.6 Variation 19
13.7 Further assurances 19
13.8 Entire Agreement 19
13.9 Counterparts 19
13.10 Interpretation 19
13.11 Business days 20
13.12 Assignment 20
13.13 Several Liability 20
13.14 Invalidity 20
SCHEDULE 1 — Part 1 — Permits (Areas) PPL 119 and Bainbilla Block
Part 2 — Downlands East Joint Venture and Spring Grove Field
Part 3 — Brynog Exploration Play
SCHEDULE 2 — AFE for MOS 2005 2 D Seismic Program
SCHEDULE 3 — Interests of each Party in the Permits
SCHEDULE 4 — Native Title Claims and Disputes

 

 

	Queensland Duty Not Payable
Signed:
FARM1N AGREEMENT
DATE 23nd may 2006

	PARTIES

	Ausam Resources Pty Ltd ABN 12 090 935 738 of Level 2, 4 Park Road, Milton, Queensland
(Ausam)

	Mosaic Oil NL ABN 56 003 329 084 of Level 3, 6-8 Underwood Street, Sydney, New South Wales
(Mosaic)

	Santos (BOL) Pty Ltd ABN 35 000 670 575 of Ground Level, 91 King William Street, Adelaide, South
Australia (Santos)

	RECITALS

	A. Mosaic is a registered holder and a beneficial owner of a 83.333% interest in PL 119
(exclusive of the Downlands East Area) and in PPL 58 and the holder of a 83.333% beneficial
interest in the Bainbilla Block of ATP 47 1P (exclusive of the Spring Grove Field), the
holder of a 71.153% beneficial interest in PL 119 Downlands East Joint Venture relating to
the Downlands East Area within PL 119 and the holder of a 77.5% beneficial interest in the
Spring Grove Field Joint Venture relating to the Spring Grove Field within the Bainbilla
Block.

	B. Santos is a registered holder and a beneficial owner of a 16.667% interest in PL 119
(exclusive of the Downlands East Area) and in PPL 58, the holder of a 28.847% beneficial
interest in PL 119 Downlands East Joint Venture relating to the Downlands East Area within
PL 119 and the holder of a 16.667% beneficial interest in the Bainbilla Block of ATP 47 1P
exclusive of the Spring Grove Field.

	C. Mosaic and Santos are the current parties to the JOA which governs their relationship
in relation to the Permits. Mosaic and Black Gold Oil Pty Ltd (Black Gold) are the current
parties to the JOA which relates to the Spring Grove Field in which Mosaic has a 77.5%
interest and Black Gold has a 22.5% interest.

	D. By letter of agreement dated 6 March 2006, Ausam and Mosaic agreed the principal terms
upon which Ausam would earn the Stage I Farmin Interest and the Stage 2 Farmin Interest in
the Permits.

	E. Mosaic has had subsequent discussions with Santos whereby Santos has agreed in
principle to the terms of the farmin proposal between Ausam and Mosaic and Santos has
agreed to participate in that proposal and to transfer parts of its interests in the
Permits to make up the interests which Ausam may earn in the Permits.

	F. Ausam, Mosaic and Santos wish to enter into this Agreement to record their entire
understanding of the basis upon which Ausam will earn the Farmin Interests from Mosaic and
Santos.

 

 

	OPERATIVE PROVISIONS 1. INTERPRETATION 1.1 Definitions

	The following definitions apply in this Agreement.
Agreement means this agreement including its schedules and annexures.

	ATP 471P means Authority To Prospect For Petroleum 471P granted and continued in force
under the Petroleum Act 1923 of Queensland.

	Bainbilla Block means the exploration area within ATP 47 1P described in part 1 of schedule 1.

	Black Gold means Black Gold Oil Pty Ltd ABN 27 091 321 274 Condition Precedent means the
condition specified in clause 2.

	Downlands East Area means that part of the area of PL 119 described in part 2 of schedule 1.

	Downlands East Joint Venture means the joint venture between Mosaic and Santos relating to the
Downlands East Area and constituted upon the terms of the JOA in which Mosaic has a 71.153%
participating interest and Santos has a 28.847% participating interest.

	Earning Period means the period from the Effective Date up to the completion of the Stage 1
Obligations and, if applicable, the Stage 2 Obligations.

	Effective Date means 7 days after the date on which Mosaic notifies Ausam that the Condition
Precedent has been satisfied.

	Encumbrance means any mortgage, charge, lien, writ, caveat, royalty, net profit interest or
other encumbrance or third party interest, but excluding:

	(a) Royalties payable to Government;

	(b) Legal Requirements;

	(c) Terms and conditions of the Permit;

	(d) Terms of the JOA; and

	(e) The Royalty Interests.

	Excluded Equipment means the following plant and equipment used in respect of petroleum
production operations within the Farmin Area and which are owned by Mosaic :

	(a) Downland compressor ( CM 219);

	(b) Glycol dehydrator and reboiler;

 

 

	(c) Separator ( V 631); and

	(d) Storage tank (TK 29).

	Farmin Area means the area of the Permits.

	Farmin Interest means the Stage 1 Farmin Interest and Stage 2 Farmin Interest, as applicable.

	Force Majeure means any event or circumstance not within the control of the Party claiming
Force Majeure, and which by the exercise of reasonable care, that Party is not able to
prevent or overcome, including without limiting the generality of the nature of any such
event or circumstance any:

	(a) act of God;

	(b) strike, lockout, ban or limitation of work or other industrial disturbance (whether
or not the affected Party is a party to it or would be able to influence a settlement
thereof);

	(c) act of the public enemy, war (declared or undeclared), blockade, revolution, riot,
insurrection, civil commotion or hostility;

	(d) lightning, fire, storm, flood, earthquake, inclement weather or perils of navigation;

	(e) quarantine restriction or epidemic;

	(f) accident, explosion or breakage;

	(g) any act, order or demand of any court or any Government, including any restraint,
embargo, inability to obtain (or delay in obtaining) Governmental approvals, permits,
licences or allocations, restraint on access to the Permit areas, or termination or
suspension of any Permit;

	(h) action, whether legal or otherwise, by conservation groups or other groups opposed to
the conduct of operations in respect to the Farmin Area on the basis of environmental or
other considerations;

	(i) shortage or unavailability of equipment, materials or labour, or delay in
transportation or communication, or breakage of or accidental damage to machinery or
pipelines; or

	(j) freezing of well or delivery facilities, cratering, washout, well blowout or
necessity for making repairs to or reconditioning of wells;

	Provided that Force Majeure shall not include any failure to pay money or any lack or
restriction of funds.

