Document:

Exhibit 10.10

 

INTELLECTUAL
PROPERTY SECURITY AGREEMENT

 

This Intellectual Property Security Agreement (the “Agreement”),
dated as of May 27, 2008 is made by each of the pledgors signatory hereto
(together with any other entity that may become a party hereto as provided
herein, each a “Pledgor” and collectively, the “Pledgors”), in
favor of Deutsche Bank National Trust Company, as Collateral Agent (in such
capacity, the “Agent”) for the benefit of itself, the Trustee (as
defined below) and the Noteholders (as defined below).

 

WHEREAS, pursuant to the Seventh Amended and
Restated Credit Agreement, dated as of March 7, 2008 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among K. Hovnanian Enterprises, Inc., a California
corporation (the “Issuer”), Hovnanian Enterprises, Inc., a Delaware
corporation (“Hovnanian”), the Lenders now or hereafter party thereto
(the “Lenders”), and PNC Bank National Association, as administrative
agent (the “Administrative Agent”), the Lenders have provided certain
loans and other financial accommodations to the Issuer;

 

WHEREAS, the Issuer, Hovnanian and each of
the other Guarantors (as defined in the Secured Note Indenture) have entered
into the Indenture, dated as of May 27, 2008 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the “Secured
Note Indenture”) with Deutsche Bank National Trust Company as trustee (in
such capacity, the “Trustee”),
pursuant to which the Issuer issued 11 1/2 % Senior Secured Notes due 2013 (collectively, the “Secured
Notes”);

 

WHEREAS, the Issuer, Hovnanian, certain subsidiaries of Hovnanian party
thereto, PNC Bank, National Association, as Senior Credit Agent, the Trustee
and Wilmington Trust Company, as Mortgage Tax Collateral Agent have entered
into the Intercreditor Agreement, dated as of May 27, 2008 (as amended,
supplemented, amended or restated or otherwise modified from time to time, the “Intercreditor Agreement”);

 

WHEREAS, the Issuer is a member of an affiliated group of companies
that includes Hovnanian, the Issuer’s parent company, and each other Pledgor;

 

WHEREAS, the proceeds of the issuance of
Secured Notes under the Secured Note Indenture will be used in part to enable
the Issuer to make valuable transfers to one or more of the other Pledgors in
connection with the operation of their respective businesses;

 

WHEREAS, the Issuer and the other Pledgors are engaged in related
businesses, and each Pledgor will derive substantial direct and indirect
benefit from the issuance of the Secured Notes;

 

WHEREAS, pursuant to and under the Secured Note Indenture and the
Second Lien Security Agreement dated as of May 27, 2008 (the “Security
Agreement”) among the parties hereto, the Issuer and the other Pledgors
have agreed to enter into this agreement in order to grant a security interest
to the Agent in certain patents, trademarks, copyrights and other property as
security for such loans and other obligations as more fully described herein.

 

NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto agree as follows:

 

1.             Defined Terms.

 

(a)           Except as otherwise expressly provided herein, (i) capitalized
terms used in this Agreement shall have the respective meanings assigned to
them in the Security Agreement and (ii) the 

 

 

rules of construction set forth in Section 1.02
of the Secured Note Indenture shall apply to this Agreement.  Where applicable and except as otherwise
expressly provided herein, in the Secured Note Indenture or the Intercreditor
Agreement, terms used herein (whether or not capitalized) shall have the
respective meanings assigned to them in the Uniform Commercial Code as enacted
in New York as amended from time to time (the “Code”).

 

(b)           “Copyright Licenses” shall mean any written agreement naming any
Pledgor as licensor or licensee, granting any right under any Copyright,
including, without limitation, the grant of rights to distribute, exploit and
sell materials derived from any Copyright, including, without limitation, any
of the foregoing referred to in Schedule A.

 

(c)           “Copyrights” shall mean (i) all copyrights arising under
the laws of the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published or
unpublished, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office referred to
in Schedule A, and (ii) the right to obtain all renewals thereof.

 

(d)           “Intellectual Property” shall mean the collective reference to
all rights, priorities and privileges, whether arising under United States,
multinational or foreign laws, in, to and under the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark
Licenses, and all rights to sue at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.

 

(e)           “Noteholder” means the “Holder” or “Holder of Notes” as defined
in the Secured Note Indenture.

 

(f)            “Patent License” shall mean all written agreements providing
for the grant by or to any Pledgor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule A.

 

(g)           “Patents” shall mean (i) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues
and extensions thereof, including, without limitation, any of the foregoing
referred to in Schedule A, (ii) all applications for letters patent
of the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule A, and (iii) all rights to obtain
any reissues or extensions of the foregoing.

 

(h)           “Secured Obligations” shall mean and include the following: all
now existing and hereafter arising Second Priority Lien Obligations (as defined
in the Secured Note Indenture) of the Issuer and every other Pledgor, together
with any extensions, renewals, replacements or refundings thereof, and all
costs and expenses of enforcement and collection, including reasonable attorney’s
fees.

 

(i)            “Secured Parties” shall mean the
collective reference to the Agent, the Trustee and the Noteholders, in each
case to which any Secured Obligations are owed.

 

(j)            “Trademarks” shall mean (i) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers, and all goodwill associated therewith, now owned or
hereafter acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State 

 

2

 

thereof or any other country or any political
subdivision thereof, and all common-law rights related thereto, including,
without limitation, any of the foregoing referred to in Schedule A, and (ii) the
right to obtain all renewals thereof.

 

(k)           “Trademark License” shall mean any written agreement providing
for the grant by or to any Pledgor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule
A.

 

2.             To secure the full payment and performance of
all Secured Obligations, each Pledgor hereby grants, and conveys a security
interest to Agent in the entire right, title and interest of such Pledgor in
and to all of its Intellectual Property; provided, however, that
notwithstanding any of the other provisions set forth in this Section 2
(and notwithstanding any recording of the Agent’s Lien made in the U.S. Patent
and Trademark Office, U.S. Copyright Office, or other registry office in any
other jurisdiction), this Agreement shall not constitute a grant of a security
interest in any property to the extent that such grant of a security interest
is prohibited by any applicable Law of an Official Body, requires a consent not
obtained of any Official Body pursuant to such Law or is prohibited by, or
constitutes a breach or default under or results in the termination of or gives
rise to any right of acceleration, modification or cancellation or requires any
consent not obtained under, any contract, license, agreement, instrument or
other document evidencing or giving rise to such property, except to the extent
that such Law or the term in such contract, license, agreement, instrument or
other document or similar agreement providing for such prohibition, breach,
default or termination or requiring such consent is ineffective under
applicable Law including 9-406, 9-407, 9-408 or 9-409 of the New York UCC (or
any successor provision or provisions); provided, further, that no security
interest shall be granted in any United States “intent-to-use” trademark or
service mark application unless and until acceptable evidence of use of the
trademark or service mark has been filed with and accepted by the U.S. Patent
and Trademark Office pursuant to Section 1(c) or Section 1(d) of
the Lanham Act (U.S.C. 1051, et seq.), and to the extent that, and solely
during the period in which, the grant of a security interest therein would
impair the validity or enforceability of such “intent-to-use” trademark or
service mark applications under applicable federal Law.  After such period and after such evidence of
use has been filed and accepted, each Pledgor acknowledges that such interest
in such trademark or service mark applications will become part of the
Collateral.  The Agent agrees that, at
any Pledgor’s reasonable request and expense, it will provide such Pledgor
confirmation that the assets described in this paragraph are in fact excluded
from the Collateral during such limited period only.

 

3.             Each Pledgor covenants and warrants that:

 

(a)           To the knowledge of such Pledgor, on the date hereof, all material
Intellectual Property owned by such Pledgor is valid, subsisting and unexpired,
has not been abandoned and does not, to the knowledge of such Pledgor, infringe
the intellectual property rights of any other Person;

 

(b)           Such Pledgor is the owner of each item of Intellectual Property, free
and clear of any and all Liens or claims of others except for the Permitted
Liens permitted to exist on the Collateral by the Secured Note Indenture (the “Permitted
Encumbrances”).  No financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except with respect to
Permitted Encumbrances;

 

(c)           Such Pledgor will within thirty (30) calendar days after any change in
its jurisdiction of organization, or change in its legal name, provide written
notice thereof to the Agent; and

 

3

 

(d)           Such Pledgor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents and papers as the Agent may reasonably
request to evidence the Agent’s and the Secured Parties’ security interest in
such Intellectual Property and the goodwill of such Pledgors relating thereto
or represented thereby.

 

4.             Each of the obligations of each Pledgor under
this Agreement is joint and several. 
Subject to the Intercreditor Agreement, the Agent and the other Secured
Parties, or any of the them, may, in their sole discretion, elect to enforce
this Agreement against any Pledgor without any duty or responsibility to pursue
any other Pledgor and such an election by the Agent and the other Secured
Parties, or any of them, shall not be a defense to any action the Agent and the
other Secured Parties, or any of them, may elect to take against any Pledgor.  Each of the Agent and the other Secured
Parties hereby reserve all right against each Pledgor.

 

5.             Pledgor agrees that, until all of the Secured
Obligations shall have been indefeasibly satisfied in full, it will not enter
into any agreement (for example, a license agreement) which is inconsistent
with Pledgor’s obligations under this Agreement, without Agent’s prior written
consent which shall not be unreasonably withheld except Pledgor may license
technology in the ordinary course of business without the Agent’s consent to
suppliers and customers to facilitate the manufacture and use of such Pledgor’s
products.

 

6.             Prior to the Discharge of Senior Lender
Claims, each Pledgor, if requested to do so with respect to the Senior Lender
Claims by the Administrative Agent pursuant to Section 4.4 of the First
Lien Security Agreement, shall execute and deliver to Agent, and have recorded,
any and all agreements, instruments, documents, and papers to evidence the
Agent’s and the other Secured Parties’ second lien security interest in any
Copyright, Patent or Trademark and the goodwill and General Intangibles of such
Pledgor relating thereto or represented thereby.  On and after the Discharge of Senior Lender
Claims, such Pledgor shall promptly execute and deliver, and have recorded, any
and all agreements, instruments, documents, and papers as may be necessary to
create and perfect the Agent’s and the other Secured Parties’ security interest
in any Copyright, Patent or Trademark and the goodwill and General Intangibles
of such Pledgor relating thereto or represented thereby.  In addition, if, before the Secured
Obligations shall have been indefeasibly satisfied in full, any Pledgor shall
own any new trademark applications or registrations or any new registered
copyrights or patents, or any patent application or patent for any reissue,
division, continuation, renewal, extension, or continuation in part of any
Intellectual Property, the provisions of this Agreement shall automatically
apply thereto and such Pledgor shall give to Agent prompt notice thereof in
writing.  Each Pledgor and Agent agree to
modify this Agreement by amending Schedule A to include any future
patents, patent applications, trademark applications, trademarks, copyrights or
copyright applications and the provisions of this Agreement shall apply
thereto.

 

7.             Subject to the Intercreditor Agreement, Agent
shall have, in addition to all other rights and remedies given it by this
Agreement and those rights and remedies set forth in the Security Agreement and
the Secured Note Indenture, those allowed by applicable Law and the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
jurisdiction in which the Intellectual Property may be located and, without
limiting the generality of the foregoing, solely if an Event of Default has
occurred and is continuing and subject to the Intercreditor Agreement, Agent
may immediately, without demand of performance and without other notice (except
as set forth below) or demand whatsoever to Pledgors, all of which are hereby
expressly waived, and without advertisement, sell at public or private sale or
otherwise realize upon, in a city that the Agent shall designate by notice to
the Pledgors, in Pittsburgh, Pennsylvania or elsewhere, the whole or from time
to time any part of the Intellectual Property, or any interest which any
Pledgor may have therein and, after deducting from the proceeds of sale or
other disposition of the Intellectual Property all expenses (including fees and
expenses 

 

4

 

for brokers and attorneys), shall apply the
remainder of such proceeds toward the payment of the Secured Obligations as the
Agent, in its sole discretion, shall determine. 
Any remainder of the proceeds after payment in full of the Secured
Obligations shall, subject to the Intercreditor Agreement, be paid over to
Pledgors.  Notice of any sale or other
disposition of the Intellectual Property shall be given to Pledgors at least
ten (10) days before the time of any intended public or private sale or
other disposition of the Intellectual Property is to be made, which each
Pledgor hereby agrees shall be reasonable notice of such sale or other
disposition.  At any such sale or other
disposition, Agent may, to the extent permissible under applicable Law,
purchase the whole or any part of the Intellectual Property sold, free from any
right of redemption on the part of Pledgor, which right is hereby waived and
released.  The Agent shall endeavor to
provide the Issuer with notice at or about the time of the exercise of remedies
in the preceding sentence, provided that the failure to provide such notice
shall not in any way compromise or adversely affect the exercise of such
remedies or the Agent’s rights hereunder.

 

8.             If any Event of Default shall have occurred
and be continuing, Pledgor hereby authorizes and empowers Agent to make,
constitute and appoint any officer or agent of Agent, as Agent may select in
its exclusive discretion, as such Pledgor’s true and lawful attorney-in-fact,
with the power to endorse such Pledgor’s name on all applications, documents,
papers and instruments necessary for Agent to use the Intellectual Property, or
to grant or issue, on commercially reasonable terms, any exclusive or
nonexclusive license under the Intellectual Property to any third person, or
necessary for Agent to assign, pledge, convey or otherwise transfer title in or
dispose, on commercially reasonable terms, of the Intellectual Property to any
third Person.  Each Pledgor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof.  This power of attorney, being
coupled with an interest, shall be irrevocable for the life of this Agreement.

 

9.             Any and all fees, costs and expenses, of
whatever kind or nature, including reasonable attorneys’ fees and expenses
incurred by Agent in connection with the preparation of this Agreement and all
other documents relating hereto and the consummation of this transaction, the
filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, counsel
fees, maintenance fees, encumbrances, the protection, maintenance or
preservation of the Intellectual Property, or the defense or prosecution of any
actions or proceedings arising out of or related to the Intellectual Property,
shall be borne and paid by Pledgor within fifteen (15) days of demand by Agent.

 

10.           No course of dealing between Pledgor and Agent, nor any failure to
exercise nor any delay in exercising, on the part of Agent, any right, power or
privilege hereunder or under the Secured Note Indenture or other Noteholder
Documents shall operate as a waiver of such right, power or privilege, nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.

 

11.           All of Agent’s rights and remedies with respect to the Intellectual
Property, whether established hereby, by the Security Agreement or by the
Secured Note Indenture or by any other agreements or by Law, shall be
cumulative and may be exercised singularly or concurrently.  In the event of any irreconcilable
inconsistency in the terms of this Agreement and the Security Agreement, the
Security Agreement shall control.

 

12.           The provisions of this Agreement are severable, and if any clause or
provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
clause or provision of this Agreement in any jurisdiction.

 

5

 

13.           This Agreement is subject to modification only by a writing signed by
the parties, except as provided in Section 6 hereof.

 

14.           The benefits and burdens of this Agreement shall inure to the benefit
of and be binding upon the respective successors and permitted assigns of the
parties, provided, however, that Pledgor may not assign or
transfer any of its rights or obligations hereunder or any interest herein and
any such purported assignment or transfer shall be null and void.

 

15.           This Agreement and the rights and obligations of the parties under this
agreement shall be governed by, and construed and interpreted in accordance
with, the Law of the State of New York.

 

16.           Each Pledgor (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the courts of the State of New York and the United States
District Court for the Southern District of New York, or any successor to said
court (hereinafter referred to as the “New York Courts”) for purposes of
any suit, action or other proceeding which relates to this Agreement or any
other Noteholder Document, (ii) to the extent permitted by applicable Law,
hereby waives and agrees not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the New York Courts, that such suit,
action or proceeding is brought in an inconvenient forum, that the venue of
such suit, action or proceeding is improper, or that this Agreement or any
Noteholder Document may not be enforced in or by the New York Courts, (iii) hereby
agrees not to seek, and hereby waives, any collateral review by any other
court, which may be called upon to enforce the judgment of any of the New York
Courts, of the merits of any such suit, action or proceeding or the
jurisdiction of the New York Courts, and (iv) waives personal service of
any and all process upon it and consents that all such service of process be
made by certified or registered mail addressed as provided in Section 19 hereof
and service so made shall be deemed to be completed upon actual receipt
thereof.  Nothing herein shall limit any
Secured Party’s right to bring any suit, action or other proceeding against any
Pledgor or any of any Pledgor’s assets or to serve process on any Pledgor by
any means authorized by Law.

 

17.           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 an original, but all such counterparts shall
constitute one and the same instrument. 
Each Pledgor acknowledges and agrees that a telecopy transmission to the
Agent or any Secured Party of the signature pages hereof purporting to be
signed on behalf of any Pledgor shall constitute effective and binding
execution and delivery hereof by such Pledgor.

 

18.           EXCEPT AS PROHIBITED BY LAW, EACH PLEDGOR AND EACH OF THE COMPANIES
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER NOTEHOLDER DOCUMENTS OR TRANSACTIONS RELATING
THERETO.

 

19.           All notices, requests, demands, directions and other communications
(collectively, “notices”) given to or made upon any party hereto under the
provisions of this Agreement shall be as set forth in Section 13.03 of the
Secured Note Indenture.

 

20.           Each Pledgor acknowledges and agrees that, in addition to the other
rights of the Agent hereunder and under the other Noteholder Documents, because
the Agent’s remedies at law for failure of such Pledgor to comply with the
provisions hereof relating to the Agent’s rights (i) to inspect the books 

 

6

 

and records related to the Pledged
Collateral, (ii) to receive the various notifications such Pledgor is
required to deliver hereunder, (iii) to obtain copies of agreements and
documents as provided herein with respect to the Pledged Collateral, (iv) to
enforce the provisions hereof pursuant to which the such Pledgor has appointed
the Agent its attorney-in-fact, and (v) to enforce the Agent’s remedies
hereunder, would be inadequate and that any such failure would not be
adequately compensable in damages, such Pledgor agrees that each such provision
hereof may be specifically enforced.

 

21.           Notwithstanding anything herein to the contrary, the lien and security
interest granted to the Secured Party pursuant to this Agreement and the
exercise of any right or remedy by the Secured Party hereunder are subject to
the provisions of the Intercreditor Agreement. 
In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern.

 

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

7

 

[SIGNATURE PAGE 1 OF 1 TO
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized, as
of the date first above written.

 

8

 

	
   

  	
  DEUTSCHE BANK NATIONAL TRUST

  COMPANY, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

9

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

10

 

[SIGNATURE
PAGE 2 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  Pledgors:

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Kevin C. Hake

  
	
   

  	
  Title:
  Senior Vice-President — Finance and Treasurer

  
				

 

11

 

[SIGNATURE
PAGE 3 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Kevin C.
  Hake

  
	
   

  	
  Title:   Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EASTERN TITLE AGENCY, INC.

  
	
   

  	
   

  
	
   

  	
  FOUNDERS
  TITLE AGENCY, INC.

  
	
   

  	
   

  
	
   

  	
  GOVERNOR’S
  ABSTRACT CO., INC.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN DEVELOPMENTS OF FLORIDA, INC. 

  
	
   

  	
   

  
	
   

  	
  K. HOV INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOV IP, II, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOV IP, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN ACQUISITIONS, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT BERNARDS IV, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT BRANCHBURG III, INC. 

  

  K. HOVNANIAN AT BRIDGEPORT, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT BRIDGEWATER VI, INC. 

  K. HOVNANIAN AT BURLINGTON III, INC. K.

  

  HOVNANIAN AT BURLINGTON, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT CALABRIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT CAMERON CHASE, INC. 

  

  K. HOVNANIAN AT CARMEL DEL MAR, INC. 

  

  K. HOVNANIAN AT CASTILE, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  On behalf of, and as Senior Vice-President — Finance

  and Treasurer of each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest: 

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

12

 

[SIGNATURE
PAGE 4 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K.
  HOVNANIAN AT CHAPARRAL, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT CLARKSTOWN, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT CRESTLINE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT DOMINGUEZ HILLS, INC. 

  

  K. HOVNANIAN AT EAST WHITELAND I, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT FREEHOLD TOWNSHIP I, INC. 

  

  K. HOVNANIAN AT HERSHEY’S MILL, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT HACKETTSTOWN, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HIGHLAND VINEYARDS, INC. 

  

  K. HOVNANIAN AT HOPEWELL IV, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT HOPEWELL VI, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HOWELL TOWNSHIP, INC. 

  

  K. HOVNANIAN AT KINGS GRANT I, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT LA TERRAZA, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT LAKEWOOD, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT LOWER SAUCON, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT MAHWAH II, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT MAHWAH VI, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT MAHWAH VII, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT MANALAPAN, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT MARLBORO II, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT MARLBORO TOWNSHIP III, INC. 

  

  K. HOVNANIAN AT MARLBORO TOWNSHIP IV, INC. 

  

  K. HOVNANIAN AT MONTGOMERY I, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT MONROE II, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  On behalf of, and as Senior Vice-President — Finance 

  and Treasurer of each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest: 

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  

 

13

 

[SIGNATURE
PAGE 5 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT NORTHLAKE,
  INC. K. 

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN AT OCEAN TOWNSHIP,
  INC. K. 

  

  HOVNANIAN AT OCEAN WALK, INC. K. 

  

  HOVNANIAN AT PERKIOMEN I, INC. K. 

  

  HOVNANIAN AT PERKIOMEN II, INC. K. 

  

  HOVNANIAN AT RANCHO CRISTIANITOS, INC. K. 

  

  HOVNANIAN AT RESERVOIR RIDGE, INC. K. 

  

  HOVNANIAN AT SAN SEVAINE, INC. K. 

  

  HOVNANIAN AT SARATOGA, INC.K.
  HOVNANIAN

  

  AT SAWMILL, INC.

  K. HOVNANIAN AT SCOTCH PLAINS II, INC.

  K.
  HOVNANIAN AT SMITHVILLE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT SOUTH BRUNSWICK V, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT STONE CANYON, INC. K. 

  

  HOVNANIAN AT STONY POINT, INC. K. 

  

  HOVNANIAN AT SYCAMORE, INC. K. 

  

  HOVNANIAN AT TANNERY HILL, INC. K. 

  

  HOVNANIAN AT THE BLUFF, INC. K. 

  

  HOVNANIAN AT THORNBURY, INC. K. 

  

  HOVNANIAN AT TIERRASANTA, INC. K.
  

  

  HOVNANIAN AT TROVATA, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT TUXEDO, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT UNION TOWNSHIP I, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  On behalf of, and as Senior Vice-President — Finance 

  and Treasurer of each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest: 

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  

 

14

 

[SIGNATURE
PAGE 6 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP I, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT UPPER MAKEFIELD I, INC. 

  

  K. HOVNANIAN AT VAIL RANCH, INC. K.
  

  

  HOVNANIAN AT WALL TOWNSHIP VI, INC. K. 

  

  HOVNANIAN AT WALL TOWNSHIP VIII, INC. K. 

  

  HOVNANIAN AT WASHINGTONVILLE, INC. K. 

  

  HOVNANIAN AT WAYNE III, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT WAYNE V, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN AT WILDROSE, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN COMMUNITIES, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN COMPANIES NORTHEAST, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES OF CALIFORNIA, INC. 

  

  K. HOVNANIAN COMPANIES OF MARYLAND, INC. 

  

  K. HOVNANIAN COMPANIES OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA,
  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES OF VIRGINIA, INC. 

  

  K. HOVNANIAN CONSTRUCTION II, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN CONSTRUCTION III, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC. 

  

  K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC. K. 

  

  HOVNANIAN DEVELOPMENTS OF ARIZONA, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN DEVELOPMENTS OF CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  On behalf of, and as Senior Vice-President — Finance

  and Treasurer of each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest: 

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  

 

15

 

[SIGNATURE
PAGE 7 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN DEVELOPMENTS OF CONNECTICUT, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN DEVELOPMENTS OF D.C., INC. 

  
	
   

  	
   

  
	
   

  	
  K.  HOVNANIAN
  DEVELOPMENTS OF DELAWARE, INC. 

  

  K. HOVNANIAN DEVELOPMENTS OF GEORGIA, INC.
  

  

  K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC. K. 

  

  HOVNANIAN DEVELOPMENTS OF INDIANA, INC. K. 

  

  HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC. K. 

  

  HOVNANIAN DEVELOPMENTS OF MARYLAND, INC. K. 

  

  HOVNANIAN DEVELOPMENTS OF MICHIGAN, INC. K. 

  

  HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC. 

  

  K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN DEVELOPMENTS OF OHIO, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN DEVELOPMENTS
  OF PENNSYLVANIA, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN DEVELOPMENTS OF SOUTH 

  CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN DEVELOPMENTS
  OF WEST VIRGINIA, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN FORECAST HOMES NORTHERN, INC. 

  

  K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  On behalf of, and as Senior Vice-President — Finance 

  and Treasurer of each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest: 

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  

 

16

 

[SIGNATURE
PAGE 8 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN HOMES OF VIRGINIA, INC. 

  

  K. HOVNANIAN PA REAL ESTATE, INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN PROPERTIES OF NORTH BRUNSWICK V, 

  INC.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN PROPERTIES OF RED BANK, INC. 

  
	
   

  	
   

  
	
   

  	
  KHC ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
  LANDARAMA,
  INC.

  
	
   

  	
   

  
	
   

  	
  M&M
  AT LONG BRANCH, INC.

  
	
   

  	
   

  
	
   

  	
  MCNJ,
  INC.

  
	
   

  	
   

  
	
   

  	
  SEABROOK ACCUMULATION CORPORATION 

  
	
   

  	
   

  
	
   

  	
  STONEBROOK HOMES, INC.

  
	
   

  	
   

  
	
   

  	
  THE MATZEL & MUMFORD ORGANIZATION, INC. 

  
	
   

  	
   

  
	
   

  	
  WASHINGTON HOMES, INC.

  
	
   

  	
   

  
	
   

  	
  WH
  LAND I, INC.

  
	
   

  	
   

  
	
   

  	
  WH
  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  On behalf of, and as Senior Vice-President — Finance 

  and Treasurer of each of the foregoing corporations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest: 

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
  Secretary

  

 

17

 

[SIGNATURE
PAGE 9 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN HOMES OF D.C., L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: K. Hovnanian
  Developments of D.C., Inc., as the sole 

  member of the foregoing limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest: 

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FOUNDERS TITLE AGENCY OF
  MARYLAND, L.L.C. 

  

  GREENWAY FARMS UTILITY ASSOCIATES, L.L.C. 

  

  HOMEBUYERS FINANCIAL
  SERVICES, L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND INVESTMENT GROUP OF 

  MARYLAND, L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT KING FARM,
  L.L.C. K. 

  

  HOVNANIAN AT RODERUCK. L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT WILLOW BROOK, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN COMPANIES OF
  METRO D.C. NORTH, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT CAMP
  SPRINGS, L.L.C. 

  

  K. HOVNANIAN HOMES AT
  CIDER MILL, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: K.
  Hovnanian Developments of Maryland, Inc., as the 

  sole
  member of each of the foregoing limited liability companies.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest: 

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  
					

 

18

 

[SIGNATURE
PAGE 10 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K.
  HOVNANIAN HOMES AT FOREST RUN, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT
  GREENWAY FARM PARK 

  TOWNS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT RENAISSANCE PLAZA, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN HOMES AT RUSSETT, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN HOMES OF MARYLAND, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT KENT ISLAND CONDOMINIUMS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT KENT ISLAND, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR
  SEASONS AT ST. MARGARETS LANDING, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
    RIDGEMORE UTILITY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  WASHINGTON HOMES AT
  COLUMBIA TOWN CENTER, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  WH/PR
  LAND COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
  WOODLAND LAKES CONDOS AT
  BOWIE NEWTOWN, 

  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K.
  Hovnanian Developments of Maryland, Inc.,

  as the sole member of each of the foregoing 

  limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
  Secretary

  

 

19

 

[SIGNATURE
PAGE 11 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  ALFORD,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
  DULLES
  COPPERMINE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN
  LAND INVESTMENT GROUP OF VIRGINIA, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LAKE RIDGE CROSSING, L.L.C. 

  

  K. HOVNANIAN AT LAKE TERRAPIN, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN FRANCUSCUS HOMES, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN HOMES AT CAMERON STATION, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT BELMONT OVERLOOK, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K.
  HOVNANIAN HOMES AT PAYNE STREET, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN HOMES AT VICTORIA STATION, L.L.C. 

  

  K. HOVNANIAN SUMMIT HOLDINGS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT ASHBURN 

  VILLAGE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT 

  CHARLOTTESVILLE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT DULLES 

  DISCOVERY CONDOMINIUM, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT DULLES 

  DISCOVERY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT NEW KENT, L.L.C. 

  

  K. HOVNANIAN’S FOUR SEASONS AT VINT HILL, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K.
  Hovnanian Developments of Virginia, Inc., as the 

  sole member of each of
  the foregoing limited liability 

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
  Secretary

  

 

20

 

[SIGNATURE
PAGE 12 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  AUDDIE ENTERPRISES, L.L.C. 

  BUILDER SERVICES NJ, L.L.C.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN LAND INVESTMENT GROUP OF NEW

  JERSEY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT ABERDEEN URBAN RENEWAL, 

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT ALLENDALE, L.L.C. K. 

  

  HOVNANIAN AT BARNEGAT I, L.L.C. K. 

  HOVNANIAN AT BARNEGAT II, L.L.C. K. 

  HOVNANIAN AT BARNEGAT III, L.L.C. K. 

  HOVNANIAN AT BERKELEY, L.L.C.
  K. 

  HOVNANIAN AT BERNARDS V, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole
  member 

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

21

 

[SIGNATURE
PAGE 13 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN AT BLUE HERON PINES, L.L.C. 

  

  K. HOVNANIAN AT BRIDGEWATER I, L.L.C K. 

  HOVNANIAN AT CAMDEN I, L.L.C. K. 

  HOVNANIAN AT CEDAR GROVE III, L.L.C. K. 

  HOVNANIAN AT CEDAR GROVE IV, L.L.C. K. 

  HOVNANIAN AT CHESTER I, L.L.C. K. 

  HOVNANIAN AT CHESTERFIELD, L.L.C. K. 

  HOVNANIAN AT CHESTERFIELD II, L.L.C. K. 

  HOVNANIAN AT CLIFTON II, L.L.C. K. 

  HOVNANIAN AT CLIFTON, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT CRANBURY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT CURRIES WOODS, L.L.C.

  
	
   

  	
   

  
	
   

  	
    By: K. Hovnanian Holdings NJ,
  L.L.C., as the sole member of

  
	
   

  	
  each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

22

 

[SIGNATURE
PAGE 14 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT DENVILLE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT DEPTFORD TOWNSHIP, L.L.C. 

  K. HOVNANIAN AT DOVER, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT EDGEWATER II, L.L.C.

  K. HOVNANIAN AT EDGEWATER, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT EGG HARBOR TOWNSHIP, L.L.C. K. 

  HOVNANIAN AT EGG HARBOR TOWNSHIP II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT ELK TOWNSHIP, L.L.C. 

  K. HOVNANIAN AT FIFTH AVENUE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole
  member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

23

 

[SIGNATURE
PAGE 15 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN AT FLORENCE I, L.L.C.

  K. HOVNANIAN AT FLORENCE II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

  K. HOVNANIAN AT FRANKLIN, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT FREEHOLD TOWNSHIP, L.L.C. 

  K. HOVNANIAN AT GALLOWAY, L.L.C.
  K. 

  HOVNANIAN AT GREAT NOTCH,
  L.L.C. K. 

  HOVNANIAN AT GUTTENBERG,
  L.L.C. K. 

  HOVNANIAN AT HACKETTSTOWN II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HAMBURG CONTRACTORS, L.L.C. 

  K. HOVNANIAN AT HAMBURG, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HAWTHORNE, L.L.C

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole
  member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

24

 

[SIGNATURE
PAGE 16 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  K. HOVNANIAN AT HAZLET, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT HILLTOP, L.L.C. K. 

  HOVNANIAN AT JACKSON I, L.L.C. K. 

  HOVNANIAN AT JACKSON, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT JERSEY CITY V URBAN RENEWAL 

  COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT KEYPORT, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LAFAYETTE ESTATES, L.L.C. 

  K. HOVNANIAN AT LAWRENCE V,
  L.L.C. K. 

  HOVNANIAN AT LINWOOD, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN AT LITTLE EGG HARBOR TOWNSHIP II,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole
  member 

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments
  of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President —
  Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

25

 

[SIGNATURE
PAGE 17 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

K. HOVNANIAN AT LITTLE EGG HARBOR

CONTRACTORS, L.L.C.

 

K. HOVNANIAN AT LITTLE EGG HARBOR, L.L.C.

 

K. HOVNANIAN AT LITTLE EGG HARBOR III, L.L.C.

 

K. HOVNANIAN AT LONG BRANCH I,
L.L.C. K.

 

HOVNANIAN AT MANALAPAN III,
L.L.C. K.

 

HOVNANIAN AT MANSFIELD I, L.L.C.
K.

 

HOVNANIAN AT MANSFIELD II,
L.L.C. K.

 

HOVNANIAN AT MANSFIELD III,
L.L.C. K.

 

HOVNANIAN AT MAPLE AVENUE, L.L.C.

 

K. HOVNANIAN AT MARLBORO TOWNSHIP IX, L.L.C. K.

 

HOVNANIAN AT MARLBORO TOWNSHIP
V, L.L.C. K.

 

HOVNANIAN AT MARLBORO TOWNSHIP VIII, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

26

 

[SIGNATURE PAGE 18 OF 54 TO THE INTELLECTUAL PROPERTY
SECURITY AGREEMENT]

 

K. HOVNANIAN AT MARLBORO VI, L.L.C.

 

K. HOVNANIAN AT MARLBORO VII, L.L.C.

 

K. HOVNANIAN AT MENDHAM TOWNSHIP, L.L.C.

K. HOVNANIAN AT MIDDLE
TOWNSHIP, L.L.C. K.

 

HOVNANIAN AT MIDDLE TOWNSHIP II, L.L.C. K.

 

HOVNANIAN AT MIDDLETOWN II,
L.L.C. K.

 

HOVNANIAN AT MIDDLETOWN, L.L.C.

 

K. HOVNANIAN AT MILLVILLE I, L.L.C.

 

K. HOVNANIAN AT MILLVILLE II, L.L.C.

 

K. HOVNANIAN AT MILLVILLE III, L.L.C.

 

K. HOVNANIAN AT MONROE III, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

27

 

[SIGNATURE PAGE 19 OF 54 TO THE INTELLECTUAL PROPERTY
SECURITY AGREEMENT]

 

K. HOVNANIAN AT MONROE IV, L.L.C.

K. HOVNANIAN AT MONROE NJ, L.L.C.

K. HOVNANIAN AT MONTVALE, L.L.C.

 

K. HOVNANIAN AT MT. OLIVE TOWNSHIP, L.L.C.

 

K. HOVNANIAN AT NEW BRUNSWICK URBAN

RENEWAL, L.L.C.

 

K. HOVNANIAN AT NORTH BERGEN, L.L.C.

 

K. HOVNANIAN AT NORTH BRUNSWICK VI, L.L.C.

 

K. HOVNANIAN AT NORTH CALDWELL
II, L.L.C.

 

K. HOVNANIAN AT NORTH CALDWELL III, L.L.C. K.

 

HOVNANIAN AT NORTH CALDWELL,
L.L.C. K.

 

HOVNANIAN AT NORTH HALEDON, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

28

 

[SIGNATURE PAGE 20 OF 54 TO THE INTELLECTUAL PROPERTY
SECURITY AGREEMENT]

 

K. HOVNANIAN AT NORTH WILDWOOD, L.L.C.

 

K. HOVNANIAN AT NORTHFIELD,
L.L.C. K.

 

HOVNANIAN AT OCEANPORT, L.L.C.
K.

 

HOVNANIAN AT OLD BRIDGE, L.L.C. K.

 

HOVNANIAN AT PARAMUS, L.L.C.

 

K. HOVNANIAN AT
PARSIPPANY-TROY HILLS, L.L.C.

 

K. HOVNANIAN AT
PEAPACK-GLADSTONE, L.L.C.

 

K. HOVNANIAN AT PITTSGROVE,
L.L.C.

 

K. HOVNANIAN AT PORT
IMPERIAL URBAN RENEWAL

VII,   L.L.C.

 

K. HOVNANIAN AT PORT
IMPERIAL URBAN RENEWAL

VIII,    L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member
  of

  each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

29

 

[SIGNATURE PAGE 21 OF 54 TO THE INTELLECTUAL PROPERTY
SECURITY AGREEMENT]

 

K. HOVNANIAN AT PRINCETON LANDING, L.L.C. 

 

K. HOVNANIAN AT PRINCETON NJ,
L.L.C. K.

 

HOVNANIAN AT RANDOLPH I, L.L.C.
K.

 

HOVNANIAN AT READINGTON II,
L.L.C. K.

 

HOVNANIAN AT RED BANK, L.L.C. K.

 

HOVNANIAN AT RIDGEMONT, L.L.C.
K.

 

HOVNANIAN AT SAYREVILLE, L.L.C.
K.

 

HOVNANIAN AT SCOTCH PLAINS,
L.L.C. K.

 

HOVNANIAN AT SMITHVILLE III,
L.L.C. K.

 

HOVNANIAN AT SOMERS POINT, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

30

 

[SIGNATURE PAGE 22 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K.
HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

 

K.
HOVNANIAN AT SPARTA, L.L.C.

 

K.
HOVNANIAN AT SPRINGCO, L.L.C.

 

K.
HOVNANIAN AT SPRINGFIELD, L.L.C.

 

K.
HOVNANIAN AT TEANECK, L.L.C.

 

K. HOVNANIAN
AT THE MONARCH, L.L.C.

 

K.
HOVNANIAN AT TRENTON, L.L.C.

 

K.
HOVNANIAN AT TRENTON URBAN RENEWAL, L.L.C.

 

K.
HOVNANIAN AT UNION TOWNSHIP II, L.L.C.

 

K.
HOVNANIAN AT UPPER FREEHOLD TOWNSHIP II,

L.L.C.

 

K.
HOVNANIAN AT UPPER FREEHOLD TOWNSHIP III,

L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

31

 

[SIGNATURE PAGE 23 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K.
HOVNANIAN AT VERONA URBAN RENEWAL, L.L.C.

 

K. HOVNANIAN AT VINELAND, L.L.C. K.

 

HOVNANIAN AT WANAQUE, L.L.C. K. HOVNANIAN

 

AT
WARREN TOWNSHIP, L.L.C.

 

K.
HOVNANIAN AT WASHINGTON, L.L.C.

 

K. HOVNANIAN AT WAYNE IX, L.L.C. K.

 

HOVNANIAN
AT WAYNE VIII, L.L.C.

 

K.
HOVNANIAN AT WEST MILFORD, L.L.C.

 

K.
HOVNANIAN AT WEST WINDSOR, L.L.C.

 

K.
HOVNANIAN AT WILDWOOD BAYSIDE, L.L.C.

 

K.
HOVNANIAN AT WOODHILL ESTATES, L.L.C.

 

K.
HOVNANIAN AT WOOLWICH I, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments
  of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

32

 

[SIGNATURE PAGE 24 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K.
HOVNANIAN CENTRAL ACQUISITIONS, L.L.C.

 

K.
HOVNANIAN CHESTERFIELD INVESTMENT, L.L.C.

 

K.
HOVNANIAN CLASSICS, L.L.C.

 

K.
HOVNANIAN CLASSICS CIP, L.L.C.

 

K.
HOVNANIAN HUDSON POINTE INVESTMENTS, L.L.C.

 

K.
HOVNANIAN HOMES – DFW, L.L.C.

 

K.
HOVNANIAN HOMES OF HOUSTON, L.L.C.

 

K.
HOVNANIAN OF HOUSTON II, L.L.C.

 

K.
HOVNANIAN INVESTMENTS II, L.L.C.

 

K.
HOVNANIAN NORTH CENTRAL ACQUISITIONS,

L.L.C.

 

K.
HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

33

 

[SIGNATURE PAGE 25 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K.
HOVNANIAN NORTHEAST SERVICES, L.L.C. K.

 

HOVNANIAN
SHORE ACQUISITIONS, L.L.C. K.

 

HOVNANIAN
SOUTHERN NEW JERSEY, L.LC.

 

K.
HOVNANIAN SOUTH JERSEY ACQUISITIONS, L.L.C.

 

K.
HOVNANIAN T&C INVESTMENT, L.L.C.

 

K.
HOVNANIAN VENTURE I, L.L.C.

 

K.
HOVNANIAN’S PRIVATE HOME PORTFOLIO, L.L.C.

 

TERRAPIN
REALTY, L.L.C.

 

KHIP,
L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole member

  of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

34

 

[SIGNATURE PAGE 26 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

 

	
   

  	
  F&W MECHANICAL SERVICES, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the managing

  member of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

35

 

[SIGNATURE PAGE 27 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  HUDSON POINTE JOINT DEVELOPMENT, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Hudson Pointe Investments L.L.C., its 

  sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., its sole

  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New

  Jersey, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

36

 

[SIGNATURE PAGE 28 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN AT HUDSON POINTE, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Hudson Pointe Joint Development, L.L.C., its sole

  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Hudson Pointe Investments,

  L.L.C., its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., its

  sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of 

  New Jersey, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
									

 

37

 

[SIGNATURE PAGE 29 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  PARK TITLE COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Houston II, L.L.C., its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., its sole

  member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New 

  Jersey, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance

  and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

38

 

[SIGNATURE PAGE 30 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  PI INVESTMENTS II, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Investments II, L.L.C., its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., its sole 

  member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New 

  Jersey, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
							

 

39

 

[SIGNATURE PAGE 31 OF 54 TO THE
INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K.
HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL

IV,     L.L.C.

 

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL

V,    L.L.C.

 

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL

VI,     L.L.C.

 

	
   

  	
  By:

  	
  PI Investments II,
  L.L.C., its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Investments II, L.L.C., its sole

  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., its

  sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of

  New Jersey, Inc., as member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II,

  Inc., as member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
							

 

40

 

[SIGNATURE
PAGE 32 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

HOVNANIAN LAND INVESTMENT GROUP OF 

CALIFORNIA, L.L.C.

 

K. HOVNANIAN AT 3 CHAPMAN, L.L.C. 

 

K. HOVNANIAN AT 4S, L.L.C.

 

K. HOVNANIAN AT ACQUA VISTA, L.L.C. 

 

K. HOVNANIAN AT ALISO, L.L.C.

 

K. HOVNANIAN AT ARBOR
HEIGHTS, L.L.C. 

 

K.
HOVNANIAN AT AVENUE ONE, L.L.C. K. 

 

HOVNANIAN
AT BELLA LAGO, L.L.C. K. 

 

HOVNANIAN
AT BRIDLEWOOD, L.L.C. K.

 

HOVNANIAN AT CAPISTRANO,
L.L.C.

 

K. HOVNANIAN AT CARMEL
VILLAGE, L.L.C. 

 

K. HOVNANIAN AT CIELO,
L.L.C.

 

K. HOVNANIAN AT COASTLINE,
L.L.C.

 

K. HOVNANIAN AT CORTEZ HILL, L.L.C.

 

K. HOVNANIAN AT EASTLAKE, L.L.C.

 

K. HOVNANIAN AT ENCINITAS
RANCH, L.L.C.

 

K. HOVNANIAN AT EVERGREEN,
L.L.C.

 

K. HOVNANIAN AT GASLAMP
SQUARE, L.L.C.

 

K.
HOVNANIAN AT HIGHWATER, L.L.C. K. 

 

HOVNANIAN AT LA COSTA,
L.L.C.

 

K. HOVNANIAN AT LA COSTA GREENS, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Developments of California, Inc., as
  the 

  sole member of each of the foregoing limited liability 

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

41

 

[SIGNATURE
PAGE 33 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN AT LA HABRA KNOLLS, L.L.C. 

 

K. HOVNANIAN AT LAKE HILLS, L.L.C.

 

K. HOVNANIAN AT LAKE RANCHO VIEJO, L.L.C.

 

K. HOVNANIAN AT MATSU, L.L.C.

 

K. HOVNANIAN AT MENIFEE,
L.L.C.

 

K. HOVNANIAN AT MOCKINGBIRD CANYON, L.L.C. 

 

K. HOVNANIAN AT MOSAIC, L.L.C.

 

K. HOVNANIAN AT OLDE ORCHARD,
L.L.C.

 

K. HOVNANIAN AT ORANGE HEIGHTS, L.L.C.

 

K. HOVNANIAN AT PACIFIC BLUFFS,
L.L.C.

 

K. HOVNANIAN AT PARK LANE,
L.L.C. K. 

 

HOVNANIAN AT PIAZZA D’ORO,
L.L.C. K.

 

HOVNANIAN AT PRADO, L.L.C.

 

K. HOVNANIAN AT RANCHO SANTA MARGARITA,

L.L.C.

 

K. HOVNANIAN AT RIVERBEND,
L.L.C.

 

K. HOVNANIAN AT ROSEMARY LATANA, L.L.C.

 

K. HOVNANIAN AT ROWLAND HEIGHTS, L.L.C.

 

K. HOVNANIAN AT SAGE, L.L.C.

 

K. HOVNANIAN AT SKYE ISLE,
L.L.C.

 

K. HOVNANIAN AT SUNSETS,
L.L.C.

 

K. HOVNANIAN AT THE CROSBY,
L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Developments of California, Inc., as
  the

  sole member of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

42

 

[SIGNATURE
PAGE 34 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN AT THE GABLES,
L.L.C.

 

K. HOVNANIAN AT THE PRESERVE, L.L.C.

 

K. HOVNANIAN AT THOMPSON RANCH, L.L.C.

 

K. HOVNANIAN AT TRAIL RIDGE,
L.L.C.

 

K. HOVNANIAN AT WINCHESTER,
L.L.C.

 

K. HOVNANIAN INTERNATIONAL, L.L.C.

 

K. HOVNANIAN T&C
MANAGEMENT CO., L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS
AT BAKERSFIELD, 

L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS
AT BEAUMONT, 

L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS
AT HEMET, L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS AT MENIFEE 

VALLEY, L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS
AT PALM SPRINGS,

L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS,
L.L.C.

 

K. HOVNANIAN’S PARKSIDE AT TOWNGATE, L.L.C. 

 

NATOMAS CENTRAL NEIGHBORHOOD HOUSING, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Developments of California, Inc., as
  the

  sole member of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

43

 

[SIGNATURE
PAGE 35 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
   

  	
  K. HOVNANIAN HOLDINGS NJ, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Developments of New Jersey, Inc., as 

  member of the foregoing limited liability company.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
                        AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II, Inc., as 

  member of the foregoing limited liability company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

44

 

[SIGNATURE
PAGE 36 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

BUILDER SERVICES, PA, L.L.C.

 

HOVNANIAN LAND INVESTMENT GROUP OF 

PENNSYLVANIA, L.L.C.

 

K. HOVNANIAN AT ALLENBERRY,
L.L.C.

 

K. HOVNANIAN AT ALLENTOWN,
L.L.C.

 

K. HOVNANIAN AT BROAD AND WALNUT, L.L.C. 

 

K. HOVNANIAN AT CAMPHILL, L.L.C.

 

K HOVNANIAN AT EAST BRANDYWINE, L.L.C. K 

 

HOVNANIAN AT FORKS TWP. I, L.L.C.

 

K. HOVNANIAN AT LOWER
MACUNGIE TOWNSHIP I, 

L.L.C.

 

K. HOVNANIAN AT LOWER
MACUNGIE TOWNSHIP II,

L.L.C.

 

K. HOVNANIAN AT LOWER
MAKEFIELD TOWNSHIP I,

L.L.C.

 

K. HOVNANIAN AT LOWER MORELAND I, L.L.C. K. 

 

HOVNANIAN AT LOWER MORELAND II, L.L.C. K. 

 

HOVNANIAN AT LOWER MORELAND III, L.L.C. K.

 

HOVNANIAN AT MACUNGIE, L.L.C. K.

 

HOVNANIAN AT NORTHAMPTON, L.L.C.
K.

 

HOVNANIAN AT PHILADELPHIA II,
L.L.C. K.

 

HOVNANIAN AT PHILADELPHIA III,
L.L.C. K.

 

HOVNANIAN AT PHILADELPHIA IV,
L.L.C. K.

 

HOVNANIAN AT RAPHO, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Companies of Pennsylvania, Inc., as the

  sole member of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

45

 

[SIGNATURE
PAGE 37 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN AT SILVER SPRING,
L.L.C.

 

K. HOVNANIAN AT UPPER UWCHLAN II, L.L.C. 

 

K. HOVNANIAN AT UPPER UWCHLAN,
L.L.C. 

 

K. HOVNANIAN AT WEST BRADFORD, L.L.C.

 

K. HOVNANIAN HOMES OF
PENNSYLVANIA, L.L.C.

 

K. HOVNANIAN PENNSYLVANIA
ACQUISITIONS, L.L.C.

 

K. HOVNANIAN SUMMIT HOMES OF
PENNSYLVANIA, L.L.C.

 

MIDWEST BUILDING PRODUCTS & CONTRACTOR 

SERVICES OF PENNSYLVANIA, L.L.C.

 

RIDGEMORE UTILITY ASSOCIATES OF 

PENNSYLVANIA, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Companies of Pennsylvania, Inc., as the

  sole member of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

46

 

[SIGNATURE
PAGE 38 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

HOVNANIAN LAND INVESTMENT GROUP OF FLORIDA, 

L.L.C.

 

K. HOVNANIAN CAMBRIDGE HOMES, L.L.C.

 

K. HOVNANIAN FIRST HOMES, L.L.C.

 

K. HOVNANIAN FLORIDA REALTY, L.L.C.

 

K. HOVNANIAN STANDING ENTITY, L.L.C.

 

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

 

K. HOVNANIAN WINDWARD HOMES, L.L.C.

 

	
   

  	
  By:

  	
  Hovnanian Developments of Florida, Inc., as the sole
  member of each of the foregoing limited liability companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

47

 

[SIGNATURE
PAGE 39 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
   

  	
  K. HOVNANIAN COMPANIES,
  LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian Enterprises, Inc., as member of the 

  foregoing limited liability company.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AND

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian
  Developments of New Jersey II, Inc., as 

  member of the foregoing limited liability company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  K. HOVNANIAN
  EASTERN PENNSYLVANIA, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  K. Hovnanian at
  Perkiomen II, Inc., as the sole member 

  of the foregoing limited liability company.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  
	
   

  	
   

  	
   

  	
   

  	
  Secretary

  

 

48

 

[SIGNATURE
PAGE 40 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN CRAFTBUILT HOMES OF SOUTH 

CAROLINA, L.L.C.

 

K. HOVNANIAN FOUR SEASONS AT GOLD HILL, L.L.C. 

 

K. HOVNANIAN HOMES OF SOUTH CAROLINA, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Developments of South Carolina, Inc.,
  as

  the sole member of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

	
   

  	
  K. HOVNANIAN GREAT WESTERN BUILDING 

  COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN GREAT WESTERN HOMES, L.L.C. 

  
	
   

  	
   

  
	
   

  	
  NEW LAND TITLE AGENCY, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian
  Developments of Arizona, Inc., as the sole 

  member of each of the foregoing limited liability 

  companies.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

49

 

[SIGNATURE
PAGE 41 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN AT HIGHLAND SHORES, L.L.C. 

 

K. HOVNANIAN AT RIDGESTONE, L.L.C.

 

K. HOVNANIAN HOMES OF MINNESOTA, L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK,

L.L.C.

 

K. HOVNANIAN T&C HOMES AT MINNESOTA, L.L.C.

 

	
   

  	
  By:

  	
  K. Hovnanian Developments of Minnesota, Inc., as the

  sole member of each of the foregoing limited liability

  companies.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
   

  	
  Senior
  Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

50

 

[SIGNATURE
PAGE 42 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN OHIO REALTY, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN OSTER HOMES, L.L.C. K.

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN SUMMIT HOMES, L.L.C.

  
	
   

  	
   

  
	
   

  	
  MIDWEST BUILDING PRODUCTS & CONTRACTOR

  SERVICES, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Ohio, Inc., as the sole

  member of each of the foregoing limited liability

  companies.

  

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  
	
   

  	
   

  	
  Secretary

  

 

 

	
   

  	
  MILLENNIUM TITLE AGENCY, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Oster Homes, L.L.C., its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Ohio, Inc., as

  member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

51

 

[SIGNATURE
PAGE 43 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

	
   

  	
  K. HOVNANIAN HOMES OF WEST VIRGINIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN’S FOUR SEASONS AT HUNTFIELD,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  K. HOVNANIAN SUMMIT HOMES OF WEST VIRGINIA,

  L.L.C.

  
	
   

  	
   

  
	
   

  	
  MIDWEST BUILDING PRODUCTS & CONTRACTOR

  SERVICES OF WEST VIRGINIA, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of West Virginia, Inc., as

  the sole member of each of the foregoing limited liability

  companies.

  

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

 

	
   

  	
  K. HOVNANIAN SUMMIT HOMES OF MICHIGAN, L.L.C.

  
	
   

  	
   

  
	
   

  	
  MIDWEST BUILDING PRODUCTS & CONTRACTOR

  SERVICES OF MICHIGAN, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  K. Hovnanian Developments of Michigan, Inc., as the

  sole member of the foregoing limited liability company.

  

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

52

 

[SIGNATURE
PAGE 44 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

M&M AT CHESTERFIELD,
L.L.C.

 

M&M AT APPLE RIDGE,
L.L.C.

 

M&M AT EAST MILL, L.L.C.

 

M&M AT MORRISTOWN,
L.L.C.

 

M&M AT SHERIDAN, L.L.C.

 

M&M AT SPINNAKER POINTE,
L.L.C.

 

M&M AT SPRUCE HOLLOW,
L.L.C.

 

M&M AT SPRUCE RUN,
L.L.C.

 

M&M AT THE HIGHLANDS,
L.L.C.

 

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

MATZEL & MUMFORD AT MONTGOMERY, L.L.C.

 

THE LANDINGS AT SPINNAKER POINTE, L.L.C.

 

By:                              The Matzel & Mumford Organization, Inc.,
as the sole

member of each of the foregoing limited liability

companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

53

 

[SIGNATURE
PAGE 45 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

M & M AT COPPER BEECH, L.L.C.

 

M & M AT CRESCENT COURT, L.L.C.

 

M&M AT EAST RUTHERFORD, L.L.C. 

 

M&M AT KENSINGTON WOODS, L.L.C.

 

M & M AT STATION
SQUARE, L.L.C. 

 

M & M AT UNION, L.L.C.

 

M&M AT TAMARACK HOLLOW, L.L.C.

 

M&M AT THE CHATEAU, L.LC.

 

M&M AT WEST ORANGE, L.L.C.

 

M&M AT WESTPORT, L.L.C.

 

M&M AT WHEATENA URBAN RENEWAL, L.L.C.

 

MATZEL & MUMFORD AT SOUTH BOUND BROOK

URBAN RENEWAL, L.L.C.

 

MMIP, L.L.C.

By:                              M&M Investments, L.P., as the sole member
of each of

the foregoing limited liability companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

54

 

[SIGNATURE PAGE
46 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN HOMES AT FAIRWOOD, L.L.C.

 

K. HOVNANIAN HOMES AT JONES STATION 1, L.L.C. 

 

K. HOVNANIAN HOMES AT JONES STATION 2, L.L.C. 

 

K. HOVNANIAN HOMES AT MAXWELL PLACE. L.L.C.

 

K. HOVNANIAN HOMES AT PRIMERA, L.L.C.

 

PADDOCKS, L.L.C.

 

PINE AYR, L.L.C.

 

By:                              K. Hovnanian Homes of Maryland, L.L.C., as
the sole

member of each of the foregoing limited liability

companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

 

HOVNANIAN LAND INVESTMENT
GROUP OF TEXAS, L.L.C.

 

By:                              K. Hovnanian Homes - DFW, L.L.C., as the sole

member of the foregoing limited liability company.

 

	
   

  	
  By:

  	
  K. Hovnanian Holdings NJ, L.L.C., as the sole

  member of the foregoing limited liability
  company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
   

  	
  Senior Vice-President — Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  
						

 

55

 

[SIGNATURE
PAGE 47 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN AT NEW WINDSOR, L.L.C. 

 

BUILDER SERVICES NY, L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS AT 

HAMPTONBURGH, L.L.C.

 

By:                              K. Hovnanian at Northern Westchester, Inc.,
as the sole

member of each of the foregoing limited liability

companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

K. HOVNANIAN DELAWARE
ACQUISITIONS, L.L.C. 

 

K. HOVNANIAN HOMES OF DELAWARE, L.L.C.

 

K. HOVNANIAN HOMES AT NASSAU GROVE, L.L.C.

 

By:                              K. Hovnanian Developments of Delaware, Inc.,
as the

sole member of the foregoing limited liability company.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

56

 

[SIGNATURE
PAGE 48 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN AT MENIFEE VALLEY 

CONDOMINIUMS, L.L.C.

 

By:          K. Hovnanian’s Four Seasons At Menifee Valley, L.L.C.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart

  Secretary

  

 

HOVNANIAN LAND INVESTMENT
GROUP OF NORTH 

CAROLINA, L.L.C.

 

By:                              K. Hovnanian Developments of North Carolina, Inc.,
as

the sole member of the foregoing limited
liability

company.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

57

 

[SIGNATURE
PAGE 49 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN’S FOUR SEASONS AT BAILEY’S GLENN,
L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS AT OLDE LIBERTY, L.L.C.

 

K. HOVNANIAN’S FOUR SEASONS AT RENAISSANCE, L.L.C.

 

By:                              K. Hovnanian Homes of North Carolina, Inc.
as the sole

member of the foregoing limited liability companies

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

58

 

[SIGNATURE
PAGE 50 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN HOMES OF INDIANA, L.L.C.

 

By:                    K. Hovnanian Developments of Indiana, Inc.,
as the sole

member of the foregoing limited liability company.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

 

K. HOVNANIAN SUMMIT HOMES OF KENTUCKY, L.L.C.

 

MIDWEST BUILDING PRODUCTS & CONTRACTOR 

SERVICES OF KENTUCKY, L.L.C.

 

By:                    K. Hovnanian Developments of Kentucky, Inc.,
as the

sole member of the foregoing limited
liability companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

59

 

[SIGNATURE
PAGE 51 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN CONNECTICUT ACQUISITIONS, L.L.C.

 

By:                    K. Hovnanian Developments of Connecticut, Inc.,
as the

sole member of the foregoing limited liability company.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

 

By:                    K. Hovnanian Developments of Illinois, Inc.,
as the sole member of the foregoing limited liability company.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

 

HOVNANIAN LAND INVESTMENT
GROUP OF GEORGIA,

L.L.C

 

K. HOVNANIAN HOMES OF GEORGIA, L.L.C.

 

By:                    K. Hovnanian Developments of Georgia, Inc.,
as the sole

member of each of the foregoing limited
liability companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S.
  Reinhart

  Secretary

  

 

60

 

[SIGNATURE PAGE
52 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

WESTMINSTER HOMES OF ALABAMA, L.L.C. 

 

WESTMINSTER HOMES OF MISSISSIPPI, L.L.C.

 

By:                    Washington Homes, Inc., as sole member
of each of the

foregoing limited liability companies.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

 

K. HOVNANIAN AT EWING, L.L.C.

 

By: K. Hovnanian at Lakewood, Inc.,
as sole

member of the foregoing limited liability

company

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and 

  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

61

 

[SIGNATURE
PAGE 53 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

K. HOVNANIAN POLAND, SP. Z.O.O.

 

By:       Hovnanian Enterprises, Inc., as
member.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

AND

 

By:       K. Hovnanian International, Inc., as
member.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

62

 

[SIGNATURE
PAGE 54 OF 54 TO THE INTELLECTUAL PROPERTY SECURITY AGREEMENT]

 

M&M INVESTMENTS, L.P.