	Government means the government of the Commonwealth of Australia or the State of Queensland.

	JOA means the Joint Operating Agreement for ATP 145P — Bainbilla Block dated 3 October
1989 originally between International Oil Proprietary, Bridge Oil Limited, Petroz N.L and
Ampolex (PPL) Pty Limited, OGMD Development Pty Ltd and Australian

 

 

	Petroleum Management Limited and which now with all necessary modifications applies as
between the following parties in respect of the following areas or permits:

	(a) Mosaic and Santos in respect of PL119 including the Downlands East Area;

	(b) Mosaic and Santos in respect of PPL58;

	(c) Mosaic and Santos in respect of the Bainbilla Block of ATP 471P exclusive of the
Spring Grove Field; and

	(d) Mosaic and Black Gold in respect of the Spring Grove Field within the Bainbilla
Block.

	Unless otherwise indicated in this Agreement, any reference to JOA means each of the JOAs as
applying to each of the Permits.

	Legal Requirements means obligations arising under present or future legislation
regulations by-laws or orders of any Government, including notices requiring the carrying
out of any works.

	Liabilities means claims, demands, proceedings, costs, losses, obligations and liabilities,
arising under statute or at common law or in equity, and arising in contract or in tort or
otherwise, but excludes any future or contingent claims, demands, proceedings, costs,
losses, obligations and liabilities.

	Operating Committee means each Operating Committee under each JOA,

	Operator means the Operator from time to time under the JOA, being Mosaic at the date of this
Agreement.

	Party means a party to this Agreement.

	Permits means PL 119, PPL 58 and the Bainbilla Block of ATP 471P including the Spring Grove
Field.

	Permit Information means all information and files, in physical or electronic form, available
with respect to the Farmin Area including (a) all geophysical, geological and geochemical
information and data; and (b) all records and files maintained in relation to the Permits.

	Petroleum Act means the Petroleum Act 1923 (Queensland) and the Petroleum and Gas (Production
and Safety) Act 2004.

	Pipeline means the pipeline the subject of PPL 58.

	PL 119 means Petroleum Lease 119 granted under the Petroleum Act 1923.

	PPL 58 means Pipeline Licence 58 continued in force under the Petroleum and Gas
(Production and Safety) Act 2004.

 

 

	Royalty Interests means the royalty interests and net profits interest(s) under the JOA to
which Mosaic or Santos are subject and including those interests of which Santos is a
beneficiary.

	Spring Grove Field means that part of the Bainbilla Block of ATP 47 1P described in part 2
ofschedule 1.

	Spring Grove Field Joint Venture means the joint venture between Mosaic and Black Gold relating
to the Spring Grove Field as constituted by the JOA.

	Stage I Farmin Interest means up to a 26.9% legal and beneficial interest in the Permits and
the JOA including all existing wells, reserves and infrastructure within the Farmin Area in
which Mosaic and Santos (as the case may be) have an interest but not including the
Excluded Equipment.

	Stage I Obligations means those obligations set out in clause 3.3. Stage I Work Program has
the meaning given to that term in clause 3.3.

	Stage 2 Farmin Interest means up to a further 8.1% legal and beneficial interest in the
Permits and the JOA including all existing wells, reserves and infrastructure within the
Farmin Area in which Mosaic and Santos (as the case may be) have an interest but not
including the Excluded Equipment.

	Stage 2 Obligations means those obligations set out in clause 3.5.

	Stage 2 Work Program has the meaning given to that term in clause 3.5 (b). 1.2 Monetary
Amounts

	Monetary amounts are expressed in Australian currency unless otherwise specified. 2. CONDITION
PRECEDENT

	(a) This Agreement is subject to and conditional upon Mosaic obtaining the necessary
consents under the JOA as it relates to the Spring Grove Field from Black Gold for the
assignment of the Farmin Interests in the Spring Grove Field from Mosaic to
Ausam.

	(b) Upon the execution of this Agreement, Mosaic will request the required consents and
will use all reasonable endeavours to obtain those consents as soon as possible. Mosaic
will give written notice to Ausam immediately upon obtaining the necessary consents and
will provide copies to Ausam.

	(c) If the necessary consents are withheld, and the withholding of such consents is
permitted under the JOA, or 90 days from the date of this Agreement has lapsed, without
such consents being obtained, then Ausam may terminate this Agreement by notice to Mosaic.

	(d) Each of Mosaic and Santos consent and agree to the other transferring its proportion of
the Farmin Interests to Ausam in accordance with the terms of this Agreement and each of
Mosaic and Santos waive any rights of pre-emption or rights of first

 

 

	refusal arising under the JOA or any other document which they might otherwise have in
respect of those transfers.

	3. FARMIN

	3.1 Farmin Interest

	(a) Ausam may earn up to a 35% Farmin Interest by funding a total expenditure of $6.5
million in accordance with this Agreement. The Farmin Interest will be provided by each of
Mosaic and Santos in the following percentages:

	(i) Mosaic — 83.333% in PL 119 (exclusive of the Downlands East Area), PPL58, the Bainbilla
Block (exclusive of the Spring Grove Field) and 100% in the Spring Grove Field and 71.153%
in the Downlands East Area; and

	(ii) Santos — 16.667% in PL 119 (exclusive of the Downlands East Area), PPL 58, the
Bainbilla Block (exclusive of the Spring Grove Field) and 28.847% in the Downlands East
Area.

	(b) If Ausam earns the full Stage 1 Farmin Interest of 26.9% then:

	(i) Mosaic will assign to Ausam in so far as the interest relates to PL 119
(exclusive of the Downlands East Area), PPL 58 and the Bainbilla Block (exclusive of the Spring
Grove Field) a 22.4166% interest and in respect of the Downlands East Area a 19.1402%
interest and in respect of the Spring Grove Field a 26.9% interest; and

	(ii) Santos will transfer to Ausam a 4.4834% interest in PL 119 (exclusive
of the Downlands East Area), PPL 58 and the Bainbilla Block (exclusive of the Spring Grove
Field) and a 7.7598% interest in the Downlands East Area.