 

By:                    The Matzel & Mumford Organization, Inc.,
as general

partner of the foregoing limited partnership.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Kevin C. Hake

  
	
   

  	
   

  	
  Senior Vice-President — Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Peter S. Reinhart 

  Secretary

  

 

 

 

Address for Notices for each of the foregoing
Debtors:

 

c/o K. Hovnanian Enterprises, Inc.
110 

West Front St., P.O. Box 500 Red Bank, NJ 

07701

Attention: Kevin C. Hake

Telephone: (732) 747-7800

Telecopy: (732) 747-6835

 

 

SCHEDULE A

TO

INTELLECTUAL PROPERTY
SECURITY AGREEMENT

 

LIST OF REGISTERED PATENTS,
TRADEMARKS AND COPYRIGHTS

 

1.               Registered
Patents:   None.

 

2.               Trademarks:  [see
attached]

 

3.               Copyrights:   None.Exhibit 10.1

 

[EXECUTION VERSION]

 

$700,000,000.00

 

SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION

AND EXIT OPTION CREDIT AGREEMENT

 

dated as of May 5, 2008

 

among

 

LINENS ‘N THINGS, INC.

and

LINENS ‘N THINGS CENTER, INC.,

as US Borrowers,

 

LINENS ‘N THINGS CANADA CORP.,

as Canadian Borrower,

 

LINENS HOLDING CO.

and

THE OTHER GUARANTORS PARTY HERETO,

as Guarantors,

 

THE LENDERS PARTY HERETO,

 

GE CAPITAL MARKETS, INC., 

as Arranger and Bookmanager,

 

GENERAL ELECTRIC CAPITAL CORPORATION,

as US Administrative Agent and US Collateral Agent,

 

GE CANADA FINANCE HOLDING COMPANY,

as Canadian Administrative Agent and Canadian Collateral Agent

 

WELLS FARGO RETAIL FINANCE, LLC,

as Syndication Agent

 

BANK OF AMERICA, N.A.,

as Documentation Agent

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I.
  

  	
  DEFINITIONS

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
   

  	
  Defined Terms

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.02.

  	
   

  	
  Classification of Loans and Borrowings

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.03.

  	
   

  	
  Terms Generally

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.04.

  	
   

  	
  Accounting Terms; GAAP

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.05.

  	
   

  	
  Resolution of Drafting Ambiguities

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  THE CREDITS

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
   

  	
  Commitments

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.02.

  	
   

  	
  Loans

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.03.

  	
   

  	
  Borrowing Procedure

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.04.

  	
   

  	
  Evidence of Debt; Repayment of Loans

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.05.

  	
   

  	
  Fees

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.06.

  	
   

  	
  Interest on Loans

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.07.

  	
   

  	
  Termination and Reduction of Commitments

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.08.

  	
   

  	
  Interest Elections

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.09.

  	
   

  	
  [Intentionally Deleted]

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.10.

  	
   

  	
  Optional and Mandatory Prepayments of Loans

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.11.

  	
   

  	
  Alternate Rate of Interest

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.12.

  	
   

  	
  Yield Protection

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.13.

  	
   

  	
  Breakage Payments

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.14.

  	
   

  	
  Payments Generally; Pro Rata Treatment;
  Sharing of Setoffs

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.15.

  	
   

  	
  Taxes

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.16.

  	
   

  	
  Mitigation Obligations; Replacement of
  Lenders

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.17.

  	
   

  	
  Swingline Loans

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.18.

  	
   

  	
  Letters of Credit

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.19.

  	
   

  	
  [Intentionally Deleted.]

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.20.

  	
   

  	
  Determination of Borrowing Base

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.21.

  	
   

  	
  Determination of Canadian Borrowing Base

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.22.

  	
   

  	
  Collection Allocation Mechanism

  	
   

  	
  86

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.23.

  	
   

  	
  Super Priority Nature of Obligations and
  Lenders’ Liens

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.24.

  	
   

  	
  Payment of Obligations

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.25.

  	
   

  	
  No Discharge; Survival of Claims

  	
   

  	
  91

  
						

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.26.

  	
   

  	
  Release

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.27.

  	
   

  	
  Waiver of any Priming Rights

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
   

  	
  Organization; Powers

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.02.

  	
   

  	
  Authorization; Enforceability

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.03.

  	
   

  	
  No Conflicts

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.04.

  	
   

  	
  Financial Statements; Projections

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.05.

  	
   

  	
  Properties

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.06.

  	
   

  	
  Intellectual Property

  	
   

  	
  95

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.07.

  	
   

  	
  Equity Interests and Subsidiaries

  	
   

  	
  95

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.08.

  	
   

  	
  Litigation; Compliance with Laws

  	
   

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.09.

  	
   

  	
  Agreements

  	
   

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.10.

  	
   

  	
  Federal Reserve Regulations

  	
   

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.11.

  	
   

  	
  Investment Company Act

  	
   

  	
  96

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.12.

  	
   

  	
  Use of Proceeds

  	
   

  	
  97

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.13.

  	
   

  	
  Taxes

  	
   

  	
  98

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.14.

  	
   

  	
  No Material Misstatements

  	
   

  	
  98

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.15.

  	
   

  	
  Labor Matters

  	
   

  	
  98

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.16.

  	
   

  	
  Solvency

  	
   

  	
  98

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.17.

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  99

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.18.

  	
   

  	
  Environmental Matters

  	
   

  	
  99

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.19.

  	
   

  	
  Insurance

  	
   

  	
  100

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.20.

  	
   

  	
  Security Documents

  	
   

  	
  101

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.21.

  	
   

  	
  [Intentionally Omitted]

  	
   

  	
  102

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.22.

  	
   

  	
  Anti-Terrorism Law

  	
   

  	
  102

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.23.

  	
   

  	
  Material Adverse Effect

  	
   

  	
  102

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.24.

  	
   

  	
  Executive Offices; Location of Material
  Inventory

  	
   

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.25.

  	
   

  	
  Accuracy of Borrowing Base

  	
   

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.26.

  	
   

  	
  [Intentionally Omitted.]

  	
   

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.27.

  	
   

  	
  Common Enterprise

  	
   

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.28.

  	
   

  	
  No Defaults

  	
   

  	
  103

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.29.

  	
   

  	
  Reorganization
  Matters

  	
   

  	
  103

  
						

 

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  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  CONDITIONS TO CREDIT
  EXTENSIONS AND CONVERSION TO EXIT FACILITIES

  	
   

  	
  104

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
   

  	
  Conditions to Effectiveness of this
  Agreement

  	
   

  	
  104

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.02.

  	
   

  	
  Conditions to All Credit Extensions

  	
   

  	
  108

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.03.

  	
   

  	
  Exit Facilities Option

  	
   

  	
  109

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.04.

  	
   

  	
  Conditions to Exit Facilities Option

  	
   

  	
  110

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  112

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
   

  	
  Financial Statements, Reports, etc.

  	
   

  	
  112

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.02.

  	
   

  	
  Litigation and Other Notices

  	
   

  	
  116

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.03.

  	
   

  	
  Existence; Businesses and Properties

  	
   

  	
  116

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.04.

  	
   

  	
  Insurance

  	
   

  	
  117

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.05.

  	
   

  	
  Obligations and Taxes

  	
   

  	
  118

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.06.

  	
   

  	
  Employee Benefits

  	
   

  	
  119

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.07.

  	
   

  	
  Maintaining Records;
  Access to Properties and Inspections; Annual Meetings

  	
   

  	
  119

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.08.

  	
   

  	
  Use of Proceeds

  	
   

  	
  119

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.09.

  	
   

  	
  Compliance with Environmental Laws;
  Environmental Reports

  	
   

  	
  119

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.10.

  	
   

  	
  [Intentionally Deleted]

  	
   

  	
  120

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.11.

  	
   

  	
  Additional Collateral; Additional
  Guarantors

  	
   

  	
  120

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.12.

  	
   

  	
  Security Interests; Further Assurances

  	
   

  	
  121

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.13.

  	
   

  	
  Information Regarding Collateral

  	
   

  	
  122

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.14.

  	
   

  	
  Post Closing Matters

  	
   

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.15.

  	
   

  	
  Affirmative Covenants with Respect to
  Leases

  	
   

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.16.

  	
   

  	
  Interest Rate Agreements

  	
   

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.17.

  	
   

  	
  Restructure Advisors; Permitted Store
  Closings

  	
   

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  NEGATIVE COVENANTS

  	
   

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
   

  	
  Indebtedness

  	
   

  	
  123

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.02.

  	
   

  	
  Liens

  	
   

  	
  125

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.03.

  	
   

  	
  Sale and Leaseback Transactions

  	
   

  	
  127

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.04.

  	
   

  	
  Investment, Loan and Advances

  	
   

  	
  127

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.05.

  	
   

  	
  Mergers and Consolidations

  	
   

  	
  128

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.06.

  	
   

  	
  Asset Sales

  	
   

  	
  129

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.07.

  	
   

  	
  Acquisitions

  	
   

  	
  129

  
						

 

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  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.08.

  	
   

  	
  Dividends

  	
   

  	
  130

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.09.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  130

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.10.

  	
   

  	
  Cancellation of Indebtedness

  	
   

  	
  131

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.11.

  	
   

  	
  Prepayments of Other
  Indebtedness; Modifications of Organizational Documents and Other Documents,
  etc.

  	
   

  	
  131

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.12.

  	
   

  	
  Limitation on Certain Restrictions on
  Subsidiaries

  	
   

  	
  131

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.13.

  	
   

  	
  Limitation on Issuance of Capital Stock

  	
   

  	
  132

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.14.

  	
   

  	
  Limitation on Creation of Subsidiaries

  	
   

  	
  132

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.15.

  	
   

  	
  Business

  	
   

  	
  132

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.16.

  	
   

  	
  Limitation on Accounting Changes

  	
   

  	
  133

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.17.

  	
   

  	
  Fiscal Year

  	
   

  	
  133

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.18.

  	
   

  	
  No Further Negative Pledge

  	
   

  	
  133

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.19.

  	
   

  	
  Anti-Terrorism Law; Anti-Money Laundering

  	
   

  	
  133

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.20.

  	
   

  	
  Embargoed Person

  	
   

  	
  133

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.21.

  	
   

  	
  Budget Compliance Covenants

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.22.

  	
   

  	
  Repayment
  of Indebtedness

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.23.

  	
   

  	
  Reclamation
  Claims

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.24.

  	
   

  	
  Chapter
  11 Claims

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.25.

  	
   

  	
  Leases

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  GUARANTEE

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
   

  	
  The Guarantee

  	
   

  	
  134

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.02.

  	
   

  	
  Obligations Unconditional

  	
   

  	
  135

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.03.

  	
   

  	
  Reinstatement

  	
   

  	
  136

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.04.

  	
   

  	
  Subrogation; Subordination

  	
   

  	
  136

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.05.

  	
   

  	
  Remedies

  	
   

  	
  136

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.06.

  	
   

  	
  Instrument for the Payment of Money

  	
   

  	
  137

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.07.

  	
   

  	
  Continuing Guarantee

  	
   

  	
  137

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.08.

  	
   

  	
  General Limitation on Guarantee Obligations

  	
   

  	
  137

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.09.

  	
   

  	
  Release of Guarantors

  	
   

  	
  137

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  EVENTS OF DEFAULT

  	
   

  	
  137

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
   

  	
  Events of Default

  	
   

  	
  137

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.02.

  	
   

  	
  Rescission

  	
   

  	
  143

  
						

 

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  SECTION 8.03.

  	
   

  	
  Application of Proceeds

  	
   

  	
  144

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  COLLATERAL ACCOUNT;
  APPLICATION OF COLLATERAL PROCEEDS

  	
   

  	
  146

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
   

  	
  Collateral Accounts

  	
   

  	
  147

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.02.

  	
   

  	
  Accounts; Cash Management

  	
   

  	
  147

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.03.

  	
   

  	
  Inventory

  	
   

  	
  151

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.04.

  	
   

  	
  Borrowing Base-Related Reports

  	
   

  	
  152

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  THE ADMINISTRATIVE
  AGENTS AND THE COLLATERAL AGENTS

  	
   

  	
  153

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
   

  	
  Appointment and Authority

  	
   

  	
  153

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.02.

  	
   

  	
  Rights as a Lender

  	
   

  	
  153

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.03.

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  153

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.04.

  	
   

  	
  Reliance by Agent

  	
   

  	
  154

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.05.

  	
   

  	
  Delegation of Duties

  	
   

  	
  155

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.06.

  	
   

  	
  Resignation of Agent

  	
   

  	
  155

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.07.

  	
   

  	
  Non-Reliance on Agent and Other Lenders

  	
   

  	
  155

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.08.

  	
   

  	
  No Other Duties, etc.

  	
   

  	
  156

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.09.

  	
   

  	
  Indemnification

  	
   

  	
  156

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.10.

  	
   

  	
  Overadvances

  	
   

  	
  156

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.11.

  	
   

  	
  Concerning the Collateral and the Related
  Loan Documents

  	
   

  	
  157

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.12.

  	
   

  	
  Field Audit, Examination Reports and Other
  Reports

  	
   

  	
  157

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  MISCELLANEOUS

  	
   

  	
  158

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.01.

  	
   

  	
  Notices

  	
   

  	
  158

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.02.

  	
   

  	
  Waivers; Amendment

  	
   

  	
  161

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.03.

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  164

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
  166

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.05.

  	
   

  	
  Survival of Agreement

  	
   

  	
  168

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.06.

  	
   

  	
  Counterparts; Integration; Effectiveness;
  Electronic Execution

  	
   

  	
  169

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.07.

  	
   

  	
  Severability

  	
   

  	
  169

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.08.

  	
   

  	
  Right of Setoff

  	
   

  	
  169

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.09.

  	
   

  	
  Governing Law; Jurisdiction; Consent to
  Service of Process

  	
   

  	
  170

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.10.

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  171

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.11.

  	
   

  	
  Headings

  	
   

  	
  171

  
						

 

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  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.12.

  	
   

  	
  Treatment of Certain Information;
  Confidentiality

  	
   

  	
  171

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.13.

  	
   

  	
  USA PATRIOT Act Notice

  	
   

  	
  172

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.14.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  172

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.15.

  	
   

  	
  Lender Addendum

  	
   

  	
  172

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.16.

  	
   

  	
  Obligations Absolute

  	
   

  	
  172

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.17.

  	
   

  	
  Dollar Equivalent Calculations

  	
   

  	
  173

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.18.

  	
   

  	
  Judgment Currency

  	
   

  	
  173

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.19.

  	
   

  	
  Special Provisions Relating to Currencies
  Other Than Dollars

  	
   

  	
  173

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.20.

  	
   

  	
  Intercreditor Agreements

  	
   

  	
  174

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.21.

  	
   

  	
  Parties
  Including Trustees; U.S. Bankruptcy Court Proceedings

  	
   

  	
  174

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.22.

  	
   

  	
  Pre-Petition
  Loan Documents

  	
   

  	
  174

  

 

vi

 

SCHEDULES

 

	
  Schedule 1.01(a)

  	
   

  	
  Refinancing Indebtedness to Be Repaid

  
	
  Schedule 1.01(b)

  	
   

  	
  Subsidiary Guarantors

  
	
  Schedule 1.01(c)

  	
   

  	
  Existing Letters of Credit

  
	
  Schedule 3.03

  	
   

  	
  Governmental Approvals; Compliance with Laws

  
	
  Schedule 3.09

  	
   

  	
  Material Agreements

  
	
  Schedule 3.12

  	
   

  	
  Sources and Uses

  
	
  Schedule 3.19

  	
   

  	
  Insurance

  
	
  Schedule 3.24

  	
   

  	
  Location of Material Inventory

  
	
  Schedule 4.01(g)

  	
   

  	
  Local Counsel

  
	
  Schedule 4.01(x)(v)

  	
   

  	
  First Day Pleadings

  
	
  Schedule 6.01(b)

  	
   

  	
  Existing Indebtedness

  
	
  Schedule 6.02(c)

  	
   

  	
  Existing Liens

  
	
  Schedule 6.04(a)

  	
   

  	
  Existing Investments

  
	
  Schedule 5.14

  	
   

  	
  Post-Closing Matters

  
	
  Schedule 9.02

  	
   

  	
  Accounts and Lockboxes

  

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Form of Administrative Questionnaire

  
	
  Exhibit B

  	
   

  	
  Form of Assignment and Assumption

  
	
  Exhibit C

  	
   

  	
  Form of Borrowing Request

  
	
  Exhibit D

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit E

  	
   

  	
  Form of Interest Election Request

  
	
  Exhibit F

  	
   

  	
  Form of Joinder Agreement

  
	
  Exhibit G

  	
   

  	
  Form of Landlord Access Agreement

  
	
  Exhibit H

  	
   

  	
  Form of LC Request

  
	
  Exhibit I

  	
   

  	
  Form of Lender Addendum

  
	
  Exhibit J

  	
   

  	
  Form of Interim Order

  
	
  Exhibit K-1

  	
   

  	
  Form of Revolving Note

  
	
  Exhibit K-2

  	
   

  	
  Form of Canadian Revolving Note

  
	
  Exhibit K-3

  	
   

  	
  Form of US Swingline Note

  
	
  Exhibit K-4

  	
   

  	
  Form of Canadian Swingline Note

  
	
  Exhibit K-5

  	
   

  	
  Form of Discount Note

  
	
  Exhibit K-6

  	
   

  	
  Intentionally omitted

  
	
  Exhibit L-1

  	
   

  	
  Form of Perfection Certificate

  
	
  Exhibit L-2

  	
   

  	
  Form of Perfection Certificate Supplement

  
	
  Exhibit M-1

  	
   

  	
  Form of US Security Agreement

  
	
  Exhibit M-2

  	
   

  	
  Form of Canadian Security Agreement

  
	
  Exhibit N

  	
   

  	
  Form of Opinion of Company Counsel

  
	
  Exhibit O

  	
   

  	
  Form of Solvency Certificate

  
	
  Exhibit P

  	
   

  	
  Form of Intercompany Note

  
	
  Exhibit Q

  	
   

  	
  Form of Non-Bank Certificate

  
	
  Exhibit S

  	
   

  	
  Form of Borrowing Base Certificate

  

 

 

SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION

AND EXIT OPTION CREDIT AGREEMENT

 

This SENIOR SECURED, SUPER-PRIORITY
DEBTOR-IN-POSSESSION AND EXIT OPTION  CREDIT
AGREEMENT (this “Agreement”) dated
as of May 5, 2008 is among LINENS ‘N THINGS, INC., a Delaware corporation
(“LNT”) and LINENS ‘N THINGS CENTER,
INC., a California corporation (“LNT Center” and
together with LNT the “US Borrowers”
and each individually a “US Borrower”)
each as a debtor and a debtor-in-possession, LINENS ‘N THINGS CANADA CORP., a
Nova Scotia unlimited company (“Canadian Borrower”
and together with US Borrowers, the “Borrowers”);
LINENS HOLDING CO., a Delaware corporation  (“Holdings”); the Subsidiary Guarantors (such
term and each other capitalized term used but not defined herein having the
meaning given to it in Article I); the Lenders; GE CAPITAL MARKETS,
INC. (“GECM”), as lead arranger (in such
capacity, “Arranger”); GENERAL
ELECTRIC CAPITAL CORPORATION (“GE CAPITAL”),
as US swingline lender (in such capacity, “US  Swingline Lender”); GENERAL ELECTRIC
CAPITAL CORPORATION, as US administrative agent (in such capacity, “US  Administrative Agent”)
for the Lenders and the Issuing Banks and as US collateral agent (in such
capacity, the “US Collateral Agent”) for the
Secured Parties; GE CANADA FINANCE HOLDING COMPANY (“GE CANADA”),
as Canadian collateral agent (in such capacity, the “Canadian
Collateral Agent”; the US Collateral Agent and the Canadian
Collateral Agent are collectively referred to herein as the “Collateral Agents”) for the Secured Parties; GE CANADA, as
Canadian administrative agent (in such capacity, the “Canadian
Administrative Agent” together with the US Administrative Agent, the
“Administrative Agents”) for the Lenders
and the Issuing Banks, and GE CANADA, as Canadian swingline lender (in such
capacity, “Canadian Swingline Lender” and
together with US Swingline Lender, the “Swingline Lenders”).

 

WITNESSETH:

 

WHEREAS, on May 2, 2008, the US
Borrowers, Holdings and their Domestic Subsidiaries, each as a debtor and a debtor-in-possession
(and together with the US Borrowers and Holdings, collectively referred to
herein as “Debtors”, and each individually, a “Debtor”) commenced
Chapter 11 Case Nos. 08-10832 through 08-10844 as administratively consolidated
at Chapter 11 Case No. 08-10832-CSS (each a “Chapter 11 Case” and
collectively, the “Chapter 11 Cases”) by filing separate voluntary
petitions for reorganization under Chapter 11 of 11 U.S.C. 101 et seq.
(the “Bankruptcy Code”), with the United States Bankruptcy Court for the
District of Delaware (the “U.S. Bankruptcy Court”).  The Debtors continue to operate their
businesses and manage their properties as debtors and debtors-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code;

 

WHEREAS, as of the date hereof, none of the
Canadian Loan Parties have commenced, or have had commenced against it, any
insolvency proceedings under any Insolvency Laws;

 

WHEREAS, prior to the Petition Date, the
Prior Lenders provided financings to the Borrowers pursuant to the Credit
Agreement, dated as of October 24, 2007, among the Borrowers, the Prior
Lenders, GE Capital, as the Prior Agent and a Prior Lender, and GE Canada, as
the Prior Canadian Agent and a Prior Lender, and the other parties party
thereto (as amended, amended and restated, supplemented, modified and otherwise
in effect from time to time, the “Pre-Petition Credit Agreement”);

 

WHEREAS, the Canadian Obligations (as defined
in the Pre-Petition Credit Agreement) under the Pre-Petition Credit Agreement,
are Guaranteed Obligations (as defined in the Pre-Petition Credit Agreement) of
the Guarantors (as defined in the Pre-Petition Credit Agreement);

 

WHEREAS, as of the date hereof, the Prior
Lenders under the Pre-Petition Credit Agreement are owed approximately $287,477,062.36
in U.S. revolving loan principal obligations, including 

 

 

reimbursement obligations in
the amount of $58,874,192.76 in respect of the face amount of outstanding
letters of credit and $6,872,362.00 in Canadian revolving loan principal
obligations and $75,000,000.00 in tranche B principal obligations, plus
interest, fees, costs and expenses and all other Obligations (under and as
defined in the Pre-Petition Credit Agreement);

 

WHEREAS, the Obligations, under and as
defined in the Pre-Petition Credit Agreement, are secured by a security
interest in substantially all of the existing and after-acquired assets
(subject to certain exceptions and limitations) of the Loan Parties, under and
as defined in the Pre-Petition Credit Agreement, as more fully set forth in the
Pre-Petition Loan Documents and such security interest is perfected (except
with respect to Leases as defined in the Pre-Petition Loan Documents; provided,
however, that such security interests were perfected as to the proceeds
of Leases) and, with certain exceptions, as described in the Pre-Petition Loan
Documents and the Intercreditor Agreement, and such security interests have
priority over other security interests;

 

WHEREAS, the US Borrowers have requested that
the Lenders provide a senior secured, super-priority revolving credit facility
to the US Borrowers of up to Seven Hundred Million Dollars ($700,000,000) in
the aggregate to fund the working capital requirements of the Debtors during
the pendency of the Chapter 11 Cases and to repay in full all Obligations
under, and as defined in, the Pre-Petition Credit Agreement (including the
Canadian Prior Lender Obligations);

 

WHEREAS, the Canadian Borrower has requested
that the Lenders provide a revolving credit facility, similar to the terms of
the Canadian credit facility under the Pre-Petition Credit Agreement, which,
among other things, includes a $50 million revolving sub-facility and a $5
million swingline commitment to be made available to the Canadian Borrower, all
as set forth herein;

 

WHEREAS, the Lenders are willing to make
certain Post-Petition loans and other extensions of credit to the Borrowers of
up to such amount upon the terms and conditions set forth herein;

 

WHEREAS, the US Borrowers and the Domestic
Subsidiary Guarantors have agreed to secure all of their obligations under the
Loan Documents by granting to the Collateral Agents, for the benefit of
Collateral Agents and the Lenders, a security interest in and lien upon all of
their existing and after-acquired personal property and certain real property,
subject to the Order and the security interest priorities set forth therein;

 

WHEREAS, the Canadian Borrower and the
Canadian Guarantors have agreed to secure all of their obligations under the
Loan Documents by granting to the Collateral Agents, for the benefit of
Collateral Agents and the Lenders, a security interest in and lien upon all of
their existing and after-acquired assets;

 

WHEREAS, each Agent’s and the Lenders’
willingness to extend financial accommodations to the US Borrowers, and to
administer each US Borrower’s collateral security therefor, on a combined basis
as more fully set forth in this Agreement, is done solely as an accommodation
to the US Borrowers and at the US Borrowers’ request;

 

WHEREAS, Holdings and its Subsidiaries are
willing to guarantee all of the obligations of the Borrowers to the Agents and
Secured Parties under the Loan Documents, to grant to the Collateral Agents,
for the benefit of the Secured Parties, a security interest in and lien upon all
of their existing and after-acquired personal property and certain real
property and to pledge to the Collateral Agents, for the benefit of the Secured
Parties, (i) all of the Equity Interests of its Domestic Subsidiaries and (ii) sixty-five
percent (65%) of the Equity Interests of its Foreign Subsidiaries, in each
case, to secure such guaranty;

 

2

 

WHEREAS, capitalized terms used in this
Agreement shall have the meanings ascribed to them in Article I and,
for purposes of this Agreement and the other Loan Documents, the rules of
construction set forth in Article I shall govern.  All Annexes, Disclosure Schedules, Exhibits
and other attachments (collectively, “Appendices”) hereto, or expressly
identified to this Agreement, are incorporated herein by reference, and taken
together with this Agreement, shall constitute but a single agreement.  These Recitals shall be construed as part of
the Agreement.

 

NOW, THEREFORE, in consideration of the
premises and the mutual covenants hereinafter contained, and for other good and
valuable consideration, the parties hereto agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

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

 

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

 

“ABR Borrowing” shall mean a Borrowing comprised
of ABR Loans.

 

“ABR Loan” shall mean any Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.

 

“ABR Revolving Loan” shall mean any
Revolving Loan bearing interest at a rate determined by reference to the
Alternate Base Rate in accordance with the provisions of Article II.

 

“Acceptance Fee” shall have the meaning
assigned to such term in Section 2.06(d).

 

“Account Debtor” shall mean any Person who
may become obligated to another Person under, with respect to, or on account
of, an Account.

 

“Accounts”
shall mean all “accounts” as
such term is defined in the UCC as in effect on the date hereof in the State of
New York or as defined in the PPSA, as applicable, in which such Person now or
hereafter has rights and shall include, without limitation, Credit Card
Receivables.

 

“Actual Disbursement Amount”
shall mean the actual amount of all disbursements made by the Loan Parties  during the relevant Period.

 

“Actual Inventory Amount”
shall mean the actual Inventory balance of the Loan Parties  as
of the relevant date of determination.

 

“Actual Receipts Amount”
shall mean the actual amount of all receipts received by the Loan Parties  during the relevant Period as determined in a manner
consistent with the Budget.

 

“Actual Sales Receipts”
shall mean the actual amount of all sales receipts received by the Loan Parties  during the relevant Period as determined in a manner
consistent with the Budget.

 

3

 

“Adjusted LIBOR Rate” shall mean, with
respect to any Eurodollar Borrowing for any Interest Period, (a) an
interest rate per annum (rounded upward, if necessary, to the nearest 1/100th
of 1%) determined by the applicable Administrative Agent to be equal to the
LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period
divided by (b) 1 minus the Statutory Reserves (if any) for such
Eurodollar Borrowing for such Interest Period.

 

“Administrative Agents” shall have the
meaning assigned to such term in the preamble hereto.

 

“Administrative Borrower” shall mean LNT Center, or any
successor entity serving in that role pursuant to Section 2.03(c).

 

“Administrative Questionnaire” shall mean an
Administrative Questionnaire in substantially the form of Exhibit A.

 

“Affiliate” shall mean, when used with
respect to a specified person, another person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the person specified; provided, however,
that, for purposes of Section 6.09 , the term “Affiliate” shall
also include (i) any person that directly or indirectly owns more than 10%
of any class of Equity Interests of the person specified or (ii) any
person that is an executive officer or director of the person specified.

 

“Agents” shall mean the Administrative
Agents and the Collateral Agents; and “Agent” shall mean any of them.

 

“Agreement” shall have the meaning assigned
to such term in the preamble hereto.

 

“Alternate Base Rate” shall mean, for any
day, a floating rate equal to the higher of (a) the rate publicly quoted
from time to time by The Wall Street Journal as the “prime rate” (or, if
The Wall Street Journal ceases quoting a prime rate, the highest per
annum rate of interest published by the Federal Reserve Board in Federal
Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as
the Bank prime loan rate or its equivalent), and (b) the Federal Funds
Effective Rate plus 50 basis points per annum. 
Each change in any interest rate provided for in the Agreement based
upon the Alternate Base Rate shall take effect at the time of such change in
the Alternate Base Rate.  If the US
Administrative Agent shall have determined (which determination shall be conclusive
absent manifest error) that it is unable to ascertain the Federal Funds
Effective Rate for any reason, including the inability or failure of the US
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence until the
circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to
a change in the Base Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Base Rate or the Federal
Funds Effective Rate, respectively.

 

“Allowed Professional Fees” shall have the meaning assigned
to such term in Section 2.23(a)(iii).

 

“Anti-Terrorism Laws” shall have the meaning
assigned to such term in Section 3.22.

 

“Applicable Fee” shall mean, for any day,
with respect to any Commitment, 0.375% of such Commitment.

 

4

 

“Applicable Margin” shall mean, for any day,
with respect to any Revolving Loan or Swingline Loan, as the case may be, the
applicable percentage set forth below.

 

	
  Revolving Loans

  	
   

  
	
  Eurodollar/ 

  Acceptance

  Fees

  	
   

  	
  ABR/Canadian

  Prime

  	
   

  
	
  3.25%

  	
   

  	
  1.75%

  	
   

  

 

“Approved Canadian Proceeding” shall mean
any reorganization proceeding commenced in respect of any Canadian Loan Party
under any Insolvency Law; provided that (i) each of the applicable
Canadian Loan Parties consults with the Agents and the Lenders as to the nature
and structure of such proceeding and the Agent and the Lenders approve thereof,
(ii) in connection therewith, the Canadian Facility hereunder is
restructured as a debtor-in-possession facility on terms and conditions and
pursuant to documentation acceptable to the Agents and the Lenders in all
respects and (iii) the Agents and the Lenders are satisfied with all court
approvals, terms, conditions and such other documentation as are customary in
debtor-in-possession facilities in Canada (as determined by the Agents and
their counsel) or as any Agent or Lender may reasonably request.

 

“Approved Currency” shall mean each of dollars and Canadian
dollars.

 

“Approved Fund” shall mean any Fund that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.

 

“Arranger” shall have the meaning assigned
to such term in the preamble hereto.

 

“Asset Sale” shall mean (a) any
conveyance, sale, lease, sublease, assignment, transfer or other disposition
(including by way of Permitted Store Closings, merger, amalgamation or
consolidation and including any Sale and Leaseback Transaction) of any property
excluding (i) sales of Inventory in the ordinary course of business, (ii) dispositions
of Cash Equivalents and (iii) leases or subleases of less than all or
substantially all of the Stores, in each case, in the ordinary course of
business, by Holdings or any of its Subsidiaries and (b) any issuance or
sale of any Equity Interests of any Subsidiary of Holdings, in each case, to
any person other than (i) the Borrowers, (ii) any Subsidiary
Guarantor or (iii) other than for purposes of Section 6.06,
any other Subsidiary.

 

“Assignment and Assumption” shall mean 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 11.04(b)),
and accepted by the applicable Administrative Agent, in substantially the form
of Exhibit B, or any other form approved by the applicable Administrative
Agent.

 

“BA Equivalent Loan” shall mean a Canadian Revolving Loan
made by a Non-BA Lender.

 

“Bankers’ Acceptance” shall mean a bill of exchange,
including a depository bill defined and issued in accordance with the
Depository Bills and Notes Act (Canada), denominated in 

 

5

 

Canadian dollars, drawn by the
Canadian Borrower and accepted by the Lender and shall include, where the
context requires, a Discount Note and a BA Equivalent Loan not evidenced by a
Discount Note.

 

“Bankruptcy Code” shall have the meaning assigned to such
term in the recitals of this Agreement.

 

“Bankruptcy Rules” shall mean the Federal Rules of
Bankruptcy Procedure and any applicable local bankruptcy rules, including the
Local Rules of the United States Bankruptcy Court for the District of
Delaware, as the same may from time to time be in effect and applicable to a
Chapter 11 Case.

 

“Base Rate”
shall mean, for any day, a
rate per annum that is equal to the corporate base rate of interest established
by the US Administrative Agent from time to time; each change in the Base Rate
shall be effective on the date such change is effective.  The corporate base rate is not necessarily
the lowest rate charged by the US Administrative Agent to its customers.

 

“BIA” shall mean the Bankruptcy
and Insolvency Act (Canada) as such legislation now exists or may
from time to time hereafter be amended, modified, recodified, supplemented or
replaced, together with all rules, regulations and interpretations thereunder
or related thereto.

 

“Blocked Account” shall mean shall have the
meaning assigned to such term in Section 9.02(b).

 

“Board” shall mean the Board of Governors of
the Federal Reserve System of the United States.

 

“Board of Directors” shall mean, with
respect to any person, (i) in the case of any corporation (including, for
the avoidance of doubt, any company incorporated under the laws of Canada (or
any province or territory thereof)), the board of directors of such person, (ii) in
the case of any limited liability company, the board of managers of such
person, (iii) in the case of any partnership, the Board of Directors of
the general partner of such person and (iv) in any other case, the
functional equivalent of the foregoing.

 

“Borrowers” shall have the meaning assigned
to such term in the preamble hereto.

 

“Borrowing” shall mean (a) Loans of the
same Class and Type, made, converted or continued on the same date and, in
the case of Eurodollar Loans or Banker’s Acceptances, as to which a single
Interest Period is in effect, or (b) a Swingline Loan.

 

“Borrowing Base” shall mean at any time,
subject to adjustment as provided in Section 2.20, an amount equal
to the lesser of (a) the sum of, without duplication:

 

(i)            the book value of Eligible Accounts of US
Borrowers and the US Borrowing Base Guarantors multiplied by the advance rate
of 95%, plus

 

(ii)           the advance rate of 95% of the Net Recovery
Cost Percentage multiplied by the Cost of Eligible Inventory of US Borrowers
and the US Borrowing Base Guarantors, plus

 

(iii)          the
advance rate of 95% of the Net Recovery Cost Percentage multiplied by the Cost
of all Eligible In-Transit Inventory of US Borrowers and the US Borrowing Base
Guarantors, plus

 

6

 

(iv)          the
advance rate of 95% of the Net Recovery Cost Percentage multiplied by the
aggregate undrawn face amount of Eligible Letters of Credit of US Borrowers and
the US Borrowing Base Guarantors, minus

 

(v)           a reserve in the amount of the Current
Derivative Exposure, minus

 

(vi)          a reserve in the amount of the Carve-Out
Amount, minus

 

(vii)         any Reserves established from time to time by
such Collateral Agents in the exercise of their Permitted Discretion, and

 

(b)           the
maximum amount of Revolving Credit Obligations (as defined in the Senior Note
Agreement) that are permitted in Sections 4.09(b)(1) and (14)
of the Senior Note Agreement as Permitted Debt thereunder, minus the
Canadian Exposure of all the Lenders, and, except as otherwise consented to by
the US Administrative Agent, minus any Permitted Leasehold Facility and
any other Indebtedness included in the compliance calculation under Sections 4.09(b)(1) and (14)  of the Senior Note Agreement.

 

The
Borrowing Base at any time shall be determined by reference to the most recent
Borrowing Base Certificate theretofore delivered to the Collateral Agents and
the Administrative Agents with such adjustments as Administrative Agents and
Collateral Agents deem appropriate in their collective Permitted Discretion to
assure that the Borrowing Base is calculated in accordance with the terms of
this Agreement.  The parties understand
that the exclusionary criteria in the definitions of Eligible Accounts and
Eligible Inventory, any Reserves that may be imposed as provided herein, any
deductions or other adjustments to determine “lower of cost or market value”
and factors considered in the calculation of the Cost of Eligible Inventory or
the book value of Eligible Accounts have the effect of reducing the Borrowing
Base, and, accordingly, whether or not any provisions hereof so state, all of
the  foregoing shall be determined
without duplication so as not to result in multiple reductions in the Borrowing
Base for the same facts or circumstances.

 

“Borrowing Base Certificate” shall mean an
Officers’ Certificate from Borrowers, substantially in the form of (or in such
other form as may be mutually agreed upon by Borrowers, Collateral Agents and
Administrative Agents), and containing the information prescribed by Exhibit S,
delivered to the Administrative Agents and the Collateral Agents setting forth
Borrowers’ calculation of the Borrowing Base and the Canadian Borrowing Base.

 

“Borrowing Base Guarantor Intercompany Loan Amount”
shall mean, at any time, the amount which is the sum of (a) the net amount
of any intercompany advances (including Letters of Credit issued for the
account or benefit of a US Borrowing Base Guarantor) which are made and
outstanding to or for the account of a US Borrowing Base Guarantor from the
Administrative Borrower and (b) interest accrued and unpaid on such amount
(from the date of this Agreement for amounts outstanding on the date hereof and
which remain outstanding, and from the date of such intercompany advance for
subsequent advances) at the rate per annum equal to the Alternate Base Rate
plus the Applicable Margin in effect from time to time.

 

“Borrowing Base Guarantors” shall mean the US Borrowing Base
Guarantors and the Canadian Borrowing Base Guarantors.

 

“Borrowing Request” shall mean a request by
Borrowers in accordance with the terms of Section 2.03 and
substantially in the form of Exhibit C, or such other form as shall
be approved by the Administrative Agents.

 

7

 

“Budget” shall mean the budget prepared by the Debtors
and the Canadian Loan Parties (or Conway, Del Genio, Gries & Co. LLC
or other restructuring advisors reasonably acceptable to the Administrative
Agents) and furnished to the Administrative Agent and the Lenders on the
Closing Date and which is approved
by, and in form and substance satisfactory to, the Required Lenders and their
financial advisors in their sole discretion, as the same may be updated, modified or supplemented from time
to time as provided in Section 5.01(h).

 

“Budgeted Disbursement
Amount” means the line item contained in the Budget under the
heading ‘Total Disbursements’ during the relevant Period of determination as
set forth in the Budget.

 

“Budgeted Inventory Amount”
means, for any date, the line item contained in the Budget under the heading ‘2008
Book Inventory’ for the US Borrowers and the Canadian Borrower and reflecting
the projected Inventory balance as of such date.

 

“Budgeted Receipts Amount” means
the line item contained in the Budget under the heading ‘Total Receipts’ during
the relevant Period of determination as set forth in the Budget.

 

“Budgeted Sales Receipts”
means the line item contained in the Budget under the heading ‘Sales Receipts’
during the relevant Period of determination as set forth in the Budget.

 

“Business Day” shall mean any day other than
a Saturday, Sunday or other day on which banks in New York City are authorized
or required by law to close; provided, however, that when used in
connection with (a) a Eurodollar Loan, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market and (b) a Canadian Revolving Loan, the term “Business Day” shall also exclude
any day on which banks in Toronto, Canada are authorized or required by law to
close.

 

“CAM Exchange” shall mean the exchange of the Lenders’
interests provided for in Section 2.22.

 

“CAM Exchange Date” shall mean the date on which (i) any
event referred to in Section 8.01(g) or (h) shall
occur with regard to the Canadian Loan Parties, or (ii) an acceleration of
the maturity of the Loans pursuant to Section 8.01 shall occur.

 

“CAM Percentage” shall mean, as to each Lender, a fraction,
expressed as a decimal, of which (i) the numerator shall be (without
duplication) the aggregate Dollar Equivalent of the Specified Obligations owed
to such Lender and such Lender’s participation in the aggregate LC Obligations
immediately prior to the CAM Exchange Date and (ii) the denominator shall
be (without duplication) the aggregate Dollar Equivalent (as so determined) of
the Specified Obligations owed to all the Lenders and the aggregate LC
Obligations immediately prior to such CAM Exchange Date.

 

“Canadian Administrative Agent” shall have the meaning
assigned to such term in the preamble hereto.

 

“Canadian Borrower” shall have the meaning assigned to such
term in the preamble hereto.

 

“Canadian Borrowing Base” shall mean at any time, subject to
adjustment as provided in Section 2.21, an amount equal to the
lesser of (a) the sum of, without duplication:

 

8

 

(i)                                     the book value of Eligible Canadian Accounts
of the Canadian Borrower and each Canadian Borrowing Base Guarantor multiplied
by the advance rate of 95%, plus

 

(ii)                                  the advance rate of 95% of the Net Recovery
Cost Percentage multiplied by the Cost of Eligible Canadian Inventory of the
Canadian Borrower and each Canadian Borrowing Base Guarantor, plus

 

(iii)                               the advance rate of 95% of the Net Recovery
Cost Percentage multiplied by the Cost of all Eligible Canadian In-Transit
Inventory of the Canadian Borrower and each Canadian Borrowing Base Guarantor, plus

 

(iv)                              the amount, if any, by which the Borrowing
Base exceeds the US Revolving Exposure of all of the Lenders (but only to the
extent that such excess is not made available to US Borrowers), minus

 

(v)                                 to the extent not already deducted in the
calculation of the Borrowing Base, a reserve in the amount of the Current
Derivative Exposure; minus

 

(vi)                              a reserve in the amount of the Priority
Payables; minus

 

(vii)                           any Reserves established from time to time by
such Collateral Agents in the exercise of their Permitted Discretion; and

 

(b)           the maximum amount of Revolving Credit
Obligations (as defined in the Senior Note Agreement) that are permitted in Sections 4.09(b)(1) and (14)
of the Senior Note Agreement as Permitted Debt thereunder, minus the US
Revolving Exposure of all of the Lenders, and, except as otherwise consented to
by the Administrative Agents, minus any Permitted Leasehold Facility and
any other Indebtedness included in the compliance calculation under Sections 4.09(b)(1) and (14)  of the Senior Note Agreement.

 

The
Canadian Borrowing Base at any time shall be determined by reference to the
most recent Borrowing Base Certificate theretofore delivered to the Collateral
Agents and the Administrative Agents with such adjustments as Administrative
Agents and Collateral Agents deem appropriate in their collective Permitted
Discretion to assure that the Canadian Borrowing Base is calculated in
accordance with the terms of this Agreement. 
The parties understand that the exclusionary criteria in the definitions
of Eligible Canadian Accounts and Eligible Canadian Inventory, any Reserves
that may be imposed as provided herein, any deductions or other adjustments to
determine “lower of cost or market value” and factors considered in the
calculation of the Cost of Eligible Canadian Inventory or the book value of
Eligible Canadian Accounts have the effect of reducing the Canadian Borrowing
Base, and, accordingly, whether or not any provisions hereof so state, all of
the foregoing shall be determined without duplication so as not to result in
multiple reductions in the Canadian Borrowing Base for the same facts or
circumstances.

 

“Canadian  Borrowing Base
Guarantor” shall mean any Wholly Owned Subsidiary of the Holdings
which may hereafter be approved by the Administrative Agents and the Collateral
Agents and which (a) is organized under the laws of Canada (or any
province or territory thereof), (b) is currently able to prepare all
collateral reports in a comparable manner to the Borrowers’ reporting
procedures and (c) has executed and delivered to the applicable Collateral
Agents such joinder agreements to guarantees, contribution and set-off agreements
and other Security Documents as such Collateral Agents have reasonably
requested so long as such Collateral Agents have received and approved, in
their reasonable discretion, (i) a collateral audit and Inventory
Appraisal conducted by an independent appraisal firm 

 

9

 

reasonably acceptable to such Collateral
Agents and (ii) all PPSA and similar search results necessary to confirm
such Collateral Agents’ First Priority Lien on all of such Canadian Borrowing
Base Guarantor’s personal property, subject to Permitted Liens.

 

“Canadian Collateral Agent” shall have the meaning assigned
to such term in the preamble hereto.

 

“Canadian dollars” or “Can$” shall
mean the lawful money of Canada.

 

“Canadian Exposure” shall mean, with respect to any Lender at
any time, the Dollar Equivalent of the aggregate principal amount at such time
of all outstanding Canadian Revolving Loans of such Lender, plus the Dollar Equivalent of the
aggregate amount at such time of such Lender’s Canadian LC Exposure, plus the aggregate amount at such time of such Lender’s
Swingline Exposure to Canadian Borrower.

 

“Canadian Guarantors”  shall mean LNT
I, LNT II, LNT Partnership, each Canadian Borrowing Base Guarantor and each
other person, if any, that executes or becomes party to a Canadian Guaranty or
other similar agreement guaranteeing the Canadian Obligations in favor of the
Canadian Collateral Agent.

 

“Canadian Guaranty” shall mean each certain Guaranty
Agreement dated as of the Closing Date guaranteeing the Canadian Obligations
addressed to the Canadian Collateral Agent for the benefit of the Canadian
Secured Parties by each Canadian Loan Party governed by Canadian law, as the
same may from time to time be modified, amended, extended or reaffirmed in
accordance with the terms thereof.

 

“Canadian Inventory” shall mean all of the Canadian Borrower’s
and Canadian Borrowing Base Guarantors’ now owned and hereafter existing or
acquired raw materials, work in process, finished goods and all other inventory
of whatsoever kind or nature, wherever located.

 

“Canadian LC Exposure”
shall mean at any time the sum of (a) the Dollar Equivalent of the
aggregate undrawn amount of all outstanding Letters of Credit issued for the
account of any Canadian Loan Party at such time, plus (b) the Dollar Equivalent of the aggregate
principal amount of all Reimbursement Obligations in respect of Letters of
Credit issued for the account of any Canadian Loan Party outstanding at such
time, plus (c) the Dollar Equivalent of
the aggregate amount owing on all outstanding LC Acceptances issued for the
account of any Canadian Loan Party.  The
Canadian LC Exposure of any Canadian Revolving Lender at any time shall mean
its Pro Rata Percentage of the aggregate Canadian LC Exposure at such time.

 

“Canadian LC
Sublimit”
shall mean, at any time, the lesser of (i) $50  million
and (ii) the aggregate amount of the Canadian Revolving Commitments at
such time.

 

“Canadian Loan Parties”  shall mean
Canadian Borrower and the Canadian Guarantors.

 

“Canadian Minimum Availability Requirement” shall mean, at
all times, an amount equal to 10% of the sum of clauses (i) through (iii) of
the Canadian Borrowing Base.

 

“Canadian Obligations” shall mean (a) obligations of
Canadian Borrower and the other Canadian Loan Parties from time to time arising
under or in respect of the due and punctual payment of (i) the principal
of and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or 

 

10

 

allowable in such proceeding)
on the Canadian Revolving Loans and Canadian Swingline Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by Canadian Borrower
under this Agreement in respect of any Letter of Credit or LC Acceptance, when
and as due, including payments in respect of Reimbursement Obligations,
interest thereon and obligations to provide cash collateral, and (iii) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of Canadian Borrower and the other
Canadian Loan Parties under this Agreement and the other Loan Documents with
respect to obligations of Canadian Borrower and the Canadian Guarantors, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of Canadian Borrower and the Canadian Guarantors under or pursuant
to this Agreement and the other Loan Documents with respect to the obligations
of Canadian Borrower and the other Canadian Loan Parties, (c) the due and
punctual payment and performance of all obligations of Canadian Borrower and
the other Canadian Loan Parties under each Lender Hedging Agreement to which
Canadian Borrower and/or the other Canadian Loan Parties maybe a party, and (d) the
due and punctual payment and performance of all obligations of any Canadian
Loan Party in respect of (i) overdrafts and related liabilities owed to
any Lender, any Affiliate of a Lender, any Administrative Agent or Collateral
Agent or any of its Affiliates arising from treasury, depositary and cash
management services or in connection with any automated clearinghouse transfer
of funds, (ii) any credit or debit card services (including, without
limitation, Private Label Credit Cards) owed to any Lender, any Affiliate of a
Lender, any Administrative Agent or Collateral Agents or any of its Affiliates
(including, without limitation, GE Money) and (iii) any other obligations
(other than those obligations described in clauses (a) through (c) above)
owed by any Canadian Loan Party to GE Capital, GE Canada and/or GE Money.  Notwithstanding anything herein to the
contrary, the term “Canadian Obligations”
shall only refer to obligations of Canadian Borrower and Canadian Guarantors
hereunder and under the other Loan Documents and shall not refer to obligations
of US Borrowers, the Domestic Guarantors and their Domestic Subsidiaries.

 

“Canadian Pledge Agreements” shall mean that certain Pledge
Agreement dated as of the Closing Date by LNT Center pledging sixty-five
percent (65%) of its Equity Interests in LNT I and LNT II to secure the US
Obligations and pledging 100% thereof to secure the Canadian Obligations  and those certain Pledge Agreements dated as of the Closing
Date by LNT I, LNT II, LNT Partnership and Canadian Borrower pledging all of
their Equity Interests in the Canadian Borrower and the Canadian Guarantors, as
applicable, to secure the Canadian Obligations, in each case, addressed to the
applicable Collateral Agents for the benefit of the applicable Secured Parties,
as the same may from time to time be modified, amended, extended or reaffirmed
in accordance with the terms thereof.

 

“Canadian Pre-Petition Revolver Outstandings” shall mean all
of the “Canadian Revolving Loans” (as defined in the Pre-Petition Credit
Agreement) and all of the “Canadian Swingline Loans” (as defined in the
Pre-Petition Credit Agreement) outstanding immediately prior to the Closing
Date.

 

“Canadian Prime Rate” shall mean on any day the greater of:

 

(a)           a rate per annum that is equal to the corporate base rate of interest
established from time to time by Bank of Montreal (or such other Schedule I
Bank selected by the Canadian Administrative Agent from time to time) as its
reference rate then in effect on such day for commercial loans made by it in
Canada (it is understood and agreed that such corporate base rate is not
necessarily the lowest rate charged by the Canadian Administrative Agent to its
customers); and

 

(b)           the CDOR Rate in effect from time to time plus 100 basis points per
annum.

 

11

 

Any
change in the Canadian Prime Rate shall be effective as of the opening of
business on the date the change become effective generally.

 

“Canadian Prime Rate Borrowing” shall mean a Borrowing
comprised of Canadian Prime Rate Loans.

 

“Canadian Prime Rate Loans” shall mean any Canadian Revolving
Loan or Canadian Swingline Loan bearing interest at a rate determined by
reference to the Canadian Prime Rate in accordance with the provisions of Article II.

 

“Canadian Prior Lender Obligations” shall mean Prior Lender
Obligations then outstanding on account of Canadian Pre-Petition Revolver
Outstandings.  Canadian Prior Lender
Obligations shall not include letter of credit obligations under the
Pre-Petition Credit Agreement which have been continued as LC Obligations
hereunder.

 

“Canadian Pro Rata Percentage” of any Canadian Revolving
Lender at any time shall mean the percentage of the total Canadian Revolving Commitments
of all Canadian Revolving Lenders represented by such Lender’s Canadian
Revolving Commitment.

 

“Canadian Revolving Borrowing” shall mean a Borrowing
comprised of Canadian Revolving Loans.

 

“Canadian Revolving Commitment” shall mean, with respect to
each Revolving Lender, the commitment, if any, of such Revolving Lender to make
Canadian Revolving Loans hereunder up to the amount set forth on Schedule I to
the Lender Addendum executed and delivered by such Lender or in the Assignment
and Assumption pursuant to which such lender assumed its Canadian Revolving
Commitment.  The Canadian Revolving
Commitment of each Revolving Lender is a sub-commitment of its Revolving
Commitment and, as such, may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by
or to such Revolving Lender pursuant to Section 11.04.  The aggregate amount of the Lenders’ Canadian
Revolving Commitments on the Closing Date is $50 million.

 

“Canadian Revolving Lender” shall mean a Lender with a
Canadian Revolving Commitment.

 

“Canadian Revolving Loan” shall mean a Revolving Loan
borrowed by the Canadian Borrower denominated in Canadian dollars or a Bankers’
Acceptance (and any advances with respect thereto) denominated in Canadian
dollars.

 

“Canadian Secured Parties” shall mean the Canadian
Administrative Agent, the Canadian Collateral Agent, each Lender that holds Canadian
Revolving Loans or has Canadian Revolving Commitments (in its capacity as
such), the Canadian Swingline Lender, GE Capital and GE Money.

 

“Canadian Security Agreement” shall mean each certain
Security Agreement dated as of the Closing Date in favor of the Canadian
Collateral Agent for the benefit of the Canadian Secured Parties by Canadian
Borrower and by each Canadian Guarantor, which is governed by Canadian law, as
the same may from time to time be modified, amended, extended or reaffirmed in
accordance with the terms thereof.

 

“Canadian  Swingline
Commitment” shall mean the commitment of the Canadian Swingline
Lender to make loans pursuant to Section 2.17, as the same may be
reduced from time to time 

 

12

 

pursuant to Section 2.07
or Section 2.17.  The amount
of the Canadian Swingline Commitment shall initially be $5 million, but in no
event shall exceed the Revolving Commitment.

 

“Canadian  Swingline Lender”
shall have the meaning assigned to such term in the preamble hereto.

 

“Canadian Swingline Loans” shall mean any loan made by the
Canadian Swingline Lender pursuant to Section 2.17(d).

 

“Capital Expenditures” shall mean, for any
period, without duplication, the increase during that period in the gross
property, plant or equipment account in the consolidated balance sheet of LNT
and its Subsidiaries, determined in accordance with GAAP, whether such increase
is due to purchase of properties for cash or financed by the incurrence of
Indebtedness, but excluding (i) expenditures made in connection with the
replacement, substitution or restoration of property pursuant to Section 2.10(d).

 

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

 

“Carve-Out Amount” shall have the meaning assigned to such
term in Section 2.23(a)(iv).

 

“Carve-Out Expenses” shall have the
meaning assigned to such term in Section 2.23(a)(iii).

 

“Case Professionals”
shall have the meaning assigned to such term in Section 2.23(a)(iii).

 

“Cash Collateral Account” shall mean a
collateral account in the form of a deposit account established and maintained
by the Collateral Agents for the benefit of the Secured Parties from the
proceeds of Collateral collected in the Collection Account that have not either
been released to the Borrowers or applicable Guarantor or applied immediately
to outstanding Obligations.

 

“Cash Equivalents” shall mean, as to any
person, (a) securities issued, or directly, unconditionally and fully
guaranteed or insured, by the United States, Canada or any agency or
instrumentality thereof (provided
that the full faith and credit of the United States or Canada is pledged in
support thereof) having maturities of not more than one year from the date of
acquisition by such person; (b) time deposits and certificates of deposit
of any Lender or any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any state thereof or the District of Columbia or any province or
territory of Canada having, capital and surplus aggregating in excess of $500
million and a rating of “A” (or such other similar equivalent rating) or higher
by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) with maturities of not more
than one year from the date of acquisition by such person; (c) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (a) above entered into with any bank meeting
the qualifications specified in clause (b) above, which repurchase
obligations are secured by a valid perfected security interest in the
underlying securities; (d) commercial paper issued by any person
incorporated in the United States or Canada rated at least A-1 or the
equivalent thereof by Standard & Poor’s Rating Service or at least P-1
or the equivalent thereof by Moody’s Investors Service Inc., and in each case
maturing not more than one year after the 

 

13

 

date of acquisition by such person; (e) investments
in money market funds substantially all of whose assets are comprised of
securities of the types described in clauses (a) through (d) above; (f) demand
deposit accounts maintained in the ordinary course of business; and (g) other
bank accounts which contain funds that have not been swept to the Concentration
Accounts because of the need to meet compensating balance or other fee
requirements of a bank that provides a Blocked Account.

 

“Cash Management Order”
shall mean the order of the U.S. Bankruptcy Court entered in the Chapter 11
Cases after the “first day” hearings, together with all extensions,
modifications and amendments thereto, in form and substance satisfactory to the
Administrative Agents, the Collateral Agents and Required Lenders, which among
other matters authorizes the Debtors to maintain their existing cash management
and treasury arrangements (as set forth in the Pre-Petition Credit Agreement)
or such other arrangements as shall be acceptable to the Administrative Agents
and the Collateral Agents in all material respects.

 

“Cash Management System” shall have the meaning assigned to
such term in Section 9.02.

 

“Casualty Event” shall mean any loss of
title or any loss of or damage to or destruction of, or any condemnation or
other taking (including by any Governmental Authority) of, any property of
Holdings or any of its Subsidiaries.  “Casualty
Event” shall include but not be limited to any taking of all or any part of any
Real Property of any person or any part thereof, in or by condemnation or other
eminent domain proceedings pursuant to any Requirement of Law, or by reason of
the temporary requisition of the use or occupancy of all or substantially all
of any Real Property of any person or any part thereof by any Governmental
Authority, civil or military, or any settlement in lieu thereof, but shall not
include a loss of title to the extent covered by a title insurance policy.

 

“CDOR Rate” shall mean, on any day, the annual rate of
interest which is the arithmetic average of the “BA 1 month” rates applicable
to Bankers’ Acceptances issued by Schedule I banks identified as such on the
Reuters Screen CDOR Page at approximately 10:00 a.m. (Toronto time)
on such day (as adjusted by the Canadian Administrative Agent after 10:00 a.m.
(Toronto time) to reflect any error in any posted rate or in the posted average
annual rate).  If the rate does not
appear on the Reuters Screen CDOR Page as contemplated above, then the
CDOR Rate on any day shall be calculated as the arithmetic average of the
discount rates applicable to one month Bankers’ Acceptances of, and as quoted
by, any two of the Schedule I banks, chosen by the Canadian Administrative
Agent, as of 10:00 a.m. (Toronto time) on such day, or if such day is not
a Business Day, then on the immediately preceding Business Day.  If less than two Schedule I banks quote the
aforementioned rate, the CDOR Rate shall be the rate chosen by the Canadian
Administrative Agent.

 

“CERCLA” shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. § 9601 et seq. and all
implementing regulations.

 

A
“Change in Control” shall be
deemed to have occurred if:

 

(a)           Holdings at any time ceases to own directly or indirectly 100% of the
Equity Interests of Borrowers;

 

(b)           at any time a change of control occurs under any Material Indebtedness;
or

 

(c)           the Permitted Holders cease to own, or to have the power to vote or
direct the voting of, Voting Stock of Holdings representing a majority of the
voting power of the total outstanding Voting Stock of Holdings.

 

14

 

For purposes of this definition, a person
shall not be deemed to have beneficial ownership of Equity Interests subject to
a stock purchase agreement, merger agreement, amalgamation agreement or similar
agreement until the consummation of the transactions contemplated by such
agreement.

 

“Change in
Law” shall mean the occurrence, after the date of this Agreement, of
any of the following:  (a) the
adoption or taking into effect of any law, treaty, order, policy, rule or
regulation, (b) any change in any law, treaty, order, policy, rule or
regulation 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.

 

“Chapter 11 Case”
and “Chapter 11 Cases” shall have the
respective meanings assigned to such terms in the recitals to this Agreement.

 

“Charges”
shall have the meaning assigned to such term in Section 11.14.

 

“Chattel
Paper” shall mean all “chattel paper,” as such term is defined in
the UCC as in effect on the date hereof in the State of New York, or as defined
in the PPSA, as applicable, in which any Person now or hereafter has rights.

 

“Class,”
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans
and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Commitment, US Swingline Commitment or Canadian
Swingline Commitment, in each case, under this Agreement, of which such Loan,
Borrowing or Commitment shall be a part.

 

“Closing
Date” shall mean the date of this Agreement, which shall not be
later than three (3) Business Days after the entry of the Interim Order.

 

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

 

“Collateral”
shall mean, collectively, all of the Security Agreement Collateral, the
Mortgaged Property and all other property of whatever kind and nature subject
or purported to be subject from time to time to a Lien under any Security
Document and/or as to which a security interest or other Lien is granted under
the Order, including, without limitation, any (x) proceeds of avoidance
actions under Chapter 5 of the Bankruptcy Code, to the extent that the Carve
Out Expenses funded the estates’ expenses in investigating such actions,
commencing such actions, and/or conducting the litigation and/or settlement
discussions that resulted in the receipt of such proceeds and (y) the
proceeds of any avoidance actions brought pursuant to Section 549 of the
Bankruptcy Code to recover any post-petition transfer of Collateral.

 

“Collateral
Agents” shall have the meaning assigned to such term in the preamble
hereto.

 

“Collection Accounts”
has the meaning assigned to such term in Section 9.02(d).

 

“Commercial
Letter of Credit” shall mean any letter of credit or similar
instrument issued for the purpose of providing credit support in connection
with the purchase of materials, goods or services by Borrowers or any of their
Subsidiaries in the ordinary course of their businesses.