	(c) If Ausam earns the full Stage 2 Farmin Interest of 8.1% then:

	(i) Mosaic will transfer to Ausam a 6.75% interest in PL 119 (exclusive of the Downlands
East Area), PPL 58 and the Bainbilla Block (exclusive of the Spring Grove Field), a 8.1%
interest in the Spring Grove Field and a 5.7634% interest in the Downlands East Area; and

	(ii) Santos will transfer to Ausam a 1.3 5% interest in PL 119 (exclusive of the Downlands
East Area), PPL 58 and the Bainbilla Block (exclusive of the Spring Grove Field) and a
2.3366% interest in the Downlands East Area.

	(d) Subject to the provisions of this Agreement, the interests of each of Mosaic, Santos
and Ausam:

	(i) on the date of this Agreement;

	(ii) after Ausam has earned the Stage 1 Farmin Interest; and

 

 

	(iii) after Ausam has earned the Stage 2 Farmin Interest, are set out in schedule 3.

	3.2 Excluded Equipment

	Ausam acknowledges that it has no right to acquire nor shall it acquire any interest in the
Excluded Equipment which shall at all times remain the sole property of Mosaic.

	3.3 Stage 1 Farmin Obligations

	(a) To earn the Stage 1 Farmin Interest, Ausam will fund, up to a maximum expenditure
amount of $5 million, the following work program (Stage 1 Work Program):

	(i) 100% of the costs associated with the 2D seismic acquisition and
processing program in relation to the Bainbilla Block of ATP 47 1P until the total cost of the
2D seismic acquisition and processing program reaches $500,000. Costs in excess of $500,000
will be borne pro-rata by the Parties based on each Party’s interest in the Bainbilla Block
with Ausam being deemed to have a 26.9% interest but only for this purpose, or by Ausam at
its election;

	(ii) the drilling, completion and connecting costs of the Downlands 4 well, up to a total
amount of $1,5 million. Costs in excess of $1.5 million will be borne pro-rata by the
Parties based on each Party’s interest in PL 119 with Ausam being deemed to have a 26.9%
interest but only for this purpose, or by Ausam at its election;

	(iii) the drilling, completion and connecting costs of the Downlands East 3 well, up to a
total amount of $1.5 million. Costs in excess of $1.5 million will be borne pro-rata by the
Parties to this agreement based on each Party’s interest in PL 119 with Ausam being deemed
to have a 26.9% interest but only for this purpose, or by Ausam at its election; and

	(iv) either:

	(A) the drilling of an exploration well within the Bainbilla Block to test the Brynog
Exploration Play as shown on the map set out in part 3 of schedule 1; or

	(B) the drilling of an exploration well within the Bainbilla Block at a location which is
to be agreed by the Parties,

	(as determined by the Parties) but in either case Ausam shall fund this part of the Stage 1
Farmin Obligation up to atotal cost of $1.5 million. Costs in excess of $1.5 million will
be borne pro-rata by the Parties based on each Party’s interest in the Bainbilla Block but
with Ausam being deemed to have a 26.9% interest but for this purpose only, or by Ausam at
its election.

	(b) Ausam retains the right to earn any unearned Stage 1 Farmin Interest by funding other
operations as agreed between the Parties.

 

 

	(c) Where pursuant to clause 3.3 Ausam bears the cost of any overrun of an
operation

	on the basis of a deemed interest of 26.9% and subsequently Ausam earns less than
a 26.9% Farmin Interest, then Ausam’s contribution to overrun of the relevant
operation will be adjusted on the basis of Ausam bearing a proportion of the
overrun equal to its actual Farmin Interest and a refund of any overpayment will be
made to Ausam.

	(d) Ausam agrees that, if so required by Mosaic and Santos in order to fulfil the

	compulsory expenditure requirements for ATP 47 IP for the current year, the
exploration well referred to in clause 3.3(a)(iv) shall be drilled prior to either the
Downlands 4 well referred to in clause 3.3(a)(ii) or the Downlands East 3 well
referred to in clause 3.3(a)(iii).
3.4 Earning of Stage 1 Farmin Interest

	Ausam will earn the Stage 1 Farmin Interest as follows:

	(a) Upon Ausam funding a total of $5,000,000 pursuant to clause 3.3, Ausam will
earn

	the full Stage 1 Farmin Interest, regardless of whether or not the Stage 1 Work
Program has been completed.

	(b) If the Stage 1 Work Program is completed for less than $5,000,000 then, upon

	completion of the Stage 1 Work Program, Ausam will earn part of the Stage 1
Farmin Interest at the rate of a 0.538% interest for each $100,000 expenditure
funded by Ausam (rounded to the nearest $100,000). Ausam will then have the
right to earn the balance of its Stage 1 Farmin Interest by funding further
expenditures to be agreed between the Parties, to make up the balance of the
$5,000,000.

	(c) Subject to clause 3.4(a), if the Stage 1 Work Program has not been completed by

	31 December 2006, Ausam will earn part of the Stage 1 Farmin Interest at the rate of
a 0.538% interest for each $100,000 funded by Ausam (rounded to the nearest
$100,000). Ausam will have the right to earn the balance of its Stage 1 Farmin
Interest by funding further expenditures, to make up the balance of the $5,000,000.

	(d) Where Ausam has elected to and does contribute in excess of $5,000,000 towards

	the Stage 1 Work Program, the excess amount will be credited towards Ausam’s
funding obligation under clause 3.6 should Ausam elect to earn the Stage 2 Farmin
Interest.
3.5 Stage 2 Farmin Obligations

	(a) Ausam may, by notice in writing to Mosaic and Santos, elect to earn the Stage 2

	Farmin Interest, by giving notice not later than 30 days after the first to occur of
the
completion of the Stage 1 Work Program and Ausam funding $5,000,000 under
clause 3.3. Mosaic and Santos will jointly notify Ausam when they consider that
the first of these dates has occurred.

	(b) If Ausam elects to earn the Stage 2 Farmin Interest under paragraph (a), then

	Ausam will fund the first $1,500,000 of expenditure on the following work program
(Stage 2 Work Program):

 

 

	(i) the drilling of an exploration well within the Bainbilla Block (to the

	extent that this work has not been completed as part of the Stage 1 Work
Program); or

	(ii) the drilling of an additional well in either
PL 119 or ATP 471P (Bainbilla Block), to be agreed between the
Parties.

	3.6 Earning of Stage 2 Farmin Interest

	Ausam will earn the Stage 2 Farmin Interest as follows:

	(a) Upon Ausam funding a total of $1,500,000 pursuant to clause 3.5 , Ausam will
earn

	the full Stage 2 Farmin Interest, regardless of whether or not the Stage 2 Work
Program has been completed.

	(b) Where the Stage 2 Work Program is completed for an amount of less than

	$1,500,000, Ausam will earn part of the Stage 2 Farmin Interest at the rate of a
0.538% interest for each $100,000 expenditure funded by Ausam (rounded to the
nearest $100,000). Ausam will then have the right to earn the balance of its Stage 2
Farmin Interest by funding further expenditures to be agreed between the Parties, to
make up the balance of the $1,500,000.

	(c) In any event, upon Ausam funding a total of $6,500,000, whether Stage 1 and /
or

	Stage 2 Obligations are completed or not, Ausam will be deemed to have earned
Stage 1 and Stage 2 Farmin Interests.
3.7 Funding of Further Expenditures

	Upon completion of Ausam’s funding obligations under clause 3.4 or clause 3.6 (as the case
may be), Ausam will be responsible for its participating interest share of costs incurred
under the JOA equivalent to its total earned Farmin Interest.

	3.8 Valuation of Farmin Interest

	The Parties agree that the value of the Farmin Interest is nil.

	4. CASH CALLS

	(a) Mosaic as Operator will cash call Ausam in relation to its contribution to the Stage

	1 Obligation or Stage 2 Obligation (as applicable), in accordance with the JOA as if
Ausam were party to the JOA.

	(b) Ausam must pay each cash call by no later than the due date for payment as

	specified in the cash call or otherwise in accordance with the JOA. Ausam will
make payment direct to the Operator.

	5. RIGHTS AND OBLIGATIONS DURING EARNING PERIOD
5.1 Ausam’s Rights

	(a) During the Earning Period Ausam has the right to approve any decision in
relation to:

 

 

	(i) a decision pertaining to any Stage 1 Obligation or Stage 2
Obligation operations (apart from routine decisions undertaken by
Operator on a daily basis);

	(ii) the location, selection and design of any Stage 1 or
Stage 2 Obligation well;

	(iii) selection of conventional and under-balanced
drilling equipment and the award of any related contracts;

	(iv) the selection of the well completion process
and equipment and the award of any related contracts; and

	(v) the selection of production equipment and the
award of any related contracts.

	(b) Notwithstanding any other provision of this Agreement to the contrary:-

	(i) Ausam has no right to approve and must accept
the existing program and AFE for the MOS2005 2D seismic acquisition and
processing program for the Bainbilla Block referred to in clause 3.3(a)(i),
a copy of which AFE is set out in schedule 2. Ausam further acknowledges
and agrees that the drilling of an exploration well within the Bainbilla
Block is necessary in order to satisfy the compulsory work obligations for
ATP 47IP for the current year;

	(ii) where the Stage 1 Obligations have not been
completed with regard to the drilling of an exploration well in the
Bainbilla Block, but Ausam has earned a Stage 1 Farmin Interest either by
expending $5 million or in accordance with clause 3.4(c) then Ausam shall be
obliged to contribute its share (equal to the extent of its earned Stage 1
Farmin Interest) of the costs of drilling an exploration well within the
Bainbilla Block in discharge of the compulsory expenditure requirements for
ATP 47IP for the current year; and

	(iii) In no circumstances shall Ausam exercise its rights
under this clause 5.1 to prevent or delay the drilling of such a well, as
part of the Stage 1 Obligations, the Stage 2 Obligations or otherwise.

	5.2 Mosaic’s Obligations

	(a) During the Earning Period, Mosaic in its capacity as Operator will at all times
keep

	Ausam fully informed of all matters relating to the Permits and the JOA. Mosaic in
its capacity as Operator will provide any information or data reasonably requested
by Ausam in relation to the Permits or the JOA.

	(b) During the Earning Period, Mosaic and Santos will consult with Ausam regarding

	any decision to be made relating to the Permits or operations within a Permit area.

	(c) Once Ausam has earned a Farmin Interest, Ausam will be entitled to be
represented

	at and vote at any operating committee meetings or technical committee meetings
under the JOA.

 

 

	5.3 Mutual Obligations

	(a) Ausam, Mosaic and Santos will use all reasonable effort to drill the
first three

	earning wells outlined in Stage 1 Obligations during 2006.

	(b) The Parties acknowledge that no drilling of wells will be carried out in the
Spring

	Grove Field as part of either the Stage 1 Obligations or Stage 2 Obligations,

	6. GAS MARKETING

	(a) Ausam, may, if it so elects, sell its participating interest share of any gas
to Mosaic

	for on-sale to Mosaic’s customers on terms no less favourable than those contracted
by Mosaic with its customers. Mosaic will do all things reasonably necessary to
facilitate the sale of Ausam’s participating interest share of gas, including the
right-
of-access to existing pipeline infrastructure should Ausam elect to market its
prorate portion of gas through Mosaic. Ausam shall bear all processing and tolling
fees and charges in respect of its share of gas which fees and charges shall be
levied
on the same basis as for other users of the relevant facilities.

	(b) Mosaic will exert its best efforts to secure a gas marketing agreement that
would

	include the marketing of Ausam’s percentage of gas produced as a result of the
Stage 1 Obligations and Stage 2 Obligations.

	7. JOA AND TRANSFERS

	7.1 Ausam to assume obligations under JOA

	(a) Upon earning a Farmin Interest, Ausam will observe, perform and be bound by the

	provisions of the JOA.

	(b) Upon earning a Farmin Interest, Ausam will be liable for all costs, charges,

	liabilities and obligations in respect of that Farmin Interest arising on or after the
Effective Date.
7.2 Ausam to become a Party to the JOA

	(a) Once Ausam has earned a Farmin Interest, Mosaic and Santos will deliver to

	Ausam Deeds of Assignment and Assumption in the form required under each of
the JOAs under which Ausam agrees to become a party to the relevant JOA and to
observe, perform and be bound by the provisions of the JOA in relation to the
Farmin Interest with effect from the Effective Date. The Parties will execute any
documents reasonably required for Ausam to become a party to the JOA.

	(b) As soon as practicable after each Deed of Assignment and Assumption is executed

	by the Parties, Ausam will arrange for the stamping of the Deed of Assignment and

	Assumption, and will lodge the Deed of Assignment and Assumption for approval
and registration under the Petroleum Act if that is required under this legislation,
7.3 Transfer of Stage 1 and Stage 2 Farmin Interest

	Upon Ausam having earned the Stage 1 Farmin Interest or the Stage 2 Farmin Interest, the
Parties will promptly execute any necessary documentation and apply for all necessary

 

 

	approval and registration under the Petroleum Act to effect the transfer of the Stage 1
Farmin Interest and the Stage 2 Farmin Interest (as applicable) to Ausam. Mosaic and
Santos will, upon Ausam’s request, effect the transfer of any pro-rata interest earned
by Ausam.