 

15

 

“Committees”
shall mean collectively, the official committee of unsecured creditors and any
other official committee appointed by the U.S. Trustee or approved by the U.S.
Bankruptcy Court in any Chapter 11 Case and each of such Committees shall be
referred to herein as a Committee.

 

“Commitment”
shall mean, with respect to any Lender, such Lender’s Revolving Commitment,
Canadian Revolving Commitment, US Swingline Commitment or Canadian Swingline
Commitment.

 

“Commitment
Fee” shall have the meaning assigned to such term in Section 2.05(a).

 

“Companies”
shall mean Holdings and its direct or indirect Subsidiaries; and “Company” shall mean any one of them.

 

“Compliance
Certificate” shall mean a certificate of a Financial Officer
substantially in the form of Exhibit D or such other form as may be
acceptable to the Administrative Agents.

 

“Concentration Accounts”
shall have the meaning assigned to such term in Section 9.02(d).

 

“Contested Collateral Lien Conditions” shall mean,
with respect to any Permitted Lien of the type described in clauses (a), (b), (e) and
(f) of Section 6.02, the following conditions:

 

(a)           US Borrowers shall cause any
proceeding instituted contesting such Lien to stay the sale or forfeiture of
any portion of the Collateral on account of such Lien;

 

(b)          at the option and at the
request of the US Administrative Agent, to the extent such Lien is in an amount
in excess of $100,000, the applicable Collateral Agent shall maintain a Reserve
against the Borrowing Base or Canadian Borrowing Base, as applicable, in an
amount sufficient to pay and discharge such Lien and the US Administrative Agent’s
reasonable estimate of all interest and penalties related thereto; and

 

(c)           such Lien shall in all
respects be subject and subordinate in priority to the Lien and security
interest created and evidenced by the Security Documents, except if and to the extent
that the Requirement of Law creating, permitting or authorizing such Lien
provides that such Lien is or must be superior to the Lien and security
interest created and evidenced by the Security Documents.

 

“Contingent
Obligation” shall mean, as to any person, any obligation, agreement,
understanding or arrangement of such person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other person
(the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of such
person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor; (b) to
advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor; (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation; (d) with
respect to bankers’ acceptances, letters of credit and similar credit
arrangements, until a reimbursement obligation arises (which reimbursement
obligation shall constitute Indebtedness); or (e) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that
the term “Contingent Obligation” shall not include endorsements of instruments
for deposit or collection in the ordinary course of business or any product
warranties.  The amount of any Contingent
Obligation 

 

16

 

shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made (or,
if less, the maximum amount of such primary obligation for which such person
may be liable, whether singly or jointly, pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such person is required to perform thereunder) as determined by such
person in good faith.

 

“Contribution, Intercompany
Contracting and Offset Agreement” shall mean that certain
Contribution, Intercompany Contracting and Offset Agreement dated as of the
Closing Date by and among the Loan Parties (other than Foreign Subsidiaries),
Collateral Agents and Administrative Agents, as the same may be amended,
amended and restated, reaffirmed, supplemented, revised or modified from time
to time.

 

“Control”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person, whether through
the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative
thereto.

 

“Control
Agreement” shall have the meaning assigned to such term in the
Security Agreement.

 

“Controlled
Investment Affiliate” means, as to any person, any other person
which directly or indirectly is in Control of, is Controlled by, or is under
common Control with, such person and is organized by such person (or any person
Controlling such person) primarily for making equity or debt investments in
Holdings or other portfolio companies.

 

“Cost”
shall mean, as determined by the applicable Collateral Agents, in good faith, with
respect to Inventory or Canadian Inventory, as applicable, the lower of (a) landed
cost computed on a first-in, first-out basis in accordance with GAAP or (b) market
value; provided, that for purposes of the calculation of the Borrowing
Base or the Canadian Borrowing Base, (i) the Cost of the Inventory or the
Cost of the Canadian Inventory shall not include: (A) the portion of the
cost of Inventory or Canadian Inventory equal to the profit earned by any
Affiliate on the sale thereof to Borrowers or the Borrowing Base Guarantors or (B) write-ups
or write-downs in cost with respect to currency exchange rates, and (ii) notwithstanding
anything to the contrary contained herein, the cost of the Inventory and
Canadian Inventory shall be computed in the same manner and consistent with the
most recent Inventory Appraisal which has been received and approved by
Collateral Agents in their reasonable discretion.

 

“Credit Card Agreements”
shall mean all agreements now or hereafter entered into by Borrowers or Borrowing
Base Guarantors with any credit card issuer or any credit card processor, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, including, without limitation, any
agreements entered into in connection with any Private Label Credit Cards.

 

“Credit Card Receivables”
shall mean, collectively, all present and future rights of Borrowers or
Borrowing Base Guarantors to payment from (a) any major credit card issuer
or major credit card processor arising from sales of goods or rendition of
services to customers who have purchased such goods or services using a credit
or debit card, (b) any major credit card issuer or major credit card
processor in connection with the sale or transfer of Accounts arising pursuant
to the sale of goods or rendition of services to customers who have purchased
such goods or services using a credit card or a debit card, including, but not
limited to, all amounts at any time due or to become due from any 

 

17

 

major
credit card issuer or major credit card processor under the Credit Card
Agreements or otherwise and (c) the issuers of Private Label Credit Cards.

 

“Credit
Extension” shall mean, as the context may require, (i) the making
of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the
amendment, extension or renewal of any existing Letter of Credit, by the
Issuing Bank.

 

“Cumulative Four Week
Period” shall mean the four-week period up to and through the Saturday
of the most recent week then ended, or if a four-week period has not then
elapsed from the Petition Date, such shorter period since the Petition Date
through the Saturday of the most recent week then ended.

 

“Cumulative Period”
shall mean period from the Petition Date
through the Saturday of the most recent week then ended.

 

“Current
Derivative Exposure”  shall mean, as of any date of
determination, 100% of the aggregate mark-to-market exposure then owing by any
Borrower under Lender Hedging Agreements, determined by all Lenders that are
counterparties to each Lender Hedging Agreement, in good faith and in a
commercially reasonable manner, based on net termination values and calculated
as if such Lender Hedging Agreements were terminated as of such determination
date and a payment were due thereunder to the Lender or its Affiliates and
furnished to the applicable Agent on a bi-monthly basis (or more frequently, in
the commercially reasonable discretion of the applicable Agent).

 

“Debt
Issuance” shall mean the incurrence by Holdings or any of its
Subsidiaries of any Indebtedness after the Closing Date (other than as
permitted by Section 6.01).

 

“Debtor” shall
have the meaning assigned to such terms in the recitals of this Agreement.

 

“Default”
shall mean any event, occurrence or condition which is, or upon notice, lapse
of time or both would constitute, an Event of Default.

 

“Default
Rate” shall have the meaning assigned to such term in Section 2.06(e).

 

“DIP Priority Collateral”  shall have the meaning assigned to such term
in the Interim Order or the Final Order, as applicable.

 

“DIP Superpriority Claim”
shall have the meaning assigned to such term in Section 2.23(a)(ii).

 

“Disbursement Account”
shall have the meaning assigned to such term in Section 9.02(i).

 

“Discount Note”
shall mean a non-interest bearing promissory note denominated in Canadian
Dollars, substantially in the form of Exhibit K-5, issued by the
Canadian Borrower to evidence a BA Equivalent Loan.

 

“Discount Proceeds”
shall mean on any day, for any Bankers’ Acceptance issued hereunder, an amount
calculated on such day by multiplying:

 

(a)           the face amount of such
Bankers’ Acceptance by

 

18

 

(b)          the quotient obtained by
dividing:

 

(i)              one by

 

(ii)             the sum of one
plus the product of:

 

A)           the Discount
Rate applicable to such Bankers’ Acceptance and

 

B)            a fraction, the
numerator of which is the number of days in the applicable Interest Period and
the denominator of which is 365,

 

with the quotient being rounded up or down to the fifth decimal place
and 0.00005 being rounded up.

 

“Discount Rate”
means, on any day, with respect to an issue of Bankers’ Acceptances, or in
respect of a BA Equivalent Loan, with the same maturity date, (a) for a
Lender which is a Schedule I Lender, (i) the average bankers’ acceptance
discount rate of the appropriate term as quoted on Reuters Screen CDOR Page determined
at or about 10:00 a.m. (Toronto time) on that day or, (ii) if the
discount rate for a particular term is not quoted on Reuters Screen CDOR Page,
the arithmetic average of the actual discount rates for bankers’ acceptances
for such term accepted by any two of the Schedule I banks, chosen by the
Canadian Administrative Agent, as of 10:00 a.m. (Toronto time) on such day,
or if such day is not a Business Day, then on the immediately preceding
Business Day, and (b) for a Lender which is not a Schedule I Lender, the
rate determined by the Canadian Administrative Agent in accordance with (a) above,
plus 10 basis points per annum.

 

“Disqualified
Capital Stock” shall mean any Equity Interest which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, (a) matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, on or prior to the first anniversary of the Final Maturity Date, (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any Equity Interests
referred to in (a) above, in each case at any time on or prior to the
first anniversary of the Final Maturity Date, or (c) contains any
repurchase obligation which may come into effect prior to payment in full of
all Obligations; provided, however,
that any Equity Interests that would not constitute Disqualified Capital Stock
but for provisions thereof giving holders thereof (or the holders of any
security into or for which such Equity Interests is convertible, exchangeable
or exercisable) the right to require the issuer thereof to redeem such Equity
Interests upon the occurrence of a change in control or an asset sale occurring
prior to the first anniversary of the Final Maturity Date shall not constitute
Disqualified Capital Stock if such Equity Interests provide that the issuer
thereof will not redeem any such Equity Interests pursuant to such provisions
prior to the repayment in full of the Obligations.

 

“Dividend”
with respect to any person shall mean that such person has declared or paid a
dividend or returned any equity capital to the holders of its Equity Interests
or authorized or made any other distribution, payment or delivery of property
(other than Qualified Capital Stock of such person) or cash to the holders of
its Equity Interests as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for consideration any of its Equity Interests
outstanding (or any options or warrants issued by such person with respect to
its Equity Interests), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for consideration any of the Equity Interests of such person
outstanding (or any options or warrants issued by such person with respect to
its Equity Interests).  Without limiting
the foregoing, “Dividends” with respect to any person shall also include all
payments made or required to be made by such person with 

 

19

 

respect
to any stock appreciation rights, plans, equity incentive or achievement plans
or any similar plans or setting aside of any funds for the foregoing purposes.

 

“Documentation
Agent” means Bank of America, N.A., in its capacity as documentation
agent hereunder.

 

“Dollar Equivalent”
shall mean, as to any amount denominated in Canadian dollars on any date of
determination, the amount of dollars that would be required to purchase the
amount of Canadian dollars based upon the Spot Selling Rate.

 

“Domestic Guarantor”
shall mean Holdings, each US Borrowing Base Guarantor and the Domestic
Subsidiary Guarantors.

 

“Domestic Subsidiary”
shall mean any Subsidiary of Holdings that is organized under the laws of the
United States  or any state thereof or
the District of Columbia.

 

“Domestic Subsidiary
Guarantors” shall mean each Subsidiary listed on Schedule 1.01(b) which
is a Domestic Subsidiary, and each other Domestic Subsidiary that is or becomes
a party to this Agreement pursuant to Section 5.11.

 

“dollars” or “$” shall mean lawful money of the United
States.

 

“Eligible Accounts”
shall have the meaning assigned to such term in Section 2.20(a).

 

“Eligible
Assignee” shall mean (a) if the assignment does not include
assignment of a Revolving Commitment, (i) any Lender, (ii) an
Affiliate of any Lender, (iii) an Approved Fund and (iv) any other
person approved by the applicable Administrative Agent (such approval not to be
unreasonably withheld or delayed) and (b) if the assignment includes
assignment of a Revolving Commitment, (i) any Revolving Lender, (ii) an
Affiliate of any Revolving Lender, (iii) an Approved Fund of a Revolving
Lender and (iv) any other person approved by the applicable Administrative
Agent, the Issuing Bank, the Swingline Lenders and Borrowers (each such
approval not to be unreasonably withheld or delayed); provided that (x) no approval of
Borrowers shall be required during the continuance of a Default, (y) “Eligible
Assignee” shall not include US Borrowers or any of their Affiliates or
Subsidiaries or any natural person and (z) each Revolving Lender becoming
a party hereto pursuant to an Assignment and Assumption must also arrange to
designate an Affiliate as a Canadian Revolving Lender and such Canadian
Revolving Lender must also become a party hereto pursuant to such Assignment
and Assumption.

 

“Eligible Canadian Accounts”
shall have the meaning assigned to such term in Section 2.21(a).

 

“Eligible Canadian
Inventory” shall mean, subject to adjustment as set forth in Section 2.21(b),
items of Canadian Inventory of the Canadian Borrower and any Canadian Borrowing
Base Guarantors.

 

“Eligible Canadian
In-Transit Inventory” means, as of any date of determination,
without duplication of other Eligible Canadian Inventory, Inventory (a) which
has been shipped by or on behalf of a supplier from any location for receipt by
Canadian Borrower or any Canadian Borrowing Base Guarantor within sixty (60)
days of the date of determination, but which has not yet been received by
Canadian Borrower or such Canadian Borrowing Base Guarantor, (b) for which
the purchase order is in the name of Canadian Borrower or any Canadian
Borrowing Base Guarantor, and title has passed to 

 

20

 

Canadian
Borrower or any Canadian Borrowing Base Guarantor, (c) for which the
document of title, to the extent applicable, reflects Canadian Borrower or any
Canadian Borrowing Base Guarantor as consignee (along with delivery to Canadian
Borrower or such Canadian Borrowing Base Guarantor of the documents of title,
to the extent applicable, with respect thereto), (d) as to which the
applicable Collateral Agent has control over the documents of title, to the
extent applicable, which evidence ownership of the subject Inventory (such as
by the delivery of a Freight Forwarding Agreement), (e) is covered by
insurance reasonably acceptable to the Collateral Agents, and (f) which
otherwise is not excluded from the definition of Eligible Inventory.

 

“Eligible Canadian Lender”  means a financial institution or
commercial finance company that is (i) not a non-resident of Canada for
the purpose of the ITA, or (ii) an “authorized foreign bank” as defined in
section 2, of the Bank Act
(Canada) and in subsection 248(1) of the ITA, that is not subject to the
restrictions and requirements referred to in subsection 524(2) of the Bank Act (Canada) and which will receive
all amounts paid or credited to it under its Canadian Revolving Loans and under
the Loan Documents in respect of its “Canadian banking business” (as defined in
subsection 248(1) of the ITA) for the purposes of paragraph 212(13.3)(a) of
the ITA.

 

“Eligible In-Transit
Inventory” means, as of any date of determination, without
duplication of other Eligible Inventory, Inventory (a) which has been
shipped by or on behalf of a supplier from any location for receipt by either a
US Borrower or any US Borrowing Base Guarantor within sixty (60) days of the
date of determination, but which has not yet been received by such US Borrower
or US Borrowing Base Guarantor, (b) for which the purchase order is in the
name of either a US Borrower or any US Borrowing Base Guarantor, and title has
passed to either a US Borrower or any US Borrowing Base Guarantor, (c) for
which the document of title, to the extent applicable, reflects either a US
Borrower or any US Borrowing Base Guarantor as consignee (along with delivery
to such a US Borrower or US Borrowing Base Guarantor of the documents of title,
to the extent applicable, with respect thereto), (d) as to which either
the applicable Collateral Agent has control over the documents of title, to the
extent applicable, which evidence ownership of the subject Inventory (such as
by the delivery of a Freight Forwarding Agreement) or the goods covered by such
document of title are expected to be delivered to a distribution center
operated by US Borrowers or any of their Subsidiaries within 20 days of the date
such goods become the subject of such document of title, (e) is covered by
insurance reasonably acceptable to the Collateral Agents, and (f) which
otherwise is not excluded from the definition of Eligible Inventory.

 

“Eligible Inventory”
shall mean, subject to adjustment as set forth in Section 2.20(b),
items of Inventory of the US Borrowers and any US Borrowing Base Guarantors.

 

“Eligible Letter of Credit”
means, as of any date of determination a Commercial Letter of Credit issued by
the Issuing Bank which meet the following criteria:

 

(a)           the Inventory
being purchased thereunder has not yet been delivered to a US Borrower or any
of the US Borrowing Base Guarantors;

 

(b)           The purchase
order for such Inventory is in the name of US Borrowers or any of its US Borrowing
Base Guarantors (or Canadian Borrower or any Canadian Borrowing Base Guarantor,
for Letters of Credit issued pursuant to Section 2.18(m)) and the
purchase of which is supported by a Commercial Letter of Credit issued under
this Agreement having an initial expiry, subject to the proviso hereto, within
120 days after the date of initial issuance of such Commercial Letter of
Credit, provided that fifty percent (50%) of the maximum Stated Amount
all such Commercial Letters of Credit shall not, at any time, have an initial
expiry greater than ninety (90) days after the original date of issuance of
such Commercial Letters of Credit;

 

21

 

(c)           Drawing under
such Commercial Letters of Credit requires delivery of a bill of lading or
other document of title, which names the US Collateral Agent, a US Borrower or
any of the US Borrowing Base Guarantors or any of their agents as consignee,
which evidences ownership of the subject inventory and which complies with the
requirements of the applicable Freight Forwarding Agreement;

 

(d)           the Inventory
is not otherwise included in another category of Eligible Inventory or Eligible
In-Transit Inventory;

 

(e)           the Inventory
being purchased thereunder is covered by insurance reasonably acceptable to the
Collateral Agents; and

 

(f)            the Inventory
being purchased thereunder is not expected to be excluded from the definition
of Eligible Inventory once it has been purchased and delivered.

 

“Embargoed
Person” shall have the meaning assigned to such term in Section 6.20.

 

“Environment”
shall mean ambient air, indoor air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or subsurface
strata, natural resources, the workplace or as otherwise defined in any
Environmental Law.

 

“Environmental
Claim” shall mean any claim, notice, demand, order, action, suit,
proceeding or other communication alleging liability for or obligation with
respect to any investigation, remediation, removal, cleanup, response,
corrective action, damages to natural resources, personal injury, property
damage, fines, penalties or other costs resulting from, related to or arising
out of (i) the presence, Release or threatened Release in or into the
Environment of Hazardous Material at any location or (ii) any violation or
alleged violation of any Environmental Law, and shall include any claim seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from, related to or arising out of the presence,
Release or threatened Release of Hazardous Material or alleged injury or threat
of injury to health, safety or the Environment.

 

“Environmental
Law” shall mean any and all present and future, foreign or domestic,
federal, provincial, territorial or state (or any Subdivision of any of them)
treaties, laws, statutes, ordinances, regulations, rules, decrees, orders,
judgments, consent orders, consent decrees, code or other binding requirements,
and the common law, relating to protection of public health or the Environment,
the Release or threatened Release of Hazardous Material, natural resources or
natural resource damages, or occupational safety or health, and any and all
Environmental Permits.

 

“Environmental
Permit” shall mean any permit, license, approval, registration,
notification, exemption, consent or other authorization required by or from a
Governmental Authority under Environmental Law.

 

“Equipment”
shall have the meaning assigned to such term in the applicable Security Agreement.

 

“Equity
Interest” shall mean, with respect to any person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or nonvoting), of equity of such
person, including, if such person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a person the right to receive a share of the profits and losses of,
or distributions of property of, such partnership, whether outstanding on the
date hereof or issued after the Closing Date, but excluding debt securities
convertible or exchangeable into such equity.

 

22

 

“Equity
Issuance” shall mean, without duplication, (i) any issuance or
sale by Holdings after the Closing Date of any Equity Interests in Holdings
(including any Equity Interests issued upon exercise of any warrant or option)
or any warrants or options to purchase Equity Interests or (ii) any
contribution to the capital of Holdings; provided,
however, that an Equity Issuance shall not include (x) any
Preferred Stock Issuance or Debt Issuance, (y) any such sale or issuance
by Holdings of not more than an aggregate amount of 5.0% of its Equity
Interests (including its Equity Interests issued upon exercise of any warrant
or option or warrants or options to purchase its Equity Interests but excluding
Disqualified Capital Stock), in each case, to directors, officers or employees
of any Company and (z) any Excluded Issuance.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended from time to time.

 

“ERISA
Affiliate” shall mean, with respect to any person, any trade or
business (whether or not incorporated) that, together with such person, is
treated as a single employer under Section 414 (b), (c) or (m) of
the Code.

 

“ERISA
Event” shall mean (a) any “reportable event,” as defined in Section 4043
of ERISA or the regulations issued thereunder, with respect to a Plan (other than
an event for which the 30-day notice period is waived by regulation); (b) the
existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether
or not waived; (c) the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any Plan
or the failure to make any required contribution to a Multiemployer Plan; (d) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence by any Company of any liability
under Title IV of ERISA with respect to the termination of any Plan; (f) the
incurrence by the Company of material liability, under Title IV of ERISA with
respect to a defined benefit pension plan maintained by an ERISA Affiliate or a
multi-employer plan (as defined in ERISA Section 3 (37)) contributed to by
an ERISA Affiliate (g) the receipt by any Company from the PBGC or a plan
administrator of any notice relating to the intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan, or the occurrence of any
event or condition which could reasonably be expected to constitute grounds under
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan; (h) the incurrence by any Company of any liability with respect
to the withdrawal from any Plan or Multiemployer Plan; (i) the receipt by
any Company of any notice, concerning the imposition of Withdrawal Liability or
a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA; (j) the “substantial
cessation of operations” within the meaning of Section 4062(e) of
ERISA with respect to a Plan; (k) the making of any amendment to any Plan
which could result in the imposition of a Lien or the posting of a bond or
other security; and (l) the occurrence of a nonexempt prohibited
transaction (within the meaning of Section 4975 of the Code or Section 406
of ERISA) which could reasonably be expected to result in liability to any
Company.

 

“Eurodollar
Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

 

“Eurodollar
Loan” shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II.

 

“Eurodollar
Revolving Borrowing” shall mean a Borrowing comprised of Eurodollar
Revolving Loans.

 

23

 

“Eurodollar
Revolving Loan” shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Article II.

 

“Event of
Default” shall have the meaning assigned to such term in Section 8.01.

 

“Excess
Amount” shall have the meaning assigned to such term in Section 2.10(f)(iii).

 

“Excess Availability” shall mean,
at any time, (a) the sum of (x) the Borrowing Base plus (y) the
Canadian Borrowing Base (exclusive of amounts added pursuant to clause (iv) thereof)
less (b) all
outstanding Loans and LC Exposure less
(c) in the applicable Collateral Agents’ reasonable discretion, the
aggregate amount of all the outstanding and unpaid trade payables and other
obligations of Borrowers and/or the Borrowing Base Guarantors which are not
paid within 90 days past the due date according to their original terms of
sale, in each case as of such date of determination less (d) in the applicable Collateral Agents’
reasonable discretion, and without duplication, the amount of checks issued by
Borrowers and/or the Borrowing Base Guarantors to pay trade payables and other
obligations but which are not paid within 90 days past the due date according
to their original terms of sale, in each case as of such date of determination,
but which either have not yet been sent or are subject to other arrangements
which are expected to delay the prompt presentation of such checks for payment less
(e) the Total Minimum Availability Requirement.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Issuance”
shall mean an issuance and sale of Qualified Capital Stock of Holdings, to the
extent such Qualified Capital Stock is used, or the net proceeds thereof shall
be, within ninety (90) days of the consummation of such issuance and sale,
used, without duplication, to finance Capital Expenditures approved by the
Administrative Agents.

 

“Excluded
Taxes” shall mean, with respect to the Administrative Agents, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of Borrowers hereunder, (a) taxes imposed on
or measured by its overall Net Income (however denominated), franchise taxes
imposed on it (in lieu of net income taxes) and branch profits taxes imposed on
it, by a jurisdiction (or any political subdivision thereof) as a result of the
recipient being organized or having its principal office or, in the case of any
Lender, its applicable lending office in such jurisdiction; (b) in the
case of a Foreign Lender, any U.S. federal withholding tax that (i) 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), except (x) 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 Borrowers with respect to such withholding tax pursuant
to Section 2.15(a), (y) if such Foreign Lender is an assignee
pursuant to a request by Borrowers under Section 2.16 or (z) if
the applicable Borrower has re-domiciled to the United States; provided that this subclause (b)(i) shall not apply to
any Tax imposed on a Lender following an Event of Default or in connection with
an interest or participation in any Loan or other obligation that such Lender
was required to acquire pursuant to Section 2.14(d), or (ii) is
attributable to such Lender’s failure to comply with Section 2.15(e);
and (c) those Canadian federal withholding taxes under Part XIII of
the ITA, if any, in excess of the amount of such taxes that would have been
imposed had the recipient of the particular payment been, at the time of the
payment, a resident of the United States for the purposes of the Canada-United
States Income Tax Convention (1980), as amended from time to time, and entitled
to the reduced withholding tax rate provided under paragraph 2 of Article XI
thereof (such rate, for greater certainty, being 10% (ten percent) as at the
date of this Agreement).

 

“Executive
Order” shall have the meaning assigned to such term in Section 3.22.

 

24

 

“Existing Issuing Bank
Letters of Credit” shall mean the outstanding letters of credit
issued before the Closing Date by an Issuing Bank for the account of a Borrower
or a Subsidiary of a Borrower set forth on Schedule 1.01(c) hereto.

 

“Existing
Lien” shall have the meaning assigned to such term in Section 6.02(c).

 

“Exit Facilities”
shall mean the Facilities after the Exit Facilities Conversion Date.  The
Exit Facilities shall terminate no later than on the Exit Facilities Maturity
Date.

 

“Exit Facilities Conversion Date” shall mean the
first date on which a Plan of Reorganization becomes effective, the Exit
Facilities Option has been exercised and the conditions to consummating the
Exit Facilities set forth in Section 4.04 are satisfied.

 

“Exit Facilities Maturity
Date” shall be the date which is the fourth anniversary of the
effective date of the Plan of Reorganization approved by the Agents and Lenders
under the Exit Facilities, or such other period as may be agreed by the
Borrowers, the Agents and the Lenders.

 

“Exit Facilities Option”
shall have the meaning assigned to such term in Section 4.03.

 

“Facilities” means the
credit facilities provided by the Lenders and Issuing Banks pursuant to this
Agreement.

 

“Federal
Funds Effective Rate” shall mean, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the
Federal Reserve System of the United States arranged by federal funds brokers,
as published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for the day for such transactions received
by the Administrative Agent from three federal funds brokers of recognized
standing selected by it.

 

“Fee Letter”
shall mean that certain Fee Letter dated as of May 5, 2008 by and among GE
Capital, GE Canada, GECM, and Borrowers, as the same may be amended, amended
and restated, supplemented, revised or modified from time to time.

 

“Fees”
shall mean the Commitment Fees, the Administrative Agent Fees, the Collateral
Monitoring Fees, the LC Participation Fees, the Fronting Fees and any and all
other fees payable to the Agents or any Lender pursuant to the Agreement or any
of the other Loan Documents.

 

“Final
Maturity Date” shall mean the Revolving Maturity Date.

 

“Final Order”
shall mean , collectively, the order of the
U.S. Bankruptcy Court entered in the Chapter 11 Cases of the Debtors after a
final hearing under Bankruptcy Rule 4001(c)(2) or
such other procedures as approved by the U.S. Bankruptcy Court which order
shall be satisfactory in form and substance to the Administrative Agents and
Lenders, together with all extensions, modifications and amendments thereto, in
form and substance satisfactory to the Administrative Agents and Lenders,
which, among other matters but not by way of limitation, authorizes the Debtors
to obtain credit, incur (or guaranty) Indebtedness, grant Liens under this
Agreement and the other Loan Documents, as the case may be, and provides for
the super priority of the Agents’ and the Lenders’ claims.

 

“Financial
Officer” of any person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such person.

 

25

 

“FIRREA”
shall mean the Federal Institutions Reform, Recovery and Enforcement Act of
1989, as amended.

 

“First Priority”
means, with respect to any Lien purported to be created in any Collateral
pursuant to any Security Document, that such Lien is the most senior Lien to
which such Collateral is subject (subject to Permitted Liens).

 

“Foreign
Lender” shall mean any Lender that is not, for United States federal
income tax purposes, (i) an individual who is a citizen or resident of the
United States, (ii) a corporation, partnership or other entity treated as
a corporation or partnership created or organized in or under the laws of the
United States, or any political subdivision thereof, (iii) an estate whose
income is subject to U.S. federal income taxation regardless of its source or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such trust.

 

“Foreign
Plan” shall mean any defined benefit pension plan, program, policy,
arrangement or agreement maintained or contributed to by any Company with
respect to employees employed outside the United States.

 

“Foreign
Subsidiary” shall mean a Subsidiary that is organized under the laws
of a jurisdiction other than the United States or any state thereof or the
District of Columbia.

 

“Freight Forwarding
Agreement” means a multi-party agreement in a form and substance
satisfactory to Collateral Agents among a Borrower, a customs broker, freight
forwarder, or other carrier, and the applicable Collateral Agents in which the
customs broker, freight forwarder, or other carrier acknowledges that it has
control over (in the case of persons other than carriers which are issuing
non-negotiable bills of lading) and holds the documents evidencing ownership of
the subject Inventory or other property for the benefit of such Collateral
Agents and agrees, upon notice from such Collateral Agent to hold and dispose
of the subject Inventory and other property solely as directed by the such
Collateral Agent.

 

“Fronting
Fee” shall have the meaning assigned to such term in Section 2.05(b).

 

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

 

“GAAP”
shall mean generally accepted accounting principles in the United States
applied on a consistent basis.

 

“GE Canada”
shall have the meaning assigned to such term in the preamble hereto.

 

“GE Capital”
shall have the meaning assigned to such term in the preamble hereto.

 

“GE Money” shall
mean GE Money Bank (successor in interest to Monogram Credit Card Bank of
Georgia).

 

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

 

26

 

government
(including any supra-national bodies such as the European Union or the European
Central Bank).

 

“Governmental
Real Property Disclosure Requirements” shall mean any Requirement of
Law of any Governmental Authority requiring notification of the buyer, lessee,
mortgagee, assignee or other transferee of any Real Property, facility, establishment
or business, or notification, registration or filing to or with any
Governmental Authority, in connection with the sale, lease, mortgage,
assignment or other transfer (including any transfer of control) of any Real
Property, facility, establishment or business, of the actual or threatened
presence or Release in or into the Environment, or the use, disposal or
handling of Hazardous Material on, at, under or near the Real Property,
facility, establishment or business to be sold, leased, mortgaged, assigned or
transferred.