	7.4 Access to Permit Information

	Upon earning a Farmin Interest, Mosaic will deliver to Ausam a copy of all Permit
Information in the possession of Mosaic. Ausam must hold the Permit Information
confidential in accordance with clause 11.

	8. WARRANTIES

	8.1 Warranties from Mosaic

	Mosaic hereby makes in favour of Ausam the following warranties with effect as at the
date of this Agreement:

	(a) The proportion of the Farmin Interests to be assigned to Ausam by Mosaic is not

	subject to any Encumbrance, other than the Encumbrances referred to in the JOA
and the Royalty Interests.

	(b) It is not aware of any dispute, present or threatened, regarding the
Permits or its

	interest in the Permits.

	(c) The Permits are in good standing and in full force and effect.

	(d) To its knowledge and belief all operations in relation to each of the Permits
and any

	associated infrastructure have been conducted in accordance with all applicable
Legal Requirements.

	(e) To the best of its knowledge, it has made disclosure to Ausam of all material

	information in its possession relating to the Permits, any associated infrastructure,
and land access issues, and to the best of its knowledge none of the information
provided to Ausam by it is misleading in any material respect provided that in no
circumstances does Mosaic give any warranty, representation or undertaking in
regard to the accuracy or validity of any geological, geophysical or seismic
interpretations relating to the Permits and their existing and prospective petroleum
content.

	(f) To the best of its knowledge, and notwithstanding that the Farmin Area is
presently

	subject to the native title claims as indicated on the map set out in schedule 4 and
may be subject to further such claims in the future, there are no existing land
access
or native title disputes which may materially affect or delay Ausam’s ability to
carry
out its obligations under this Agreement.

	(g) To the best of its knowledge, there has been no pollution or contamination in

	relation to, or migrating from the Farmin Area or any associated infrastructure
caused by any operations conducted under the JOA apart from two spills of oil from
two leaks or weaknesses in the Pipeline which occurred in early 2006 and which
spills and leaks have now been remediated and remedied. Ausam acknowledges
that there has been disclosed to it the circumstances of two failures in the Pipeline
(a)

 

 

	which occurred in early 2006 and which were caused by sulphate reducing bacteria
corrosion.

	(h) It has maintained and maintains in full force and effect appropriate
insurance in relation to the conduct of Mosaic’s operations relating to the Farmin Area
and the discharge of Mosaic’s operations under the Permits and associated
infrastructure. Such insurance is provided by well-established and reputable insurance
companies in such amounts and on such terms covering such risks as required in
accordance with good oilfield practice. To its knowledge there are no outstanding
claims and no fact or circumstance which exists which might give rise to a claim under
any insurance policy held by Mosaic relating to the Farmin Area.

	8.2 Warranties from Santos

	Santos hereby makes in favour of Ausam the following warranties with effect as at the date
of this Agreement:

	(a) The proportion of the Farmin Interests to be assigned to Ausam by Santos is not

	subject to any Encumbrance, other than the Encumbrances referred to in the JOA
and the Royalty Interests.

	(b) It is not aware of any dispute, present or threatened, regarding its interest
in the

	Permits, with the exception of existing land access or native title disputes
pursuant
to clause 8.1(f).

	(c) In relation to its interests in the Farmin Area, it has maintained and
maintains in full

	force and effect appropriate insurance in relation to the conduct of Santos’
operations relating to the Farmin Area and the discharge of Santos’ operations
under the Permits and associated infrastructure. To its knowledge there are no
outstanding claims and no fact or circumstance which exists which might give rise
to a claim under any insurance policy held by Santos relating to its interest in the
Farmin Area.
8.3 Warranties from all Parties

	Each of the Parties represents and warrants to each of the other Parties that as at the date
of this Agreement:

	(a) incorporation: it is an incorporated limited liability company and validly
exists

	under the laws of its State of incorporation;

	(b) corporate power: subject to the approval, registration or consent of a
governmental

	agency required by law, it has the corporate power to:

	(i) enter this Agreement; and

	(ii) in the case of Mosaic and Santos, dispose of its
proportion of the Farmin Interest and in the case of Ausam, acquire and
hold the Farmin Interest;

 

 

	(c) authorisation: it has taken all necessary action to authorise the
execution,
performance and delivery of this Agreement;

	(d) transaction permitted: the execution, delivery and performance by it of
this

	Agreement and the obligations within it does not and will not violate:

	(i) so far as it is aware, any Law, authorisation,
ruling, judgment, order or decree of any governmental agency; or

	(ii) its constitution or any other constituent documents; and

	(e) financial capacity: it has the financial capacity to meet its financial
obligations

	under this Agreement.
8.4 Liability for Breach of Warranty

	(a) The sole right of Ausam for any and each breach of warranty given under clause
8.1

	and the only liability of Mosaic for any and each such breach shall be limited to
the
redress and liabilities set out in this clause 8.4 and Ausam shall have no other
right,
entitlement, claim or action against Mosaic in respect of any and each breach of
warranty given under clause 8.1. Where an individual breach of any of the
warranties under clause 8.1 gives rise to a loss or liability to Ausam in excess of
$250,000 then Ausam may within thirty days of such breach occurring, terminate
this Agreement by notice in writing to each of Mosaic and Santos and Mosaic’s
liability to Ausam shall be limited to the amounts funded or otherwise expended by
Ausam up to the date of termination on the Stage 1 Obligations and the Stage 2
Obligations and thereupon the Parties shall be released from all and any further
obligation each to the other under this Agreement.

	(b) The sole right of Ausam for any and each breach of warranty given under clause
8.2

	and the only liability of Santos for any and each such breach shall be limited to the
redress and liabilities set out in this clause 8.4 and Ausam shall have no other right,
entitlement, claim or action against Santos in respect of any and each breach of
warranty given under clause 8.2. Where an individual breach of any of the
warranties under clause 8.2 gives rise to a loss or liability to Ausam in excess of
$250,000 then Ausam may within thirty days of such breach occurring terminate
this Agreement by notice in writing to each of Mosaic and Santos, and Santos’
liability to Ausam shall be limited to the amounts funded or otherwise expended by
Ausam up to the date of termination on the Stage 1 Obligations and the Stage 2
Obligations, and thereupon the Parties shall be released from all and any further
obligation each to the other under this Agreement.
8.5 No Warranty as to Prospects

	Notwithstanding clauses 8.1 and 8.2 Ausam acknowledges and agrees that no representation,
undertaking or guarantee has been given by any of Mosaic or Santos as to the existing or
prospective reserves of petroleum (whether oil or gas) within the areas of the Permits and
Ausam acknowledges and agrees that all works carried out as part of the Stage 1 Obligations
and the Stage 2 Obligations may not result in a discovery of new reserves of any type or the
expansion of existing reserves. Ausam accepts the risk of those outcomes.