 

“Guaranteed
Obligations” shall have the meaning assigned to such term in Section 7.01.

 

“Guarantees”
shall mean the guarantees issued pursuant to Article VII by
Holdings and the Subsidiary Guarantors.

 

“Guarantors”
shall mean the Domestic Guarantors and the Canadian Guarantors.

 

“Hazardous
Materials” shall mean the following: 
hazardous substances; hazardous wastes; polychlorinated biphenyls (“PCBs”) or any substance or compound
containing PCBs; asbestos or any asbestos-containing materials in any form or
condition; radon or any other radioactive materials including any source,
special nuclear or by-product material; petroleum, crude oil or any fraction
thereof; and any other pollutant or contaminant or chemicals, wastes, materials,
compounds, constituents or substances, subject to regulation or which can give
rise to liability under any Environmental Laws.

 

“Hedging
Agreement” shall mean any swap, cap, collar, forward purchase or
similar agreements or arrangements dealing with interest rates, currency
exchange rates or commodity prices, either generally or under specific
contingencies entered into for the purpose of hedging any Borrower’s exposure
to interest or exchange rates, loan credit exchange, security or currency
valuations or commodity prices not for speculative purposes.

 

“Hedging
Obligations” shall mean obligations under or with respect to Hedging
Agreements.

 

“Holdings”
shall have the meaning assigned to such term in the preamble hereto.

 

“Indebtedness”
of any person shall mean, without duplication, (a) all obligations of such
person for borrowed money or advances; (b) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person; (d) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business on normal trade terms and not
overdue by more than 90 days); (e) all Indebtedness of others secured by
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, but limited to the fair market
value of such property; (f) all Capital Lease Obligations, Purchase Money
Obligations and synthetic lease obligations of such person; (g) all
Hedging Obligations to the extent required to be reflected on a balance sheet
of such person; (h) all obligations of such person for the reimbursement
of any obligor in respect of Standby Letters of Credit, letters of guaranty,
bankers’ acceptances and similar credit transactions; and (i) all
Contingent Obligations of such person in respect of Indebtedness or 

 

27

 

obligations
of others of the kinds referred to in clauses (a) through (h) above.  The Indebtedness of any person shall include
the Indebtedness of any other entity (including any partnership in which such
person is a general partner) to the extent such person is liable therefor as a
result of such person’s ownership interest in or other relationship with such
entity, except (other than in the case of general partner liability) to the extent
that terms of such Indebtedness expressly provide that such person is not
liable therefor.

 

“Indemnified
Taxes” shall mean all Taxes other than Excluded Taxes.

 

“Indemnitee”
shall have the meaning assigned to such term in Section 11.03(b).

 

“Indenture Adequate
Protection Liens” shall have the meaning assigned to such term in
the Interim Order or the Final Order, as applicable.

 

“Indenture Compliance
Certificate” shall have the meaning assigned to such term in Section 5.01(i).

 

“Indenture Liens”  shall have the meaning assigned to such term
in the Interim Order or the Final Order, as applicable.

 

“Indenture Superpriority
Claim” shall have the meaning assigned to such term in the Interim
Order or the Final Order, as applicable.

 

“Information”
shall have the meaning assigned to such term in Section 11.12.

 

“Insolvency Laws”
shall mean any of the BIA, the Companies’ Creditors
Arrangement Act (Canada), and the Winding-Up
and Restructuring Act (Canada), each as now exists or may from time
to time hereafter be amended, modified, recodified, supplemented or replaced,
together with all rules, regulations and interpretations thereunder or related
thereto, and any other applicable insolvency or other similar law of any
jurisdiction, including any law of any jurisdiction permitting a debtor to
obtain a stay or a compromise of the claims of its creditors against it.

 

“Instruments”
shall mean all “instruments,” as such term is defined in the UCC as in effect
on the date hereof in the State of New York or as defined in the PPSA, as
applicable, in which any Person now or hereafter has rights.

 

“Insurance
Policies” shall mean the insurance policies and coverages required
to be maintained by each Loan Party which is an owner of Mortgaged Property
with respect to the applicable Mortgaged Property pursuant to Section 5.04
and all renewals and extensions thereof.

 

“Insurance
Requirements” shall mean, collectively, all provisions of the
Insurance Policies, all requirements of the issuer of any of the Insurance
Policies and all orders, rules, regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon each Loan Party which is an owner of Mortgaged Property
and applicable to the Mortgaged Property or any use or condition thereof.

 

“Intellectual
Property” shall have the meaning assigned to such term in Section 3.06(a).

 

“Intercompany
Note” shall mean a promissory note substantially in the form of Exhibit P.

 

28

 

“Intercreditor Agreement”
shall mean, as the context requires, either or both of (i) the Note
Indenture Intercreditor Agreement or (ii) the Leasehold Intercreditor
Agreement.

 

“Interest
Election Request” shall mean a request by a Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.08(b),
substantially in the form of Exhibit E.

 

“Interest
Payment Date” shall mean (a) with respect to any ABR Loan or
Canadian Prime Rate Loan, the last Business Day of each March, June, September and
December to occur during any period in which such Loan is outstanding, (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Loan with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period, (c) with
respect to any Swingline Loan, the last Business Day of each month to occur
during any period in which such Swingline Loan is outstanding and (d) with
respect to any Revolving Loan or Swingline Loan, the Revolving Maturity Date or
such earlier date on which the Revolving Commitments are terminated.

 

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

 

“Interim Order” shall mean, collectively, the order of the
U.S. Bankruptcy Court entered in the Chapter 11 Cases of the Debtors after an
interim hearing under Bankruptcy Rules or such other procedures as
approved by the U.S. Bankruptcy Court which order shall be satisfactory in form
and substance to the Administrative Agents and Lenders, together with all
extensions, modifications, and amendments thereto, in form and substance
satisfactory to the Administrative Agents and Lenders, which, among other
matters but not by way of limitation, authorizes, on an interim basis, the
Debtors to obtain credit, incur (or guaranty) Indebtedness, grant Liens under
this Agreement and the other Loan Documents, as the case may be, and provides
for the superpriority of the Administrative Agents’ and the Lenders’ claims,
substantially in the form of Exhibit J.

 

“Inventory”
shall mean all “inventory,” as such term is defined in the UCC as in effect on
the date hereof in the State of New York, or as defined in the PPSA, as
applicable, wherever located, in which any Person now or hereafter has rights.

 

“Inventory
Appraisal” shall mean (a) on the Closing Date, the inventory
appraisal prepared by the Great American Appraisal & Valuation
Services, L.L.C. (“Great American”) dated April, 2008 and the audit
prepared by the Durkin Group dated February 2008 and (b) thereafter,
the most recent inventory appraisal conducted by an independent appraisal firm
(which may include Great American) as may be acceptable to the US Collateral
Agent and delivered pursuant to Section 9 hereof.  For the avoidance of doubt, the
Administrative Borrower may, at any time when an Event of Default has not

 

29

 

occurred and is  not continuing,
request that a new Inventory Appraisal be conducted at its expense and the
Borrowers and Agents shall thereafter promptly arrange for such appraisal to be
completed at Borrower’s expense.

 

“Investments”
shall have the meaning assigned to such term in Section 6.04.

 

“Issuing
Bank” shall mean, as the context may require, (a) Wells Fargo
Retail Finance, LLC and Affiliates in its capacity as issuer of Letters of
Credit issued by it; (b) Bank of America, N.A. in its capacity as issuer
of Letters of Credit issued by it; (c) GE Capital in its capacity as
issuer of Letters of Credit issued by it; (d) any other Lender that may
become an Issuing Bank pursuant to Sections  2.18(j) and (k) in
its capacity as issuer of Letters of Credit issued by such Lender; (e) solely
with respect to Existing Issuing Bank Letters of Credit set forth on Schedule
1.01(c) issued by Wachovia, GE Capital 
or (f) collectively, all of the foregoing.

 

“ITA” means the
Income Tax Act, RSC 1985, c.1 (5th supp), as amended from time to
time.

 

“Joinder
Agreement” shall mean a joinder agreement substantially in the form
of Exhibit F.

 

“Landlord
Access Agreement” shall mean a Landlord Access Agreement,
substantially in the form of Exhibit G, or such other form as may
reasonably be acceptable to the applicable Administrative Agent.

 

“LC Acceptance(s)”
shall mean acceptances that are created by an Issuing Bank pursuant to
Commercial Letters of Credit.

 

“LC
Commitment” shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.18.  The total amount of the LC Commitment shall
initially be $400  million, but in no event exceed
the Revolving Commitment.

 

“LC
Disbursement” shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit or a LC Acceptance.

 

“LC
Exposure” shall mean at any time the sum of (a) the Dollar
Equivalent of the aggregate undrawn amount of all outstanding Letters of Credit
at such time plus (b) the
Dollar Equivalent of the aggregate principal amount of all Reimbursement
Obligations outstanding at such time, plus (c) the
Dollar Equivalent of the aggregate amount owing on all outstanding LC
Acceptances.  The LC Exposure of any
Revolving Lender at any time shall mean its Pro Rata Percentage of the
aggregate LC Exposure at such time.

 

“LC Obligations”
shall mean each payment required to be made by Borrowers and the other Loan
Parties under this Agreement in respect of any Letter of Credit or LC
Acceptance, when and as due, including payments in respect of Reimbursement
Obligations, interest and fees thereon and obligations to provide cash
collateral.

 

“LC
Participation Fee” shall have the meaning assigned to such term in Section 2.05(b).

 

“LC Request”
shall mean a request by a Borrower in accordance with the terms of Section 2.18(b) and
substantially in the form of Exhibit H, or such other form as shall
be approved by the Administrative Agents.

 

30

 

“Leasehold Intercreditor
Agreement” shall mean any intercreditor agreement between the Loan
Parties (or any of them), the Agents, the agent and/or the lenders under the
Permitted Leasehold Facility and any other parties thereto concerning the
intercreditor relationship relating to the Leasehold Priority Collateral and
such other collateral securing the Permitted Leasehold Facility (if any) and
other intercreditor matters, in form and substance satisfactory to the Agents.

 

“Leasehold Priority
Collateral” shall mean all the proceeds of any interest of the Loan
Parties as lessee under any Leases on Real Property.

 

“Leases”
shall mean any and all leases, subleases, tenancies, options, concession
agreements, rental agreements, occupancy agreements, franchise agreements,
access agreements and any other agreements (including all amendments,
extensions, replacements, renewals, modifications and/or guarantees thereof),
whether or not of record and whether now in existence or hereafter entered
into, affecting the use or occupancy of all or any material portion of any Real
Property.

 

“Lender
Addendum” shall mean with respect to any Lender on the Closing Date,
a lender addendum in the form of Exhibit I, to be executed and
delivered by such Lender on the Closing Date as provided in Section 11.15,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.

 

“Lender Hedging Agreement”
shall mean any Hedging Agreement between a Borrower and any Person (or
affiliate of such Person) that was a Lender or an Affiliate of such lender at
the time it entered into such Hedging Agreement whether or not such Person has
ceased to be a Lender under this Agreement.

 

“Lenders”
shall mean (a) the financial institutions and commercial finance companies
that have become a party hereto pursuant to a Lender Addendum and (b) any
financial institution or commercial finance company that has become a party
hereto pursuant to an Assignment and Assumption, other than, in each case, any
such financial institution that has ceased to be a party hereto pursuant to an
Assignment and Assumption.  Unless the
context clearly indicates otherwise, the term “Lenders” shall include the
Swingline Lenders and the Canadian Revolving Lenders.

 

“Letter of
Credit” shall mean any (i) Standby Letter of Credit, (ii) Commercial
Letter of Credit, in each case, issued or to be issued by an Issuing Bank for
the account of the US Borrowers or the Canadian Borrower pursuant to Section 2.18
and (iii) the Existing Issuing Bank Letters of Credit.

 

“Letter of
Credit Expiration Date” shall mean the date which is five (5) days
prior to the Revolving Maturity Date.

 

“LIBOR Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period,
the rate per annum determined by the applicable Administrative Agent to be the
arithmetic mean (rounded upward, if necessary, to the nearest 1/100th of 1%) of
the offered rates for deposits in dollars with a term comparable to such
Interest Period that appears on the Reuters Interest Settlement Rates Page (as
defined below) at approximately 11:00 a.m., London, England time, on the
second full Business Day preceding the first day of such Interest Period; provided, however, that (i) if no
comparable term for an Interest Period is available, the LIBOR Rate shall be
determined using the weighted average of the offered rates for the two terms
most nearly corresponding to such Interest Period and (ii) if there shall
at any time no longer exist a Reuters Interest Settlement Rates Page, “LIBOR
Rate” shall mean, with respect to each day during each Interest Period
pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the
rate per annum equal to the rate at which the applicable Administrative Agent
is offered deposits in dollars at approximately 11:00 a.m., London,
England time, two Business Days prior to the

 

31

 

first day of such Interest Period in the London interbank market for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to its portion of the amount of
such Eurodollar Borrowing to be outstanding during such Interest Period.  “Reuters
Interest Settlement Rates Page” shall mean the display designated as
Reuters Screen LIBOR01 Page (or any successor page provided by
Reuters or any successor service for the purpose of displaying the rates at
which dollar deposits are offered by leading banks in the London interbank
deposit market).

 

“Lien”
shall mean, with respect to any property, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security
interest or encumbrance of any kind or any arrangement to provide priority or
preference or any filing of any financing statement or financing change
statement under the UCC or the PPSA or any other similar notice of lien under
any similar notice or recording statute of any Governmental Authority,
including any easement, right-of-way or other encumbrance on title to Real
Property, in each of the foregoing cases whether voluntary or imposed by law,
and any agreement to give any of the foregoing; (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such property; and (c) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.

 

“LNT” shall have
the meaning assigned to such term in the preamble.

 

“LNT Center”
shall have the meaning assigned to such term in the preamble.

 

“LNT Partnership”
means Linens ‘n Things Canada Limited Partnership, an Alberta limited
partnership.

 

“LNT I” means
Linens ‘n Things Investment Canada I Company, a Nova Scotia unlimited company.

 

“LNT II” means
Linens ‘n Things Investment Canada II Company, a Nova Scotia unlimited company.

 

“Loan
Documents” shall mean this Agreement, the Fee Letter, any Borrowing
Base Certificate, the Letters of Credit, the Notes (if any), the Intercreditor
Agreements, the Master Documentary Agreement, the Master Standby Agreement, the
Security Documents, the Indenture Compliance Certificate and all other
agreements, instruments, documents and certificates delivered in connection
with any of the foregoing.

 

“Loan
Parties” shall mean the Borrowers and the Guarantors.

 

“Loans”
shall mean, as the context may require, a US Revolving Loan, a Canadian
Revolving Loan or a Swingline Loan.

 

“Margin
Stock” shall have the meaning assigned to such term in Regulation U.

 

“Master Documentary
Agreement” shall mean the Master Agreement for Documentary Letters
of Credit dated as of the Closing Date among Borrowers, as Applicant(s), and
the US Administrative Agent, as Issuing Bank.

 

32

 

“Master Standby Agreement”
means the Master Agreement for Standby Letters of Credit dated as of the
Closing Date among Borrowers, as Applicant(s), and the US Administrative Agent,
as Issuing Bank.

 

“Material
Adverse Effect” shall mean, other than the filing of the Chapter 11
Cases, (a) a material adverse effect on the business, property, results of
operations, prospects or condition, financial or otherwise, or material
agreements of Borrowers and their Subsidiaries, taken as a whole; (b) material
impairment of the ability of the Loan Parties to fully and timely perform their
obligations under the Loan Documents; (c) material impairment of the
rights of or benefits or remedies available to the Lenders or the Collateral
Agents under any Loan Document; or (d) a material adverse effect on the
Collateral or the Liens in favor of the Collateral Agents (for their benefit
and for the benefit of the other Secured Parties) on the Collateral or the
priority of such Liens.

 

“Material
Indebtedness” shall mean (a) the Senior Note Documents, (b) Indebtedness
under the Permitted Leasehold Facility and (c) any other Indebtedness
(other than the Loans and Letters of Credit) or Hedging Obligations of Holdings
or any of its Subsidiaries in an aggregate outstanding principal amount
exceeding $10 million.  For purposes of determining Material
Indebtedness, the “principal amount” in respect of any Hedging Obligations of
any Loan Party at any time shall be the maximum aggregate amount (giving effect
to any netting agreements) that such Loan Party would be required to pay if the
related Hedging Agreement were terminated at such time.

 

“Maximum
Rate” shall have the meaning assigned to such term in Section 11.14.

 

“Mortgage”
shall mean an agreement, including, but not limited to, a mortgage, deed of
trust or any other document, creating and evidencing a Lien on a Mortgaged
Property, which shall be substantially in a form reasonably satisfactory to the
applicable Collateral Agents, in each case, with such schedules and including
such provisions as shall be reasonably necessary to conform such document to
applicable local or foreign law or as shall be customary under applicable local
or foreign law.

 

“Mortgaged
Property” shall mean (a) each Real Property identified as a
Mortgaged Property on Schedule 8(a) to the Perfection Certificate
dated the Closing Date and (b) each Real Property, if any, which shall be
subject to a Mortgage delivered after the Closing Date pursuant to Section 5.11(c).

 

“Multiemployer
Plan” shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or
Section 3(37) of ERISA (a) to which any Company is then making or
accruing an obligation to make contributions; (b) to which any Company has
within the preceding five plan years made contributions; or (c) with
respect to which any Company could incur liability.

 

“Net Income” means, with respect to any specified person,
the net income (loss) of such person, determined in accordance with GAAP and
before any reduction in respect of preferred stock dividends

 

“Net
Recovery Cost Percentage” shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the recovery
on the aggregate amount of the Inventory or Canadian Inventory, as applicable,
at such time on a “net orderly liquidation value” basis as set forth in the
most recent Inventory Appraisal received by Collateral Agents in accordance
with Section 4.01 or Section 9, net of operating
expenses, liquidation expenses and commissions reasonably anticipated in the
disposition of such assets, and (b) the denominator of which is the
original Cost of the aggregate amount of the Inventory or the Canadian
Inventory, as applicable, subject to appraisal. 
On the Closing Date, the initial Net Recovery Cost Percentage shall be
80.3%.

 

33

 

“Non-BA Lender”
shall mean a Canadian Revolving Lender that cannot or does not, as a matter of
policy, accept Bankers’ Acceptances.

 

“Non-Guarantor
Subsidiary” shall mean each Subsidiary that is not a Subsidiary
Guarantor.

 

“Note Indenture
Intercreditor Agreement” shall mean that certain Intercreditor Agreement
dated as of February 14, 2006 by and among Holdings, US Borrowers,
Canadian Borrower, the Subsidiary Guarantors party thereto, UBS AG, Stamford
Branch, as administrative agent, UBS AG, Stamford Branch and Wachovia Bank,
National Association, as US co-collateral agents, UBS AG Canada Branch and
Wachovia Capital Finance Corporation (Canada), as Canadian co-collateral agents
and Senior Note Collateral Agent, as supplemented by that certain Joinder and
Acknowledgement Agreement dated as of October 24, 2007 by and among
Holdings, US Borrowers, Canadian Borrower, the Subsidiary Guarantors party
thereto, the US Administrative Agent, the Collateral Agents and Senior Note
Collateral Agent, under which this Agreement shall constitute a “Revolving
Credit Agreement” and the Obligations shall constitute “Revolving Credit
Obligations”, respectively, and with respect to which the Agent has, on the
Closing Date, issued a “New Debt Notice” (as defined therein) and as may be
further amended, restated, supplemented or otherwise modified from time to
time.

 

“Note Lien Collateral”
shall have the meaning assigned to such term in the Interim Order or the Final
Order, as applicable.

 

“Notes”
shall mean any notes evidencing the Revolving Loans or Swingline Loans, in each
case, issued pursuant to this Agreement, if any, substantially in the form of Exhibit K-1,
K-2, K-3, or K-4, including any notes issued to the
Lenders on the Closing Date.

 

“Obligations”
shall mean (a) obligations of Borrowers and the other Loan Parties (or any
of them) from time to time arising under or in respect of the due and punctual
payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by Borrowers and the
other Loan Parties under this Agreement in respect of any Letter of Credit or
LC Acceptance or other LC Obligation, when and as due, including payments in
respect of Reimbursement Obligations, interest thereon and obligations to
provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding), of Borrowers and the other Loan Parties under this Agreement and
the other Loan Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of Borrowers and the other
Loan Parties under or pursuant to this Agreement and the other Loan Documents, (c) the
due and punctual payment and performance of all obligations of the Borrowers
and any and all of the other Loan Parties under each Lender Hedging Agreement
and (d) the due and punctual payment and performance of all obligations in
respect of (i) overdrafts and related liabilities owed to any Lender, any
Affiliate of a Lender, any Administrative Agent or Collateral Agent or any of
its Affiliates arising from treasury, depositary and cash management services
or in connection with any automated clearinghouse transfer of funds, (ii) any
credit or debit card services (including, without limitation, Private Label
Credit Cards) owed to any Lender, any Affiliate of a Lender, any Administrative
Agent or Collateral Agents or any of its Affiliates (including, without
limitation, GE Money) and (iii) any other obligations (other than those
obligations described in clauses (a) through (c) above) owed by any
Loan Party to GE Capital, GE

 

34

 

Canada and/or GE Money.  For the
avoidance of doubt, the term “Obligations” includes both the US Obligations and
the Canadian Obligations.

 

“OFAC”
shall have the meaning assigned to such term in Section 3.22.

 

“Officers’
Certificate” shall mean a certificate executed by the chairman of
the Board of Directors (if an officer), the chief executive officer, the
president or one of the Financial Officers, each in his or her official (and
not individual) capacity.

 

“Order” shall
mean, as applicable and as the context may require, either the Interim Order or
the Final Order, whichever is then applicable.

 

“Organizational
Documents” shall mean, with respect to any person, (i) in the
case of any corporation, the certificate of incorporation and by-laws (or
similar documents) of such person, (ii) in the case of any limited
liability company, the certificate of formation and operating agreement (or
similar documents) of such person, (iii) in the case of any limited
partnership, the certificate of formation and limited partnership agreement (or
similar documents) of such person, (iv) in the case of any general
partnership, the partnership agreement (or similar document) of such person, (v) with
respect to any Foreign Subsidiary, the equivalent of the foregoing in its
jurisdiction of incorporation or organization, and (vi) in any other case,
the functional equivalent of the foregoing.

 

“Other
Taxes” shall mean 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.

 

“Participant”
shall have the meaning assigned to such term in Section 11.04(d).

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation referred to and defined in
ERISA.

 

“Perfection
Certificate” shall mean a certificate in the form of Exhibit L-1
or any other form approved by the Collateral Agents, as the same shall be
supplemented from time to time by a Perfection Certificate Supplement or
otherwise.

 

“Perfection
Certificate Supplement” shall mean a certificate supplement in the
form of Exhibit L-2 or any other form approved by the Collateral
Agents.

 

“Period” shall
mean the Prior Week, the Cumulative Four Week Period or the Cumulative Period,
as applicable.

 

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

 

“Permitted
Holders” shall mean (a) Sponsor, (b) its Controlled
Investment Affiliates, (c) Silver Point Capital, L.P. and National Realty &
Development Corp. and (d) each such person’s Related Parties.

 

“Permitted Leasehold
Facility” shall mean a credit facility which is secured by a first
priority security interest in the Leasehold Priority Collateral in favor of the
lenders or financial institutions providing such facility together with all
documents relating thereto, in each case, in form and

 

35

 

substance acceptable to the Administrative Agents and with respect to
which (i) the US Collateral Agent has a second priority perfected security
interest in the Leasehold Priority Collateral subject to the Leasehold
Intercreditor Agreement, (ii) the terms and conditions of such Permitted
Leasehold Facility (including the principal amount thereof) and the Leasehold
Intercreditor Agreement are acceptable to the US Administrative Agent in all
respects and (iii) the terms and conditions of such Permitted Leasehold
Facility and the Leasehold Intercreditor Agreement grant the US Collateral
Agent access rights to each location on terms and conditions reasonably
acceptable to the US Collateral Agent.

 

“Permitted
Liens” shall have the meaning assigned to such term in Section 6.02.

 

“Permitted Prior Liens”
shall have the meaning assigned to such term in the Interim Order.

 

“Permitted Store Closings”
shall have the meaning assigned to such term in Section 5.17.

 

“Permitted Tax Distributions” shall mean payments, dividends or
distributions by US Borrowers and any US Subsidiaries to Holdings in order to pay
consolidated or combined federal, state or local taxes, including estimated
taxes, not payable directly by US Borrowers or any of their Subsidiaries which
payments by US Borrowers and their US Subsidiaries are not in excess of the tax
liabilities that would have been payable by US Borrowers and their Subsidiaries
on a stand-alone basis.

 

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

 

“Petition Date”
shall mean, as to the Debtors, May 2, 2008, the date of the commencement
of the Chapter 11 Cases with respect to the Debtors.

 

“Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412
of the Code or Section 302 of ERISA which is maintained or contributed to
by any Company or with respect to which any Company could incur liability
(including under Section 4069 of ERISA) other than plans of ERISA
Affiliates.

 

“Plan of Reorganization”
shall mean a plan of reorganization in form and substance satisfactory to the
Administrative Agents and the Required Lenders in all respects and consented to
by the Administrative Agents and Required Lenders confirmed by an order (in
form and substance satisfactory to the Required Lenders) of the U.S. Bankruptcy
Court under the Chapter 11 Cases (i) to the extent the Exit Facilities
Option is exercised by the Debtors, approving and authorizing the transactions
contemplated thereby and, if the Borrowers have exercised the Exit Facilities
Option, approving and authorizing the Exit Facilities, the transactions
contemplated thereby and the granting of liens under the Exit Facilities, (ii) containing
a provision for termination of the Commitments and repayment in full in cash of
all of the Obligations under this Agreement on or before the effective date of
such plan, (iii) containing a release in favor of the Agents and the
Lenders and their respective affiliates, (iv) containing provisions with
respect to the settlement or discharge of all claims and other debts and
liabilities, and such Plan of Reorganization shall be in full force and effect
and shall not have been modified, altered, amended or otherwise changed or
supplemented without the prior written consent of the Administrative Agents and
(v) such other terms as the Administrative Agents may require.

 

“Post-Petition”
shall mean the time period beginning immediately upon filing of the Chapter 11
Cases.

 

36

 

“PPSA” shall
mean the Personal Property Security Act (Ontario)
and the Regulations and Minister’s Orders thereunder, as from time to time in
effect, provided, however, if attachment, perfection or priority of any Agent’s
security interest in any Collateral is governed by the personal property
security laws of any jurisdiction other than Ontario, PPSA shall mean those
personal property security laws in such other jurisdiction of Canada for the
purposes of the provisions hereof relating to such attachment, perfection or
priority and for the definitions related to such provisions.

 

“Pre-Petition”
shall mean the time period ending immediately prior to the filing of the
Chapter 11 Cases.

 

“Pre-Petition Credit
Agreement” shall have the meaning assigned to such term in the
recitals to this Agreement.

 

“Pre-Petition Loan
Documents” shall have the meaning assigned to the term “Loan
Documents” in the Pre-Petition Credit Agreement.

 

“Pre-Petition Revolver
Liens” shall have the meaning assigned to such term in the
applicable Order.

 

“Pre-Petition Revolver
Outstandings” shall mean, at any time of determination, the
aggregate amount of all “Revolving Loans” (as defined in the Pre-Petition
Credit Agreement) requested by the US Borrowers and outstanding on such date.

 

“Prepetition Collateral”
shall have the meaning assigned to such term in the Interim Order or the Final
Order, as applicable.

 

“Prepetition Liens”
shall have the meaning assigned to such term in the Interim Order or the Final
Order, as applicable.

 

“Preferred
Stock” shall mean, with respect to any person, any and all preferred
or preference Equity Interests (however designated) of such person whether now
outstanding or issued after the Closing Date.

 

“Preferred
Stock Issuance” shall mean the issuance or sale by Holdings or any
of its Subsidiaries of any Preferred Stock after the Closing Date (other than
any Excluded Issuance).

 

“Premises”
shall have the meaning assigned thereto in the applicable Mortgage.

 

“Prior Agent”
shall mean GE Capital, as the US administrative agent and the US collateral
agent under the Pre-Petition Credit Agreement.

 

“Prior Agents”
shall mean, collectively, the Prior Agent and the Prior Canadian Agent.

 

“Prior Canadian Agent”
shall mean GE Canada Finance Holding Company, solely in its capacity as
Canadian administrative agent and Canadian collateral agent under the
Pre-Petition Credit Agreement.

 

“Prior Lenders”
shall mean the lenders under the Pre-Petition Credit Agreement.

 

“Prior Lender Obligations”
shall mean all “Obligations” under, and as defined in, the Pre-Petition Credit
Agreement, including US Prior Lender Obligations and Canadian Prior Lender

 

37

 

Obligations, of any Loan Party to the Secured Parties (under, and as
defined in, the Pre-Petition Loan Documents) pursuant to the Pre-Petition
Credit Agreement and the Pre-Petition Loan Documents, and all instruments
executed pursuant thereto or in connection therewith.

 

“Priority Payables”
shall mean, at any time, the full amount of the liabilities at such time which
have a trust imposed to provide for payment or security interest, lien or
charge ranking or capable of ranking senior to or pari passu with security
interests, hypothecs, liens or charges securing the Obligations on any of the
Collateral under federal, provincial, state, county, municipal, or local law
including, but not limited, to claims for unremitted and accelerated rents,
taxes, wages, workers’ compensation obligations, vacation pay, government
royalties or pension fund obligations, together with the aggregate value,
determined in accordance with GAAP, of all Eligible Canadian Inventory which
applicable Collateral Agents consider may be or may become subject to a right
of a supplier to recover possession thereof under any federal or provincial or
territorial law, where such supplier’s right may have priority over the
security interests, liens or charges securing the Obligations including,
without limitation, Eligible Canadian Inventory subject to a right of a
supplier to repossess goods pursuant to Section 81.1 of the BIA.

 

“Prior Week”
shall mean, as of any date of determination, the immediately preceding week
ended on a Saturday and commencing on the prior Sunday.

 

“Private Label Credit Card”
shall mean a credit card that bears any Borrower’s trademark and/or logo and is
issued by a third party, including GE Money, which takes the credit risk as to
customers and makes payments to the Borrowers or Guarantors in a manner similar
to other major credit card issuers.