 

 

	8.6 Easements for Pipeline

	In qualification of the warranties given in clauses 8.1 and 8,2 Mosaic and Santos state that
formal easements for the route of the Pipeline as built are still to be put in place with
the owners of the freehold land on which the Pipeline has been constructed. Mosaic and
Santos will complete the negotiation, execution, stamping and registration of those
easements at their cost at their earliest convenience,

	8.7 Indemnity

	(a) Each of Mosaic and Santos severally, to the extent of their respective
interests in

	the relevant Permits, shall indemnify Ausam against any direct losses, costs or
expenses which may arise from:-

	(i) the failure by them to satisfy any payment obligations
with respect to the Royalty Interests arising prior to the Effective Date
provided that each of Mosaic and Santos shall only be liable under this
indemnity for its relevant share of those payment obligations;

	(ii) the Pipeline failures referred to in clause 8.1 (g) including any future

	remedial work that may be required arising solely out of such failures; and

	(iii) any claims by the owners of the freehold land in respect
of the granting of the formal easements referred to in clause 8.6.

	(b) Mosaic acknowledges that at no time will Ausam have any ownership interest in
the

	Excluded Equipment and any chattels used in connection with PPL58.
Accordingly, Mosaic shall indemnify Ausam against any losses, costs and expenses
which may arise from or be caused (either directly or indirectly) from the Excluded
Equipment and the chattels used in connection with PPL58, other than where those
losses, costs or expenses are the losses, costs or expenses of joint operations
under
the JOA or are otherwise recoverable as authorised expenses under the JOA.

	9. APPROVAL AND REGISTRATION

	(a) Promptly upon execution of this Agreement, Ausam will lodge this Agreement for

	any approval and registration required under the Petroleum Act. Each of Mosaic
and Santos will give all reasonable assistance in order to obtain any such approval
and registration.

	(b) The transfer of any interest in PL 119 and PPL 58 to Ausam shall be subject to
and

	conditional upon obtaining the approvals required under Division 2 of Part 6N of
the Petroleum Act 1923 and Division 2 of Part 10 of the Petroleum and Gas
(Production and Safety ) Act 2004. Ausam shall do all such things reasonably
within its power to obtain such approvals and each of Mosaic and Santos will give
reasonable assistance to Ausam.

	(c) If approval and registration is denied, then Ausam, Mosaic and Santos will use
all

	reasonable endeavours to agree the manner in which this Agreement is to be
amended so as to overcome the failure to obtain the approval and registration and
so as to give effect to their commercial intentions in entering into this Agreement.

 

 

	A Party will not unreasonably withhold its agreement to any reasonable proposal
which is not materially prejudicial to its interests.

	10. GOODS AND SERVICES TAX

	(a) In this clause:

	GST has the meaning given to that term in the GST Law;

	GST Law has the meaning given to that term in A New Tax System (Goods and
Services Tax) Act 1999 (Cth);

	taxable supply has the same meaning as in the GST Law.

	(b) Except where express provision is made to the contrary, all references to
amounts

	under any clause in the Agreement is a reference to the amount exclusive of GST.

	(c) If there is a taxable supply under or in connection with this Agreement, then
the

	Party making the taxable supply (“supplier”) will be entitled to charge the other
Party (“recipient”), in addition to the consideration for the supply, an amount in
respect of GST equal to the consideration for the supply multiplied by the rate of
the goods and services tax .

	(d) The supplier must provide a tax invoice (or an adjustment note) to the
recipient in

	respect of the taxable supply before any amount is paid in respect of GST. The
recipient must pay to the supplier the amount of the GST within 14 days thereafter.

	(e) It is agreed that the assignment of the Farmin Interests by Mosaic and Santos
to

	Ausam constitutes the supply of a going concern pursuant to section 38-325 of the
A New Tax System (Goods and Services Tax) Act 1999 (Cth). Ausam warrants it is
registered for GST purposes under the GST Law as at the date of this Agreement
and shall remain registered until the date it receives any and each assignment of the
Farmin Interests. Ausam further agrees that it will promptly notify Mosaic and
Santos if it ceases to be so registered at any time prior to this date.

	(f) If for any reason the supply of the Farmin Interests is not exempt from GST
then

	Ausam shall pay all GST payable by each of Mosaic and Santos in respect of those
transfers and any other supply under this Agreement and Ausam shall also pay any
interest and penalty tax payable by Mosaic or Santos in respect of those matters.
Ausam must make these payments within 14 days of the production to it of written
invoices, letters or demands received by either Santos or Mosaic from the
Australian Tax Office claiming the penalty tax or interest.

	(g) The amount of a party’s entitlement under this Agreement to recovery or

	compensation for any of its costs, expenses or liabilities is reduced by the input
tax
credits to which that party (or the representative member of a GST Group of which
the party is a member) is entitled in respect of such costs, expenses or
liabilities.

	Terms used in this Clause 10 which are defined in the A New Tax System (Goods and Services
Tax) Act 1999 (Cth) have the meaning given to them in that Act.

 

 

	11. CONFIDENTIALITY

	All Permit Information and other information obtained by Ausam under this Agreement will be
subject to the confidentiality obligations of a party under the JOA. Ausam covenants with
Mosaic and with Santos to observe, perform and comply with the confidentiality obligations
under the JOA as if it were already a party to and bound by the JOA.

	12. FORCE MAJEURE

	(a) If as a result of Force Majeure, any Party is rendered unable, wholly or in
part, to

	carry out its obligations under this Agreement, then the obligations of the Party
giving such notice, so far as and to the extent that the obligations are affected by
such Force Majeure, shall be suspended during the continuance of any inability so
caused and for such reasonable period thereafter as may be necessary for the Party
to put itself in the same position that it occupied prior to the Force Majeure, but
for
no longer period,

	(b) The Party claiming Force Majeure shall notify the other Parties of the Force

	Majeure within a reasonable time after the occurrence of the facts relied on and
shall keep all Parties informed of all significant developments. Such notice shall
give reasonably full particulars of the Force Majeure and also estimate the period of
time which the Party will probably require to remedy the Force Majeure.