 

“Pro Forma
Basis” shall mean on a basis in accordance with GAAP and Regulation
S-X and otherwise reasonably satisfactory to the Administrative Agent.

 

“Pro Rata
Percentage” of any Revolving Lender at any time shall mean the
percentage of the total Revolving Commitments of all Revolving Lenders
represented by such Lender’s Revolving Commitment, and with respect to any
Canadian Revolving Lender at any time, the percentage of the total Canadian
Revolving Commitments of all Canadian Revolving Lenders represented by such
Canadian Revolving Lender’s Canadian Revolving Commitment.

 

“property”
shall mean any right, title or interest in or to property or assets of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible
and including Equity Interests or other ownership interests of any person and
whether now in existence or owned or hereafter entered into or acquired,
including all Real Property.

 

“Purchase
Money Obligation” shall mean, for any person, the obligations of
such person in respect of Indebtedness (including Capital Lease Obligations)
incurred for the purpose of financing all or any part of the purchase price of
any property (including Equity Interests of any person) or the cost of
installation, construction or improvement of any property and any refinancing
thereof; provided, however, that (i) such
Indebtedness is incurred within one year after such acquisition of such
property by such person and (ii) the amount of such Indebtedness does not
exceed 100% of the cost of such acquisition, installation, construction or
improvement, as the case may be.

 

“Qualified
Capital Stock” of any person shall mean any Equity Interests of such
person that are not Disqualified Capital Stock.

 

38

 

“Real
Property” shall mean, collectively, all right, title and interest
(including any leasehold, mineral or other estate) in and to any and all
parcels of or interests in real property owned, leased or operated by any
person, whether by lease, license or other means, together with, in each case,
all easements, hereditaments and appurtenances relating thereto, all
improvements and appurtenant fixtures.

 

“Refinancing”
shall mean the repayment in full and the termination of any commitment to make
extensions of credit under all of the outstanding indebtedness of Holdings or
any of its Subsidiaries listed on Schedule 1.01(a).

 

“Register”
shall have the meaning assigned to such term in Section 11.04(c).

 

“Regulation
D” shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation
S-X” shall mean Regulation S-X promulgated under the Securities Act.

 

“Regulation
T” shall mean Regulation T of the Board as from time to time in effect
and all official rulings and interpretations thereunder or thereof.

 

“Regulation
U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation
X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

 

“Reimbursement
Obligations” shall mean Borrowers’ obligations under Section 2.18(e) to
reimburse LC Disbursements.

 

“Related
Parties” shall mean, with respect to any person, such person’s
Affiliates and the partners, directors, officers, employees, agents, counsel
and advisors of such person and of such person’s Affiliates.

 

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

 

“Released Parties”
shall have the meaning assigned to such term in Section 2.26.

 

“Releasing Parties”
shall have the meaning assigned to such term in Section 2.26.

 

“Remedies Notice Period”
shall have the meaning assigned to such term in Section 8.01.

 

“Required
Lenders” shall mean Lenders having more than 66 2/3% of the sum of
all Loans outstanding, LC Exposure and unused Revolving Commitments; provided
that if GE Capital and GE Canada collectively have more than 66 2/3% of the sum
of all Loans outstanding, LC Exposure and unused Revolving Commitments, Required
Lenders shall mean (i) GE Capital and GE Canada and one (1) additional
Lender if there are two Lenders and (ii) GE Capital and GE Canada and two (2) additional
Lenders if there are three or more Lenders; provided  further that
the preceding proviso shall not apply to changes to the definitions of “Required
Lenders” or “Supermajority Lenders” that increase the percentages set forth in
such definitions.

 

39

 

“Requirements
of Law” shall mean, collectively, any and all requirements of any
Governmental Authority including any and all laws, judgments, orders, decrees,
ordinances, rules, regulations, statutes or case law.

 

“Reserves”
shall mean reserves established against the Borrowing Base or Canadian Borrowing
Base that the Collateral Agents may, in their Permitted Discretion, establish
from time to time. Without limiting the generality of the foregoing, it is
understood that the Collateral Agents may implement a reserve or reserves (i) against
the full amount of the Carve-out Amount, (ii) with respect to leased or
rented locations that will be subject to Permitted Store Closings, (iii) with
respect to leased or rented locations with respect to which the lease has not
been assumed commencing on the date that is thirteen (13) weeks prior to the
120 day lease rejection/assumption period, as such period may be extended or
shortened by the U.S. Bankruptcy Court and (iv) with respect to leased or
rented locations for which there has been filed a landlord’s motion to compel
the assumption or rejection of the lease and in an amount reasonably determined
by the applicable Collateral Agent (after consultation with the Borrowers) and
considering the likelihood or unlikelihood of the success of such motion on its
merits.

 

“Response”
shall mean (a) “response” as such term is defined in CERCLA, 42 U.S.C. §
9601(24), and (b) all other actions required by any Governmental Authority
or voluntarily undertaken to (i) clean up, remove, treat, abate or in any
other way address any Hazardous Material in the Environment; (ii) prevent
the Release or threat of Release, or minimize the further Release, of any
Hazardous Material; or (iii) perform studies and investigations in
connection with, or as a precondition to, or to determine the necessity of the
activities described in, clause (i) or (ii) above.

 

“Responsible Officer” of any person shall mean any executive
officer or Financial Officer of such person and any other officer or similar
official thereof with responsibility for the administration of the obligations
of such person in respect of this Agreement.

 

“Reuters
Screen CDOR Page” shall mean the display designated as page CDOR
on the Reuters Monitor Money Rates Service or such other page as may, from
time to time, replace that page on that service for the purpose of
displaying bid quotations for bankers’ acceptances accepted by leading Canadian
banks.

 

“Revolver Adequate
Protection Liens” shall have the meaning assigned to such term in
the Interim Order or the Final Order, as applicable.

 

“Revolver Indemnity Account”
shall have the meaning assigned to such term in the Interim Order or the Final
Order, as applicable.

 

“Revolver Indemnity
Obligations” shall have the meaning assigned to such term in the
Interim Order or the Final Order, as applicable.

 

“Revolver Superpriority
Claim” shall have the meaning assigned to such term in the Interim
Order or the Final Order, as applicable.

 

“Revolving
Availability Period” shall mean the period from and including the
Closing Date to but excluding the earlier of (i) the Business Day
preceding the Revolving Maturity Date and (ii) the date of termination of
the Revolving Commitments.

 

“Revolving
Borrowing” shall mean a Borrowing comprised of Revolving Loans.

 

40

 

“Revolving
Commitment” shall mean, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans hereunder up to the amount set
forth on Schedule I to the Lender Addendum executed and delivered by such
Lender, or in the Assignment and Assumption pursuant to which such Lender
assumed its Revolving Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.07 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 11.04. 
The portion of the Revolving Commitments, if any, which may be utilized
for Canadian Revolving Loans shall constitute the Canadian Revolving
Commitment, which shall be treated as a sub-facility of the Revolving
Commitment and the total Revolving Loans and LC Exposure shall not exceed the
total Revolving Commitments.  The
aggregate amount of the Lenders’ Revolving Commitments on the Closing Date is
$700 million.

 

“Revolving
Exposure” shall mean, with respect to any Lender at any time, the
Dollar Equivalent of the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender, plus
the Dollar Equivalent of the aggregate amount at such time of such Lender’s LC
Exposure, plus the Dollar
Equivalent of the aggregate amount at such time of such Lender’s Swingline
Exposure.

 

“Revolving
Lender” shall mean a Lender with a Revolving Commitment and, with
respect to any Canadian Revolving Commitment, shall include the respective
Canadian Revolving Lender; it being understood that each Revolving Lender that
is not a Canadian Revolving Lender shall have an affiliated Canadian Revolving
Lender that will provide the Canadian Revolving Loans and become a signatory
hereto.

 

“Revolving
Loan” shall mean a Loan made by any of the Lenders to any Borrower
pursuant to Section 2.01(a) or (c).  Each Revolving Loan shall either be an ABR
Revolving Loan, Eurodollar Revolving Loan, Canadian Prime Rate Loan or Bankers’
Acceptance.

 

“Revolving
Maturity Date” shall mean the date that is the earliest of the
following: (i) May 2, 2009, (ii) the earlier of (x) the
date upon which the Interim Order expires or (y) thirty (30) days after
the entry of the Interim Order, in either case, if the Final Order has not been
entered prior to the expiration of such period, (iii) if a Plan of
Reorganization has been confirmed by order of the Bankruptcy Court, the earlier
of (x) the effective date of such Plan of Reorganization or (y) the
30th day after the date of entry of such confirmation order, (iv) the date
of termination of Lenders’ obligations to make Loans and to issue Letters of
Credit or permit existing Loans to remain outstanding pursuant to Section 8.01,
(v) the date of indefeasible prepayment in full by Borrowers of the Loans
and the cancellation and return of all Letters of Credit or the cash
collateralization of all L/C Obligations in accordance with the terms hereof,
and the permanent reduction of all Commitments to zero dollars ($0) and (vi) any date that is a Termination
Declaration Date.

 

“Sale and
Leaseback Transaction” means any arrangement, directly or
indirectly, with any person whereby any person shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred.

 

“Sarbanes-Oxley
Act” shall mean the United States Sarbanes-Oxley Act of 2002, as
amended, and all rules and regulations promulgated thereunder.

 

“Schedule I Lender”
means any Lender named on Schedule I to the Bank Act
(Canada).

 

“Secured
Obligations” shall mean (a) all of the Obligations, (b) the
due and punctual payment and performance of all obligations of Borrowers and
the other Loan Parties under each Hedging 

 

41

 

Agreement entered into with any counterparty that is a Secured Party
and (c) the due and punctual payment and performance of all obligations in
respect of (i) overdrafts and related liabilities owed to any Lender, any
Affiliate of a Lender, any Administrative Agent or Collateral Agent or any of
its Affiliates arising from treasury, depositary and cash management services
or in connection with any automated clearinghouse transfer of funds, (ii) any
credit or debit card services (including, without limitation, Private Label
Credit Cards) owed to any Lender, any Affiliate of a Lender, any Administrative
Agent or Collateral Agents or any of its Affiliates (including, without
limitation, GE Money) and (iii) any other obligations (other than those
obligations described in clauses (a) through (b) above) owed by any
Loan Party to GE Capital, GE Canada and/or GE Money.

 

“Secured Parties”
shall mean, collectively, the Administrative Agents, the Collateral Agents, the
Lenders, the Issuing Banks, GE Money and each party to a Lender Hedging
Agreement if at the date of entering into such Lender Hedging Agreement such
person executes and delivers to the Administrative Agents a letter agreement in
form and substance acceptable to the Administrative Agents pursuant to which
such person (i) appoints the applicable Collateral Agents as its agent
under the applicable Loan Documents and (ii) agrees to be bound by the
provisions of Section 10.03 and Section 10.09 and the
Security Agreements.

 

“Securities
Act” shall mean the Securities Act of 1933.

 

“Securities
Collateral” shall have the meaning assigned to such term in the
Security Agreements.

 

“Security
Agreement Collateral” shall mean all property pledged or granted as
collateral pursuant to the Security Agreements or pursuant to Section 5.11.

 

“Security
Agreements” shall mean, collectively, (a) the US Security
Agreement and (b) the Canadian Security Agreements, in each case, as the
same may from time to time be modified, amended, extended or reaffirmed in
accordance with the terms thereof.

 

“Security
Documents” shall mean the Security Agreements, the Mortgages, the
Canadian Pledge Agreements, the US Pledge Agreements, each Canadian Guaranty
and each other security document or pledge agreement delivered in accordance
with applicable local or foreign law to grant a valid, perfected security
interest in any property as collateral for the Secured Obligations, and all UCC
or PPSA or other financing statements or financing change statements or
instruments of perfection required by this Agreement, the Security Agreements,
any Mortgage or any other such security document or pledge agreement to be
filed with respect to the security interests in property and fixtures created
pursuant to the Security Agreements or any Mortgage and any other document or
instrument utilized to pledge or grant or purport to pledge or grant a security
interest or lien on any property as collateral for the Secured Obligations.

 

“Senior
Note Agreement” shall mean that certain Indenture dated as of February 14,
2006 by US Borrowers in favor of Senior Note Collateral Agent pursuant to which
the Senior Notes are issued as in effect on the February 14, 2006 and
thereafter amended from time to time subject to the requirements of this
Agreement.

 

“Senior  Note  Collateral”
shall have the meaning assigned to such term in the Intercreditor Agreement.

 

“Senior  Note  Collateral Agent”
means the Bank of New York, in its capacity as the collateral agent under the
Senior Note Documents, together with any successors and assigns.

 

42

 

“Senior
Note Documents” shall mean the Senior Notes, the Senior Note Agreement,
the Senior Note Guarantees and all other documents executed and delivered with
respect to the Senior Notes or the Senior 
Note Agreement.

 

“Senior Note Guarantees”
shall mean the guarantees of Holdings and the Subsidiary Guarantors pursuant to
the Senior Note Agreement.

 

“Senior  Note Secured Parties” shall have the meaning assigned to
such term in the Intercreditor Agreement.

 

“Senior
Notes” shall mean US Borrowers’ Senior Secured Floating Rate Notes
due 2014 issued on February 14, 2006 and any registered notes issued by US
Borrowers in exchange for, and as contemplated by, such notes with
substantially identical terms as such notes.

 

“Specified Obligations”
shall mean any obligation of any Loan Parties under the Loan Documents
consisting of (i) the payment of principal of and interest on Loans and (ii) Reimbursement
Obligations in respect of Letters of Credit.

 

“Sponsor”
shall mean Apollo Management, L.P. and its Affiliates.

 

“Spot
Selling Rate” shall mean the spot selling rate at which the US Administrative
Agent offers to sell Canadian Dollars for dollars in the Toronto foreign
exchange market at approximately 11:00 a.m. Toronto time on such date for
delivery two (2) Business Days later.

 

“Standby
Letter of Credit” shall mean any Letters of Credit other than
Letters of Credit which are Commercial Letters of Credit.

 

“Stated Amount”
means at any time the maximum amount for which a Letter of Credit may be
honored.

 

“Statutory
Reserves” shall mean (a) for any Interest Period for any
Eurodollar Borrowing in dollars, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of
the United States Federal Reserve System in New York City with deposits
exceeding one billion dollars against “Eurocurrency liabilities” (as such term
is used in Regulation D).

 

“Stores” shall
mean any of the retail stores operated by LNT Center and its Subsidiaries.

 

“Subsidiary”
shall mean, with respect to any person (the “parent”)
at any date, (i) any person the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if
such financial statements were prepared in accordance with GAAP as of such
date, (ii) any other corporation, limited liability company, association
or other business entity of which securities or other ownership interests
representing more than 50% of the voting power of all Equity Interests entitled
(without regard to the occurrence of any contingency) to vote in the election
of the Board of Directors thereof are, as of such date, owned, controlled or
held by the parent and/or one or more subsidiaries of the parent, (iii) any
partnership (a) the sole general partner or the managing general partner
of which is the parent and/or one or more subsidiaries of the parent or (b) the
only general partners of which are the parent and/or one or more subsidiaries
of the parent and (iv) any other person that is otherwise Controlled by
the parent and/or one or more subsidiaries of the parent.  Unless the context requires otherwise, “Subsidiary”
refers to a Subsidiary of Borrower.

 

43

 

“Subsidiary Guarantor”
shall mean each Subsidiary listed on Schedule 1.01(b), and each other
Subsidiary that is or becomes a party to this Agreement pursuant to Section 5.11.

 

“Supermajority Lenders”
shall mean at any time, Lenders having at least 80% of the Revolving Commitment
or, if the Revolving Commitments have been terminated, at least 80% of the sum
of Revolving Exposures.

 

“Survey”
shall mean a survey of any Mortgaged Property (and all improvements thereon)
which is (i) prepared by a surveyor or engineer licensed to perform
surveys in the jurisdiction where such Mortgaged Property is located, (ii) dated
(or redated) not earlier than six months prior to the date of delivery thereof
unless there shall have occurred within six months prior to such date of
delivery any exterior construction of structures on the site of such Mortgaged
Property or any easement or right of way on the Mortgaged Property has been
granted or become effective through operation of law or otherwise with respect
to such Mortgaged Property which, in either case, can reasonably be depicted on
a survey, in which events, as applicable, such survey shall be dated (or
redated) after the completion of such construction or if such construction
shall not have been completed as of such date of delivery, not earlier than 20
days prior to such date of delivery, or after the grant or effectiveness of any
such easement or right of way on the applicable Mortgaged Property, (iii) certified
by the surveyor (in a manner reasonably acceptable to the Administrative
Agents) to such Administrative Agents, the applicable Collateral Agents and the
Title Company, and (iv) complying in all respects with the minimum detail
requirements of the American Land Title Association as such requirements are in
effect on the date of preparation of such survey.

 

“Swingline
Exposure” shall mean at any time the aggregate principal amount at
such time of all outstanding Swingline Loans. 
The Swingline Exposure of any Revolving Lender at any time shall equal
its Pro Rata Percentage of the aggregate Swingline Exposure at such time.

 

“Swingline Lenders”
shall have the meaning assigned to such term in the preamble hereto.

 

“Swingline
Loans” shall mean the US Swingline Loans and the Canadian Swingline
Loans.

 

“Syndication
Agent” means Wells Fargo Retail Finance, LLC, in its capacity as
syndication agent under this Agreement.

 

“Tax Return”
shall mean all returns, statements, filings, attachments and other documents or
certifications required to be filed in respect of Taxes.

 

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

 

“Termination Declaration”
shall have the meaning assigned such term in Section 8.01.

 

“Termination Declaration
Date” shall mean the date that the Agent provides a Termination
Declaration to the Debtors.

 

“Title
Company” shall mean any title insurance company as shall be retained
by Borrowers and reasonably acceptable to the Administrative Agent.

 

44

 

“Title
Policy” shall mean with respect to each Mortgage required, a policy
of title insurance (or marked up title insurance commitment having the effect
of a policy of title insurance) insuring the Lien of such Mortgage as a valid
First Priority mortgage Lien on the Mortgaged Property and fixtures described
therein in the amount equal to not less than 115% of the fair market value of
such Mortgaged Property and fixtures, which policy (or such marked-up
commitment) shall (A) be issued by the Title Company, (B) contain a “tie-in”
or “cluster” endorsement, if available under applicable law (i.e., policies which insure against losses
regardless of location or allocated value of the insured property up to a
stated maximum coverage amount), (C) have been supplemented by such
endorsements (or where such endorsements are not available, opinions of special
counsel, architects or other professionals reasonably acceptable to the
applicable Collateral Agent) as shall be reasonably requested by such
Collateral Agent (including endorsements on matters relating to usury, first
loss, last dollar, zoning, contiguity, revolving credit, doing business,
non-imputation, public road access, survey, variable rate, environmental lien,
subdivision, mortgage recording tax, separate tax lot, and so-called
comprehensive coverage over covenants and restrictions), and (D) contain
no exceptions to title other than Permitted Liens and other exceptions
acceptable to such Collateral Agent.

 

“Total  Minimum Availability Requirement” shall mean, at all times,
an amount equal to the sum of (x) the U.S. Minimum Availability
Requirement and (y) the Canadian Minimum Availability Requirement.

 

“Transactions”
shall mean, collectively, the transactions which occurred on or prior to the
Closing Date pursuant to the Loan Documents, including the execution, delivery
and performance of the Loan Documents and the payment of all fees and expenses
to be paid on or prior to the Closing Date and owing in connection therewith.

 

“Transferred
Guarantor” shall have the meaning assigned to such term in Section 7.09.

 

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

 

“UCC”
shall mean the Uniform Commercial Code as in effect from time to time (except
as otherwise specified) in any applicable state or jurisdiction.

 

“United
States” shall mean the United States of America.

 

“US Administrative Agent”
shall have the meaning assigned to such term in the preamble hereto and
includes each other person appointed as the successor pursuant to Article X.

 

“US Agents”
shall mean, collectively, the US Administrative Agent and the US Collateral
Agent, and the term “US Agent” shall mean any one of them.

 

“U.S. Bankruptcy Court”
shall have the meaning assigned to such term in the recitals of this Agreement.

 

“US Borrower”
shall have the meaning assigned to such term in the preamble hereto.

 

“US  Borrowing Base Guarantor” shall mean LNT
Inc., a New Jersey corporation, LNT West, a Delaware corporation, and LNT
Merchandising Company, LLC, a Delaware limited liability company and any Wholly
Owned Subsidiary of US Borrowers which may hereafter be approved by the
Administrative Agents and the Collateral Agents which (a) is organized in
a State within the United 

 

45

 

States, (b) is currently able to prepare all collateral reports in
a comparable manner to the Borrowers’ reporting procedures and (c) has
executed and delivered to the applicable Collateral Agents such joinder
agreements to guarantees, contribution and set-off agreements and other
Security Documents as such Collateral Agents have reasonably requested so long
as such Collateral Agents have received and approved, in their reasonable
discretion, (i) a collateral audit and Inventory Appraisal conducted by an
independent appraisal firm reasonably acceptable to such Collateral Agents and (ii) all
UCC and similar search results necessary to confirm such Collateral Agents’
First Priority Lien on all of such Borrowing Base Guarantor’s personal
property, subject to Permitted Liens.

 

“US  Collateral Agent” shall have the meaning
assigned to such term in the preamble hereto.

 

“US Excess Availability” shall mean, at any time, the result of (a) the
Borrowing Base less (b) all
outstanding Loans made to the US Borrowers and all LC Exposure in respect of
Letters of Credit issued for the account of any US Borrower or any of its
Subsidiaries (other than the Canadian Loan Parties) less (c) in the US Collateral Agent’s reasonable discretion,
the aggregate amount of all the outstanding and unpaid trade payables and other
obligations of US Borrowers and/or the US Borrowing Base Guarantors which are
not paid within 90 days past the due date according to their original terms of
sale, in each case as of such date of determination less (d) in the US Collateral Agent’s reasonable
discretion, and without duplication, the amount of checks issued by US
Borrowers and/or the US Borrowing Base Guarantors to pay trade payables and
other obligations but which are not paid within 90 days past the due date
according to their original terms of sale, in each case as of such date of
determination, but which either have not yet been sent or are subject to other
arrangements which are expected to delay the prompt presentation of such checks
for payment less (e) the US Minimum Availability Requirement.

 

“US LC Exposure” shall mean at any
time the sum of (a) the Dollar Equivalent of the aggregate undrawn amount
of all outstanding Letters of Credit issued for the account of any US Borrower
or its Subsidiaries (other than any Canadian Loan Party) at such time, plus (b) the Dollar Equivalent of the
aggregate principal amount of all Reimbursement Obligations in respect of
Letters of Credit issued for the account of any US Borrower or its Subsidiaries
(other than any Canadian Loan Party) outstanding at such time, plus (c) the Dollar Equivalent of the aggregate amount
owing on all outstanding LC Acceptances issued for the account of any US
Borrower or its Subsidiaries (other than any Canadian Loan Party).  The US LC Exposure of any Revolving Lender at
any time shall mean its Pro Rata Percentage of the aggregate US LC Exposure at
such time.

 

“U.S. Minimum Availability
Requirement” shall mean, at all times, an amount equal to 10% of the
sum of clauses (i) through (iv) of the Borrowing Base.

 

“US Obligations”
shall mean (a) obligations of US Borrowers and the other Loan Parties from
time to time arising under or in respect of the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the US Revolving Loans and the US Swingline Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by US
Borrowers and the other Loan Parties under this Agreement in respect of any Letter
of Credit or LC Acceptance, when and as due, including payments in respect of
Reimbursement Obligations, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or 

 

46

 

allowable in such proceeding), of US Borrowers and the other Loan
Parties under this Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of US Borrowers and the other Loan Parties under or pursuant to this Agreement
and the other Loan Documents, (c) the due and punctual payment and
performance of all obligations of the US Borrowers and any and all of the other
Loan Parties under each Lender Hedging Agreement and (d) the due and
punctual payment and performance of all obligations in respect of (i) overdrafts
and related liabilities owed to any Lender, any Affiliate of a Lender, any
Administrative Agent or Collateral Agent or any of its Affiliates arising from
treasury, depositary and cash management services or in connection with any
automated clearinghouse transfer of funds, (ii) any credit or debit card
services (including, without limitation, Private Label Credit Cards) owed to
any Lender, any Affiliate of a Lender, any Administrative Agent or Collateral
Agents or any of its Affiliates (including, without limitation, GE Money) and (iii) any
other obligations (other than those obligations described in clauses (a) through
(c) above) owed by any Loan Party to GE Capital, GE Canada and/or GE
Money.

 

“US Pledge Agreements”
shall mean that certain Pledge Agreement dated as of the Closing Date by
Holdings pledging all of its Equity Interests in LNT and that certain Pledge
Agreement dated as of the Closing Date by LNT and certain US Subsidiaries
pledging all of their Equity Interests in LNT Center and the Subsidiary
Guarantors, as applicable (except the Canadian Loan Parties), in each case,
addressed to the Collateral Agents for the benefit of the Secured Parties, as
the same may from time to time be modified, amended, extended or reaffirmed in
accordance with the terms thereof.

 

“US Pre-Petition
Outstandings” shall mean the US Pre-Petition Revolver Outstandings
and the US Pre-Petition Tranche B Outstandings on any such date.

 

“US Pre-Petition Revolver
Outstandings” shall mean all of the “US Revolving Loans” (as defined
in the Pre-Petition Credit Agreement) outstanding on such date.

 

“US Pre-Petition Tranche B
Outstandings” shall mean all of the “Tranche B Loans” (as defined in
the Pre-Petition Credit Agreement) outstanding on such date.

 

“US Prior Lender
Obligations” shall mean Prior Lender Obligations then outstanding on
account of US Pre-Petition Outstandings. 
US Prior Lender Obligations shall not include letter of credit
obligations under the Pre-Petition Credit Agreement which have been continued
as LC Obligations hereunder.

 

“US Revolving Commitment”
shall mean, with respect to each Revolving Lender, the commitment, if any, of
such Revolving Lender to make US Revolving Loans hereunder up to its Pro Rata
Percentage of the Revolving Commitment.

 

“US Revolving Exposure” shall
mean, with respect to any Lender at any time, the Dollar Equivalent of the
aggregate principal amount at such time of all outstanding Revolving Loans made
to US Borrowers of such Lender, plus the
aggregate amount at such time of such Lender’s US LC Exposure, plus the aggregate amount at such time of such Lender’s
Swingline Exposure to US Borrowers.

 

“US Revolving Lender”
shall mean a Lender with a US Revolving Commitment.

 

“US Revolving Loans”
shall mean each Revolving Loan borrowed by a US Borrower.

 

“US Security Agreement”
shall mean that Security Agreement dated as of the Closing Date by and among
certain of the Loan Parties and US Collateral Agents for the benefit of the
Secured 

 

47

 

Parties, as the same may from time to time be modified, amended,
extended or reaffirmed in accordance with the terms thereof.

 

“US Subsidiary”
shall mean a Subsidiary organized in a State of the United States.

 

“US  Swingline Commitment” shall mean the
commitment of the Swingline Lender to make loans pursuant to Section 2.17,
as the same may be reduced from time to time pursuant to Section 2.07
or Section 2.17.  The amount
of the US Swingline Commitment shall initially be $50 million, but in no event
shall exceed the Revolving Commitment.

 

“US  Swingline Lender” shall have the meaning
assigned to such term in the preamble hereto.

 

“US Swingline Loans”
shall mean any loan made by the US Swingline Lender pursuant to Section 2.17.

 

“Voting
Stock” shall mean, with respect to any person, any class or classes
of Equity Interests pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
Board of Directors of such person.

 

“Wholly
Owned Subsidiary” shall mean, as to any person, (a) any
corporation 100% of whose capital stock (other than directors’ qualifying
shares) is at the time owned by such person and/or one or more Wholly Owned
Subsidiaries of such person and (b) any partnership, association, joint
venture, limited liability company or other entity in which such person and/or
one or more Wholly Owned Subsidiaries of such person have a 100% equity
interest at such time.

 

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

 

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

 

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

 

48

 

meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights and (g) “on,”
when used with respect to the Mortgaged Property or any property adjacent to
the Mortgaged Property, means “on, in, under, above or about.”

 

SECTION 1.04.                                                 Accounting Terms; GAAP. 
Except as otherwise expressly provided herein, all financial statements
to be delivered pursuant to this Agreement shall be prepared in accordance with
GAAP as in effect from time to time and all terms of an accounting or financial
nature shall be construed and interpreted in accordance with GAAP, as in effect
on the date hereof unless otherwise agreed to by Borrowers and the Required
Lenders.

 

SECTION 1.05.                                                 Resolution of Drafting Ambiguities.  Each
Loan Party acknowledges and agrees that it was represented by counsel in
connection with the execution and delivery of the Loan Documents to which it is
a party, that it and its counsel reviewed and participated in the preparation
and negotiation hereof and thereof and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation hereof or thereof.

 

ARTICLE II.

THE CREDITS

 

SECTION 2.01.                                                 Commitments.  Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly as follows:

 

(a)                                  each US Revolving Lender agrees, severally
and not jointly, to make US Revolving Loans to US Borrowers, at any time and
from time to time on or after the Closing Date until the earlier of the
Business Day prior to the Revolving Maturity Date and the termination of the US
Revolving Commitment of such Lender in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding that will not (subject to
the provisions of Section 10.10 and Section 10.11)
result in such Lender’s US Revolving Exposure exceeding the lesser of (i) such
Lender’s US Revolving Commitment and (ii) such Lender’s Pro Rata
Percentage multiplied by the result of (A) the Borrowing Base then in
effect minus (B) the U.S. Minimum Availability Requirement;

 

(b)                                 [Intentionally omitted]; and

 

(c)                                  each Canadian Revolving Lender agrees, severally
and not jointly, to make Canadian Revolving Loans to Canadian Borrower, at any
time and from time to time on or after the Closing Date until the earlier of
the Business Day prior to the Revolving Maturity Date and the termination of
the Canadian Revolving Commitment of such Lender in accordance with the terms
hereof, in an aggregate principal amount at any time outstanding that will not
(subject to Section 10.10 and Section 10.11) result in
such Lender’s Canadian Exposure exceeding the lesser of (i) such Lender’s
Canadian Revolving Commitment and (ii) such Lender’s Pro Rata Percentage
multiplied by the result of (A) the Canadian Borrowing Base then in effect
minus (B) the Canadian Minimum Availability Requirement.