	(c) The affected Party shall use all reasonable diligence to remove or overcome the

	Force Majeure situation as quickly as possible in a commercially reasonable
manner but shall not be obligated to settle any labour dispute or native title matter
except on terms acceptable to it. All such disputes shall be handled within the sole
discretion of the affected Party.

	13. GENERAL

	13.1 Communications

	(a) Any notice or other communication including, but not limited to, any request,

	demand, consent or approval (collectively “Communications”), to or by a Party to this
Agreement will be in writing and may be given in the following manner:

	(i) by delivery in person, in which case the
Communication will be deemed to have been received when delivered to the
addressee;

	(ii) by post, in which case the Communication will be
deemed to have been received 3 business days from and including the date of
postage properly paid and addressed; or

	(iii) by facsimile, in which case the Communication will
be deemed to have been received upon successful transmission to the
addressee, or if the facsimile is not transmitted during a business day, at
the commencement of the next business day; or

	(iv) by email, in which case the Communication will be deemed to have
been received upon receipt by the sender’s computer of an f

 

 

	acknowledgement of receipt of the email by the recipient’s computer, but
if this acknowledgement is received on other than a business day or after
5.00pm on a business day then the Communication will be deemed to have
been received at the commencement of the next business day
(b) Each Party’s address, fax number and email address are those set out
below, or as the person notifies the sender:
Mosaic Oil NL
Address: Level 3, 6-8 Underwood Street, Sydney, New South Wales,
Australia, 2000.
Fax number: 61-2-9241-1655
Attention: Mr. Barry Smith, Exploration Manager
Email address: bsmith@mosaicoil.com
Ausam Resources Pty Ltd
Address: Level 2,4 Park Road Milton, Queensland, Australia,4064
Fax number: +617.3367.8558
Attention: Mr. Ted Surka, Exploration Manager
Email address: tsurka@ausamenergy.com
Santos ( BOL) Pty Ltd
Address: Ground Level, 91 King William Street, Adelaide, South Australia,
Australia, 5000.
Fax number: +618 82247765
Attention: Mr. Stuart Jones, Exploration Manager- Onshore Australia.
Email address: stuart.jones@santos.com
13.2 Legal costs and stamp duty
(a) Each Party will bear its own costs associated with preparing, negotiating
and
executing this Agreement.
(b) Ausam will pay any stamp duty and registration fees charged in respect of this
Agreement, the execution, delivery and performance of this Agreement and any
transfer or other transaction effected pursuant to this Agreement.
13.3 Costs of implementation
Each Party will pay its own costs and expenses in respect of the implementation and
performance of this Agreement.

 

 

	13.4 Governing law and jurisdiction
(a) This Agreement is governed by the laws of the State of Queensland.
(b) Each Party irrevocably submits to the exclusive jurisdiction of the courts of
the
State of Queensland.
13.5 Waivers
No indulgence that a Party may grant to the other will constitute a waiver of any of the
rights of the grantor thereof who will not thereby be precluded from exercising any rights
against the grantee thereof that may have arisen in the past or may arise in the future,
13.6 Variation
A variation of any term of this Agreement will be in writing and signed by the Parties.
13.7 Further assurances
Each Party will do all things necessary to give full effect to this Agreement and the
transactions contemplated by this Agreement.
13.8 Entire Agreement
This Agreement embodies the entire agreement between the Parties with respect to the subject
matter of this agreement and supersedes any prior negotiation, arrangement, understanding or
agreement with respect to the subject matter or any term of this Agreement. Any statement,
representation, warranty, condition, promise or undertaking made, given or agreed outside
this Agreement has no effect.
13.9 Counterparts
This Agreement may be executed in counterparts, and all counterparts collectively will comprise one
instrument
13.10 Interpretation
In this Agreement, unless the context otherwise requires:
(a) headings are for convenience only and do not affect interpretation;
(b) words importing the singular include the plural and vice versa;
(c) a reference to a document includes all amendments and supplements to, or
replacements or novations of, that document;
(d) a reference to a Party to a document includes that Party’s successors and
permitted
assigns;
(e) no rule of construction applies to the disadvantage of a Party because that
Party was
responsible for the preparation of this Agreement or any part of it.

 

 

	13.11 Business days
(a) A reference to a business day is a reference to a day on which banks are open
for
business in Queensland, excluding a Saturday, a Sunday or a public holiday.
(b) If this Agreement requires a Party to do an act or make a payment on or by a
day
that is not a business day, then the Party must do that act or make that payment on
or by the previous business day.
13.12 Assignment
Ausam shall not assign any of its rights or interests under this Agreement without the prior
written consent of each of Mosaic and Santos which shall not be unreasonably withheld, but
which may be witheld where Ausam purports to assign a participating interest in any of the
Permits of less than 10%.
13.13 Several Liability
The obligations and liabilities of Mosaic and Santos under this Agreement are several and
not joint nor joint and several.
13.14 Invalidity
If a provision of this Agreement is illegal or unenforceable in any relevant jurisdiction,
it may be severed for the purposes of that jurisdiction without affecting the enforceability
of the other provisions of this Agreement except where the severing of that provision would
materially alter the scope and nature of this Agreement or the relative commercial or
financial positions of the Parties and except where the severing would be contrary to public
policy.

 

 

	EXECUTED as an agreement.
Executed by Mosaic Oil NL ABN 56 003
329 084 in accordance with its constitution in the
presence of:
Signature of director ‘ Signature of director/secretary
Name Name
Executed by Ausam Resources Pty Ltd
ABN 12 090 935 738 in accordance with its constitution in
the presence of:
Signature of director Signature of director/secretary
Name Name

 

 

	The Common Seal of Santos (BOL) Pty Ltd
ABN 35 000 670 575 was affixed hereunto
in the presence of:
Signature of director            Signature of-director/secretary
PETER C WASOW GRAHAM LESLIE
BOLLENHAGEM
Name Name COMPANY SECRETARY

 

 

	SCHEDULE 1
PERMITS
Part 1
PL 119 and ATP 471P (Bainbilla Block)
The area within PL 119 and ATP 47IP described by block and sub-block references.
Part 2
Downlands East JV Area and Spring Grove Field Area
The area within PL 119 described by co-ordinates and as outlined in the plan as the Downlands East
Joint Venture Area. The area within the Bainbilla Block of ATP 47IP described by coordinates and as
outlined in the plan as the Spring Grove Field Area.
Part 3
Brynog Exploration Play
The area within ATP 471P ( Bainbilla Block) as outlined in the plan as the area of the Brynog
Exploration Play. Also shown is the MOS 2005 seismic program as recorded within the Bainbilla Block
in early 2006.

 

 

	PERMIT 5 MINUTE BLOCK 1 MINUTE SUB-BLOCK
PL119 2725 h, j, k, n, o, p, t
ATP 471P Bainbilla 2725 f, g, I, m, q, r, s, u, v, w, x, y, z
Block
2726 b, c, d, f, g, h, I, m, n, q, r, s ,v, w, x
2797 a, b, c, d, e, j, k
2798 a, b, c, f, g, h, j, k, I, m, n, o, p, q, r, s, t,
u, v, w, x, y, z
2799 f, I, q, v
2868 g, h, j, k, m, n, o, p, q, r, s, t, u, v, w, x,
y, z
2869 a, b, c, d, e, f, g, h, j, k, I, m, n, o, p, q,
r, s, t, u, v, w, x, y, z
2870 a, b, c, d, e, f, g, h, j, k, I, m, n, o, p, q,
r, s, t, u, v, w, x, y, z
2871 a f, I, q, v

 

 

	1 27 07 53.95S 149 04 20.27E
2 27 07 53.71S 149 05 03.44E
3 27 05 54.1 1S 149 05 03.18E
4 27 05 54.33S 149 04 21.99E
5 27 06 08.16S 149 04 11.20E
6 27 06 29.22S 1490408.75E
7 27 06 42.39S 149 04 15.61E
8 27 07 00.60S 149 04 32.04E
9 27 07 25.84S 149 04 32.78E
10 27 07 38.57S 149 04 26.65E
1 27 08 38.20S 149 04 59.47E
2 27 08 55.07S 149 05 32.78E
3 27 08 49.74S 149 06 01.67E
4 27 08 33.78S 149 06 21. 71E
5 27 07 59.58S 149 06 18.30E
6 27 07 38.45S 149 06 12.86E
7 270726.13S 149 06 07.93E
8 27 07 22.49S 149 05 54.85E
9 27 07 40.58S 149 05 28.69E
10 27 07 58.98S 149 05 12.89E

 

 

	SCHEDULE1 — Part3

 

 

	SCHEDULE 2
MOS2005 Seismic Survey APE
AFE for the MOS2005 2D seismic acquisition and processing program. The recorded program is shown in
part 3 of schedule 1.

 

 

	SCHEDULE 2

	“mosaic oil«

	ATP 471P Bainbilla Block

	2005 G & G and Administration Budget — AFE 20 (BB/20)
MOS2005 Seismic Survey

	DESCRIPTION MOS2005 Bainbilla

	Management/Supervision/Planning $ 62,800 $ 46,080
Line Preparation/Restoration/Compensation $ 65,000 $ 47,694
Survey $ 29,050 $ 21,315
Drill/Preload/Explosives $208,240 $152,796
Recording $161,210 $118,288
Other/Contingency $ 37,541 $ 27,546
Processing $ 20,000 $ 14,675
Interp/Map/T A/Workstation $ 50,000 $ 36,688
Sub Total $633,841 $465,081
Overheads $ 31,692 $ 23,254
TOTAL $665,533 $488,335

	Bainbilla Participants’ Share
Mosaic Oil NL 83.333% $406,944
Santos (BOL) Pty Ltd 16.667% $ 81,391
TOTAL 100.000% $488,335

 

 

	SCHEDULE 3
(clause 3. l(d) — Interests in Permits)

	Time            Permit            Mosaic            Santos            Ausam

	| | | |
Date of Execution            PL 11 9 — Downlands 83.333% 16.667% 0%
PL1 19 — Downlands East- 71.153% 28.847% 0%
PPL58 —  83.333% 16.667% 0%
Bainbilla Block —  83.333% 16.667% 0%
Spring Grove Field 77.5% 0% 0%
Joint Venture -
After Ausam earned            PL119 — Downlands PL1 60.9164% 52.0128% 12.1836% 21.0872% 26.9% 26.9%
Stage 1 Farmin 19 — Downlands East
Interest
PPL58- 60.9164% 12.1836% 26.9%
Bainbilla Block —  60.9164% 12.1836% 26.9%
Spring Grove Field 50.600% 0% 26.9%
Joint Venture -
After Ausam earned            PL 11 9 — Downlands PL1 54.1664% 46.2494% 10.8336% 18.7506% 35% 35%
Stage 2 Farmin 19 — Downlands East
Interest
PPL58 —  54.1664% 10.8336% 35%
Bainbilla Block —  54.1664% 10.8336% 35%
Spring Grove Field 42.5% 0% 35%
Joint Venture -

 

 

	SCHEDULE 4
(clause 8. l(f) — Native Title Claims)

 

 

 

 

	Office of State Revenue ASSESSMENT NOTICE
Queensland Treasury            Duties Ant 2OO1
Upper Plaza            Duties Act 2001
33 Charlotte St, Brisbane
G.P.O. Box 2593, Brisbane 4001 \^^»fM^»iww»TM^zTMvxxTMteTMi»wTMTMvif.
Page 1 of 1
Your Reference
Revenue Officer            Phillip W Geeves

	Contact Phone No (07) 322 78337 | 1
Fax No 107)32277037 Amount Due $0.00
Issued 22 JUN 2006 ,,25

	Assessment Due Date 25 JUL 2006

	AUSAM RESOURCES PTY LTDFile no.
Level 2
4 Park Road ^^~^~~~~~-~
MILTON QLD 4064^~~T
2 7 JUN 2006
My assessment of duty is as follows: “ l’rT^Z -^
Trn Date of
No Transaction            Consideration/Value Duty Category            Amount
1 23 MAY 2006 $0.00 NO DUTY PAYABLE $0.00

	Transaction Description NON DUTIABLE TRANSACTION and 2 duplicates
Parties            AUSAM RESOURCES PTY LTD

	MOSAIC OIL NL SANTOS
BOL PTY LTD
Assessment Comments: Farmin Agreement
Assessment Total $0.00

	Amount Due $0.00
Phillip W Geeves
Revenue Officer
for Commissioner of State Revenue

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