 

Within the limits set forth in clause (a) and
clause (c) above and subject to the terms, conditions and
limitations set forth herein, the relevant Borrower may borrow, pay or prepay
and reborrow Revolving Loans; provided that in no event shall any Borrower
request, and the relevant Revolving Lenders shall not have any obligation to
honor a request for, a Revolving Loan if (I) all US Revolving Exposure
outstanding at such time (including the requested US Revolving Loan) would
exceed the lesser of (A) the amount of the US Revolving Commitments or (B) the
amount of the Borrowing Base then in effect minus the U.S. Minimum Availability
Requirement, (II) all Canadian Exposure  outstanding
at such time (including the requested Canadian Revolving Loans) would exceed
the lesser of (A) the 

 

49

 

Canadian Revolving Commitments or (B) the Canadian Borrowing Base
then in effect minus the Canadian Minimum Availability Requirement, and (III) the
sum of all Lenders’ Revolving Exposures exceeds the Revolving Commitments.

 

Each request for a U.S. Revolving Loan or a
Canadian Revolving Loan by the relevant Borrower shall be deemed to be a
representation by such Borrower that such Loan so requested complies with the
applicable conditions set forth in this Section 2.01.

 

SECTION 2.02.                                                 Loans.

 

(a)                                  Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their applicable Commitments; provided,
that the failure of any Lender to make its Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any other Lender to make
any Loan required to be made by such other Lender).  Except for Loans deemed made pursuant to Section 2.18(e)(ii),
(A) ABR Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $500,000 and not less than $1.0
million or (ii) equal to the remaining available balance of the applicable
Commitments, (B) the Eurodollar Loans comprising any Borrowing shall be in
an aggregate principal amount that is (i) an integral multiple of $500,000
and not less than $1.0 million or (ii) equal to the remaining available
balance of the applicable Commitments, (C) Canadian Prime Rate Loans in
Canadian dollars comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of Can$100,000 and not less than
Can$1.0 million or (ii) equal to the remaining available balance of the
applicable Commitments and (D) Bankers’ Acceptances in Canadian dollars
comprising any Borrowing shall be in an aggregate principal amount that is (i) an
integral multiple of Can$100,000 and not less than Can$3.0 million or (ii) equal
to the remaining available balance of the applicable Commitments.

 

(b)                                 Reserved.

 

(c)                                  Subject to Section 2.11 and Section 2.12,
each Borrowing shall be comprised entirely of ABR Loans, Eurodollar Loans,
Canadian Prime Rate Loans or Bankers’ Acceptances as the applicable Borrower
may request pursuant to Section 2.03.  Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of such
Borrower to repay such Loan in accordance with the terms of this
Agreement.  Borrowings of more than one
Type may be outstanding at the same time; provided that such Borrower shall not be entitled to request
any Borrowing that, if made, would result in more than fifteen Eurodollar
Borrowings outstanding hereunder at any one time.  For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.

 

(d)                                 Except with respect to Loans deemed made
pursuant to Section 2.18(e)(ii), each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to such account in New York City or Toronto, as the
case may be, as the applicable Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the applicable Administrative
Agent shall promptly credit the amounts so received to an account as directed
by the Administrative Borrower in the applicable Borrowing Request maintained
with the applicable Administrative Agent or, if a Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Lenders.

 

50

 

(e)                                  Unless the applicable Administrative Agent
shall have received notice from a Lender prior to the date of any Borrowing
that such Lender will not make available to the applicable Administrative Agent
such Lender’s portion of such Borrowing, such Administrative Agent may assume
that such Lender has made such portion available to such Administrative Agent
on the date of such Borrowing in accordance with paragraph (c) above, and
such Administrative Agent may, in reliance upon such assumption, make available
to the applicable Borrower on such date a corresponding amount.  If the applicable Administrative Agent shall
have so made funds available, then, to the extent that such Lender shall not
have made such portion available to such Administrative Agent, each of such
Lender and the Borrowers severally agrees to repay to such Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the applicable
Borrower until the date such amount is repaid to such Administrative Agent at (i) in
the case of such Borrower, the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by such
Administrative Agent in accordance with banking industry rules on
interbank compensation.  If such Lender
shall repay to such Administrative Agent such corresponding amount, such amount
shall constitute such Lender’s Loan as part of such Borrowing for purposes of
this Agreement, and Borrowers’ obligation to repay such Administrative Agent
such corresponding amount pursuant to this Section 2.02(e) shall
cease.

 

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

 

SECTION 2.03.                                                 Borrowing Procedure.

 

(a)                                  Borrowings.  To request a Revolving
Borrowing, the Administrative Borrower shall deliver, by hand delivery or
telecopier, a duly completed and executed Borrowing Request to the applicable
Administrative Agent (i) in the case of a Eurodollar Borrowing in dollars
or a Bankers’ Acceptance, not later than 2:00 p.m., New York City time,
three Business Days before the date of the proposed Borrowing, (ii) in the
case of an ABR Borrowing, not later than 2:00 p.m., New York City time, on
the date of the proposed Borrowing or (iii) in the case of a Borrowing of
Canadian Prime Rate Loans, not later than 2:00 p.m., New York time, one
Business Day before the date of the proposed Borrowing.  Each Borrowing Request shall be irrevocable
and shall specify the following information in compliance with Section 2.02:

 

(i)                                     the aggregate amount and Approved Currency of
such Borrowing;

 

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

 

(iii)                               for US Revolving Loans, whether such
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing or, for Canadian
Revolving Loans, whether such Borrowing is to be by way of Bankers’ Acceptance
or Canadian Prime Rate Loan;

 

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

 

(v)                                 the name of the applicable Borrower and the
location and number of the applicable Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.02(d);
and

 

51

 

(vi)                              that the conditions set forth in Section 4.02(b) –
(h), as applicable, have been satisfied as of the date of the notice.

 

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

 

(b)                                 Bankers’ Acceptances.

 

(i)                                     Canadian Administrative Agent.  On
each date that a Bankers’ Acceptance is to be accepted hereunder, the Canadian
Administrative Agent  shall advise the
Canadian Borrower as to the Canadian Administrative Agent’s determination of
the applicable Discount Rate for the Bankers’ Acceptance which any of the
Canadian Revolving Lenders have agreed to accept and purchase.

 

(ii)                                  Purchase.  Each Canadian Revolving Lender
shall purchase a Bankers’ Acceptance accepted by it, and the Canadian Borrower
shall sell such Bankers’ Acceptance to such Canadian Revolving Lender at the
applicable Discount Rate.  The relevant
Canadian Revolving Lender shall provide to the Canadian Administrative Agent on
the date of the related Borrowing the Discount Proceeds less the Acceptance Fee
payable by the Canadian Borrower with respect to such Bankers’ Acceptance.

 

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

 

(iv)                              Power of Attorney for the Execution of
Bankers’ Acceptances.  To facilitate the issuance of Bankers’
Acceptances, the Canadian Borrower hereby appoints each Canadian Revolving
Lender as its attorney to sign and endorse on its behalf, in handwriting or
facsimile or mechanical signature as and when deemed necessary by such Canadian
Revolving Lender, blank forms of Bankers’ Acceptances.  In this respect, it is each  Canadian Revolving Lender’s responsibility to
maintain an adequate supply of blank forms of Bankers’ Acceptances for
acceptance under this Agreement.  The
Canadian Borrower recognizes and agrees that all Bankers’ Acceptances signed
and/or endorsed on its behalf by a Canadian Revolving Lender shall bind the Canadian
Borrower as fully and effectually as if signed in the handwriting of and duly
issued by the proper signing officers of the Canadian Borrower.  Each Canadian Revolving Lender is hereby
authorized to issue such Bankers’ Acceptances endorsed in blank in such face
amounts as may be determined by such Canadian Revolving Lender; provided that the aggregate amount thereof is equal to the
aggregate amount of Bankers’ Acceptances required to be accepted and purchased
by such Canadian Revolving Lender.  No
Canadian Revolving Lender shall be liable for any damage, loss or other claim
arising by reason of any loss or improper use of any such instrument except for
the gross negligence or willful misconduct of such Canadian Revolving
Lender.  Each Canadian Revolving Lender
shall maintain a record with respect to Bankers’ Acceptances held by it in
blank hereunder, voided by it for any reason, accepted and purchased by it
hereunder, and canceled at their respective maturities.

 

(v)                                 Execution.  Drafts drawn by the Canadian
Borrower to be accepted as Bankers’ Acceptances shall be signed by a duly
authorized officer or officers of the Canadian Borrower or 

 

52

 

by its attorneys-in-fact,
including attorneys-in-fact appointed pursuant to this Section.  Notwithstanding that any person whose
signature appears on any Bankers’ Acceptance may no longer be an authorized
signatory for the Canadian Borrower at the time of issuance of a Bankers’
Acceptance, that signature shall nevertheless be valid and sufficient for all
purposes as if the authority had remained in force at the time of issuance and
any Bankers’ Acceptance so signed shall be binding on the Canadian
Borrower.  Any executed drafts or orders
to be used as Bankers’ Acceptances shall be held in safekeeping with the same
degree of care as if they were Lender’s own property.

 

(vi)                              Issuance.  The Canadian Administrative
Agent, promptly following receipt of a Borrowing Request or Interest Election
Request for Bankers’ Acceptances, shall advise the Canadian Revolving Lenders
of the notice and the face amount of Bankers’ Acceptances to be accepted by it
and the applicable Interest Period (which shall be identical for all Canadian
Revolving Lenders).  The aggregate face
amount of Bankers’ Acceptances to be accepted by a Canadian Revolving Lender
shall be determined by reference to such Canadian Revolving Lender’s Canadian
Pro Rata Percentage of the issue of Bankers’ Acceptances, except that, if the
face amount of a Bankers’ Acceptance which would otherwise be accepted by a
Canadian Revolving Lender would not be Can$500,000 or a whole multiple thereof,
the face amount shall be increased or reduced by the Canadian Administrative
Agent in its sole discretion to Can$100,000, or the nearest whole multiple of
that amount, as appropriate; provided that
after such issuance, (i) no Canadian Revolving Lender shall have aggregate
outstanding Canadian Exposure in excess of its Canadian Revolving Commitment
and (ii) all Canadian Exposure  outstanding at
such time (including the requested issuance) would exceed the lesser of (A) the
Canadian Revolving Commitments or (B) the Canadian Borrowing Base then in
effect minus the Canadian Minimum Availability Requirement.

 

(vii)                           Waiver of Presentment and Other Conditions.  The
Canadian Borrower waives presentment for payment and any other defense to
payment of any amounts due to any Canadian Revolving Lender in respect of a
Bankers’ Acceptance accepted and purchased by it pursuant to this Agreement
which might exist solely by reason of the Bankers’ Acceptance being held, at
the maturity thereof, by such Canadian Revolving Lender in its own right and
the Canadian Borrower agrees not to claim any days of grace if the Canadian
Revolving Lender as holder sues or otherwise commences legal proceedings
against the Canadian Borrower on the Bankers’ Acceptance for payment of the
amount payable by the Canadian Borrower thereunder.

 

(viii)                        BA Equivalent Loans by Non-BA Lenders. 
Whenever the Canadian Borrower requests a Canadian Revolving Loan under
this Agreement by way of Bankers’ Acceptances, each Non-BA Lender (or, at its
option, any other Canadian Revolving Lender), shall, in lieu of accepting a
Bankers’ Acceptance, make a BA Equivalent Loan in an amount equal to such
Non-BA Lender’s Canadian Pro Rata Percentage of such Canadian Revolving Loan.

 

(ix)                                Terms Applicable to Discount Notes.  As
set out in the definition of “Bankers’ Acceptances”, that term includes
Discount Notes and BA Equivalent Loans not evidenced by Discount Notes and all
terms of this Agreement applicable to Bankers’ Acceptances shall apply equally
to BA Equivalent Loans and Discount Notes evidencing BA Equivalent Loans with
such changes as may in the context be necessary.  For greater certainty:

 

(1)                                  the term of a Discount Note shall be the same
as the Interest Period for Bankers’ Acceptances accepted and purchased on the
same date in respect of the same Canadian Revolving Loan;

 

53

 

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

 

(3)                                  the Discount Rate applicable to a Discount
Note shall be the Discount Rate applicable to BA Equivalent Loans made on the
same date in respect of the same Canadian Revolving Loan.

 

Notwithstanding the foregoing, it is
understood and agreed that any Non-BA Lender may agree, in lieu of receiving
any Discount Notes, that such Discount Notes may be uncertificated and the
applicable BA Equivalent Loan shall be evidenced by a loan account, which such
Non-BA Lender shall maintain in its name, and in such event such loan account
shall be entitled to all the benefits of Discount Notes in respect of BA
Equivalent Loans.

 

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

 

(xi)                                Prepayments and Mandatory Payments.  If
at any time any Bankers’ Acceptances are to be paid prior to their maturity,
the Canadian Borrower shall be required to deposit the face amount of such
Bankers’ Acceptances being prepaid in an interest-bearing cash collateral
account with the Canadian Administrative Agent until the date of maturity of
such Bankers’ Acceptances.  The cash
collateral account shall be under the sole control of the Canadian
Administrative Agent and shall be subject to no Liens, except for Liens in
favor of the Canadian Administrative Agent in its capacity as such.  Except as contemplated by this Section,
neither the Canadian Borrower nor any person claiming on its behalf shall have
any right to any of the cash in the cash collateral account.  The Canadian Administrative Agent shall apply
the cash held in the cash collateral account and interest earned thereon to the
face amount of such Bankers’ Acceptances at maturity, whereupon any cash
remaining in the cash collateral account shall be released by the Canadian
Administrative Agent to the Canadian Borrower.

 

(c)                                  Appointment of Administrative Borrower.  Each
Borrower hereby irrevocably appoints and constitutes Administrative Borrower as
its agent to request and receive Loans and Letters of Credit pursuant to this
Agreement in the name or on behalf of such Borrower.  The Administrative Agents and Lenders may
disburse the Loans to such bank account of Administrative Borrower or a
Borrower or otherwise make such Loans to a Borrower and provide such Letters of
Credit to a Borrower as Administrative Borrower may designate or direct,
without notice to any other Borrower or Guarantor.  Administrative Borrower hereby accepts the
appointment by Borrowers to act as the agent of Borrowers and agrees to ensure
that the disbursement of any Loans to a Borrower requested by or paid to or for
the account of such Borrower, or the issuance of any Letter of Credit for a
Borrower hereunder, shall be paid to or for the account of such Borrower.  Each Borrower hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from the Agents and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Loan Documents.  Any notice,
election, representation, warranty, agreement or undertaking by or on behalf of
any other Borrower by Administrative Borrower shall be deemed for all purposes
to have been made by such Borrower, as the case may be, and shall be binding
upon and enforceable against such Borrower to the same extent as if made
directly by such Borrower.  No purported
termination of the appointment of Administrative Borrower as agent as aforesaid
shall be effective, except after ten (10) days’ prior written notice to
Administrative Agents.

 

54

 

(d)                                 Additional Functions of Administrative
Borrower.  The Administrative Borrower operates a
centralized cash management system for the Borrowers and their Subsidiaries,
including the Borrowing Base Guarantor Intercompany Loan Amounts and all other
intercompany accounts owing among the Loan Parties.  All Loans or Letters of Credit requested by
the Administrative Borrower for ultimate use by Loan Parties other than LNT or
Canadian Borrower shall be drawn or obtained in the name of the Administrative
Borrower.  Upon request, Administrative
Borrower shall promptly confirm for the Administrative Agents that each Loan or
Letter of Credit has been issued in the name of the appropriate Borrower and,
in the event of any error, the respective records shall be adjusted without
prejudice to the rights of the Agents and Lenders.

 

SECTION 2.04.                                                 Evidence of Debt; Repayment of Loans.

 

(a)                                  Promise to Repay.  The
US Borrowers hereby unconditionally jointly and severally promise to pay (i) to
the US Administrative Agent for the account of each Revolving Lender, the then
unpaid principal amount of each US Revolving Loan of such Revolving Lender on
the Revolving Maturity Date, together with all other Obligations then due and
owing to such Revolving Lender and (ii) to the US Swingline Lender, the
then unpaid principal amount of each US Swingline Loan on the earlier of the
Revolving Maturity Date and the first date after such Swingline Loan is made
that is the 15th or last day of a calendar month and is at least two (2) Business
Days after such Swingline Loan is made; provided
that on each date that a US Revolving Loan is made, the US Borrowers shall
repay all US Swingline Loans that were outstanding on the date such Borrowing
was requested.  Canadian Borrower hereby
unconditionally promises to pay (i) to Canadian Administrative Agent for
the account of each Canadian Revolving Lender, the then unpaid principal amount
of each Canadian Revolving Loan of such Canadian Revolving Lender on the
Revolving Maturity Date, together with all other Canadian Obligations  then due and owing to such Canadian Revolving
Lender and (ii) to the Canadian Swingline Lender, the then unpaid
principal amount of each Canadian Swingline Loan on the earlier of the
Revolving Maturity Date and the first date after such Swingline Loan is made
that is the 15th or last day of a calendar month and is at least two
(2) Business Days after such Swingline Loan is made; provided that on each
date that a Canadian Revolving Loan is made, the Canadian Borrower shall repay
all Canadian Swingline Loans that were outstanding on the date such Borrowing
was requested.  All payments or
repayments of Loans made pursuant to this Section 2.04(a) shall
be made in the Approved Currency in which such Loan is denominated.  Any Letters of Credit outstanding on the
Revolving Maturity Date shall be cash collateralized in accordance with Section 2.18(i).

 

(b)                                 Lender and Administrative Agent Records.  Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the applicable Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.  The
applicable Administrative Agent shall maintain accounts in which it will record
(i) the amount and Approved Currency of each Loan made hereunder, the Type
and Class thereof, the name of the applicable Borrower and the Interest
Period applicable thereto; (ii) the amount of any principal or interest
due and payable or to become due and payable from the applicable Borrower to
each applicable Lender hereunder; and (iii) the amount of any sum received
by such Administrative Agent hereunder for the account of the applicable
Lenders and each such Lender’s share thereof. 
The entries made in the accounts maintained pursuant to this paragraph
shall be prima facie evidence of
the existence and amounts of the obligations therein recorded as well as the
Borrower which received such Loans or Letters of Credit; provided that the failure of any Lender or
such Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrowers to repay the Loans in
accordance with their terms.

 

55

 

(c)                                  Promissory Notes.  Any
Lender by written notice to Administrative Borrower (with a copy to the
Administrative Agents) may request that Loans of any Class made by it be
evidenced by a promissory note (unless already evidenced by a Bankers’ Acceptance).  In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) in the form of Exhibit K-1, K-2, K-3
or K-4 as the case may be. 
Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section 11.04)
be represented by one or more promissory notes in such form payable to the
order of the payee named therein (or, if such promissory note is a registered
note, to such payee and its registered assigns).

 

SECTION 2.05.                Fees.  In addition to the fees
payable as set forth in the Fee Letter, the following fees will be payable to
the Administrative Agent:

 

(a)                                  Commitment Fee.  The
Borrowers agree to pay to the applicable Administrative Agent for the account
of each Lender with a Revolving Commitment a commitment fee (a “Commitment Fee”) equal to the Applicable
Fee per annum on the average daily unused amount of each Revolving Commitment
of such Lender during the period from and including the date hereof to but
excluding the date on which such Revolving Commitment terminates.  Accrued Commitment Fees shall be payable in
arrears (A) on the last Business Day of March, June, September and December of
each year, commencing on the first such date to occur after the date hereof,
and (B) on the date on which such Revolving Commitment terminates.  Commitment Fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  For purposes of computing Commitment Fees
with respect to Revolving Commitments a Revolving Commitment of a Lender shall
be deemed to be used to the extent of the outstanding Revolving Loans and LC
Exposure of such Lender (and the Swingline Exposure of such Lender shall be
disregarded for such purpose).

 

(b)                                 US LC and Fronting Fees.  The
US Borrowers agree to pay (i) to the US Administrative Agent for the
account of each US Revolving Lender a participation fee (“Standby
LC Participation Fee”) with
respect to its participations in Standby Letters of Credit, which shall accrue
at a rate equal to the Applicable Margin from time to time used to determine
the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06
on the average daily amount of such Lender’s US LC Exposure (excluding any
portion thereof attributable to Reimbursement Obligations), as appropriate, during
the period from and including the Closing Date to but excluding the later of
the date on which such Lender’s US Revolving Commitment terminates and the date
on which such Lender ceases to have any US LC Exposure, (ii) to the US
Administrative Agent for the account of each US Revolving Lender a
participation fee (“Commercial LC
Participation Fee” and together with the Standby LC Participation
Fee, the “LC Participation Fee”) with respect to
its participation in Commercial Letters of Credit, which shall accrue at a rate
equal to the greater of (A) the Applicable Margin from time to time used
to determine the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06
on the average daily amount of such Lender’s US LC Exposure (excluding any portion
thereof attributable to Reimbursement Obligations), as appropriate, during the
period from and including the Closing Date to but excluding the later of the
date on which such Lender’s US Revolving Commitment terminates and the date on
which such Lender ceases to have any US LC Exposure minus 0.50% and (B) 0.50%,
and (iii) to the Issuing Bank a fronting fee (“Fronting Fee”), which shall accrue at the rate of 0.125% per
annum on the average daily amount of the US LC Exposure (excluding any portion
thereof attributable to Reimbursement Obligations) during the period from and
including the Closing Date to but excluding the later of the date of
termination of the US Revolving Commitments and the date on which there ceases
to be any US LC Exposure, as well as the Issuing Bank’s customary fees with
respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. 
Accrued LC Participation Fees and Fronting Fees under this clause 

 

56

 

(b) shall be payable in
arrears (i) on the last Business Day of March, June, September and December of
each year, commencing on the first such date to occur after the Closing Date,
and (ii) on the date on which the Revolving Commitments terminate.  Any such fees accruing after the date on
which the US Revolving Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand
therefor.  All LC Participation Fees and
Fronting Fees under this clause (b) shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  During the continuance of a Default, the LC
Participation Fee under this clause (b) shall be increased to a per annum
rate equal to 2% plus the otherwise applicable rate with respect thereto.

 

(c)                                  Canadian LC and Fronting Fees.  The
Canadian Borrower agrees to pay (i) to the Canadian Administrative Agent
for the account of each Canadian Revolving Lender a Standby LC Participation Fee with respect to
its participations in Standby Letters of Credit, which shall accrue at a rate
equal to the Applicable Margin from time to time used to determine the interest
rate on Eurodollar Revolving Loans pursuant to Section 2.06 on the
average daily amount of such Lender’s Canadian LC Exposure (excluding any
portion thereof attributable to Reimbursement Obligations), as appropriate,
during the period from and including the Closing Date to but excluding the
later of the date on which such Lender’s Canadian Revolving Commitment
terminates and the date on which such Lender ceases to have any Canadian LC
Exposure, (ii) to the Canadian Administrative Agent for the account of
each Canadian Revolving Lender a Commercial LC Participation Fee with respect
to its participation in Commercial Letters of Credit, which shall accrue at a
rate equal to the greater of (A) the Applicable Margin from time to time used
to determine the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06
on the average daily amount of such Lender’s Canadian LC Exposure (excluding
any portion thereof attributable to Reimbursement Obligations), as appropriate,
during the period from and including the Closing Date to but excluding the
later of the date on which such Lender’s Canadian Revolving Commitment
terminates and the date on which such Lender ceases to have any Canadian LC
Exposure minus 0.50% and (B) 0.50%, and (iii) to the Issuing
Bank a Fronting Fee, which shall accrue at the rate of 0.125% per annum on the
average daily amount of the Canadian LC Exposure (excluding any portion thereof
attributable to Reimbursement Obligations) during the period from and including
the Closing Date to but excluding the later of the date of termination of the
Canadian Revolving Commitments and the date on which there ceases to be any
Canadian LC Exposure, as well as the Issuing Bank’s customary fees with respect
to the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. 
Accrued LC Participation Fees and Fronting Fees under this clause (c) shall
be payable in arrears (i) on the last Business Day of March, June, September and
December of each year, commencing on the first such date to occur after
the Closing Date, and (ii) on the date on which the Canadian Revolving
Commitments terminate.  Any such fees
accruing after the date on which the Canadian Revolving Commitments terminate
shall be payable on demand.  Any other
fees payable to the Issuing Bank pursuant to this paragraph shall be payable
within 10 days after demand therefor. 
All LC Participation Fees and Fronting Fees under this clause (c) shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).  During the continuance of a
Default, the LC Participation Fee under this clause (c) shall be increased
to a per annum rate equal to 2% plus the otherwise applicable rate with respect
thereto.

 

(d)                                 All Fees shall be paid on the dates due, in
immediately available funds in dollars, to the applicable Administrative Agent
for distribution, if and as appropriate, among the applicable Lenders, except
that the Borrowers shall pay the Fronting Fees directly to the Issuing
Bank.  Once paid, none of the Fees shall
be refundable under any circumstances.

 

57

 

SECTION 2.06.                                                 Interest on Loans.

 

(a)                                  ABR Loans.  Subject to the provisions of Section 2.06(e),
the Loans comprising each ABR Borrowing, including each Swingline Loan, shall
bear interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin in effect from time to time.

 

(b)                                 Canadian Prime Rate Loans. 
Subject to Section 2.06(e), the Loans comprising each
Canadian Prime Rate Borrowing shall bear interest at a rate per annum equal to
the Canadian Prime Rate plus the Applicable Margin in effect from time to time.

 

(c)                                  Eurodollar Loans. 
Subject to the provisions of Section 2.06(e), the Loans
comprising each Eurodollar Borrowing shall bear interest at a rate per annum
equal to the Adjusted LIBOR Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin in effect from time to time.

 

(d)                                 Bankers’ Acceptances. 
Subject to Section 2.06(e), upon acceptance of a Bankers’
Acceptance by a Lender, Canadian Borrower shall pay to Canadian Administrative
Agent on behalf of such Lender a fee (the “Acceptance Fee”)
calculated on the face amount of such Bankers’ Acceptance at a rate per annum
equal to the Applicable Margin on the basis of the number of days in the
Interest Period applicable to such Bankers’ Acceptance and a year of 365 or 366
days, as applicable.

 

(e)                                  Default Rate. 
Notwithstanding the foregoing, during an Event of Default, all
Obligations shall, to the extent permitted by applicable law and without
further notice, motion or application to, hearing before, or order from the U.S.
Bankruptcy Court, bear interest, after as well as before judgment, at a per
annum rate equal to (i) in the case of principal and premium, if any, of
or interest on any Loan, 2% plus
the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section 2.06 or (ii) in the case of any
other amount, 2% plus the rate
applicable to ABR Revolving Loans in the case of Borrowings in dollars, or
Canadian Prime Rate Loans, in the case of Borrowings in Canadian dollars, as
provided in Section 2.06(a) or (b), respectively (in
either case, the “Default Rate”).

 

(f)                                    Interest Payment Dates. 
Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided
that (i) interest accrued pursuant to Section 2.06(e) shall
be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Revolving Loan, Canadian Prime Rate
Loan or a Swingline Loan without a permanent reduction in Revolving
Commitments), accrued interest on the principal amount repaid or prepaid shall
be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion; provided  further, that in
addition to the foregoing, interest shall be payable on each of (x) the
date upon which all Commitments have been terminated and the Loans are to have
been repaid in full in cash and (y) the Revolving Maturity Date.

 

(g)                                 Interest Calculation.  All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate, the Canadian
Prime Rate or Bankers’ Acceptances shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).  The applicable Alternate Base
Rate, Adjusted LIBOR Rate, Canadian Prime Rate or Acceptance Fee shall be
determined by the applicable Administrative Agent in accordance with the
provisions of this Agreement and such determination shall be conclusive absent
manifest error.

 

58

 

(h)                                 Currency for Payment of Interest.  All
interest paid or payable pursuant to this Section 2.06 shall be
paid in the Approved Currency in which the Loan giving rise to such interest is
denominated.

 

(i)                                     Interest Act (Canada).  For
the purposes of the Interest Act (Canada),
in any case in which an interest or fee rate is stated in this Agreement to be
calculated on the basis of a number of days that is other than the number in a
calendar year, the yearly rate, to which such interest or fee rate is
equivalent, is equal to such interest or fee rate multiplied by the actual
number of days in the year in which the relevant interest or fee payment
accrues and divided by the number of days used as the basis for such
calculation.

 

SECTION 2.07.                                                 Termination and Reduction of Commitments.

 

(a)                                  Termination of Commitments.  The
Revolving Commitments, the US Swingline Commitment, the Canadian Swingline
Commitment and the LC Commitment shall automatically terminate on the Revolving
Maturity Date.

 

(b)                                 Optional Terminations and Reductions.  At
their option, Borrowers may at any time terminate, or from time to time
permanently reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of
any Class shall be in an amount that is an integral multiple of $1.0
million and not less than $5.0 million and (ii) the Revolving Commitments
shall not be terminated or reduced if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.10,
the aggregate amount of Revolving Exposures would exceed the aggregate amount
of Revolving Commitments.  Any permanent
reduction of the Revolving Commitment may result in a pro rata permanent
reduction in the Canadian Revolving Commitments, as determined by the
Administrative Agents and the Borrowers.

 

(c)                                  Notice by the Borrowers.  The
applicable Borrower shall notify the applicable Administrative Agent in writing
of any election to terminate or reduce the Commitments under Section 2.07(b) at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice,
such Administrative Agent shall advise the Lenders of the contents
thereof.  Each notice delivered by such
Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by any Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by such Borrower (by notice to such Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied.  Any termination or reduction
of the Commitments of any Class shall be permanent.  Each reduction of the Commitments of any Class shall
be made ratably among the Lenders in accordance with their respective
Commitments of such Class.

 

SECTION 2.08.                                                 Interest Elections.

 

(a)                                  Generally.  Each Revolving Borrowing,
including each Canadian Revolving Borrowing, initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurodollar
Borrowing and a Bankers’ Acceptance, shall have an initial Interest Period as
specified in such Borrowing Request.  Thereafter,
the applicable Borrower may elect to convert such Borrowing to a different Type
or to rollover or continue such Borrowing and, in the case of a Eurodollar
Borrowing or a Bankers’ Acceptance, may elect Interest Periods therefor, all as
provided in this Section (except that only the Canadian Borrower may elect
Canadian Prime Rate Borrowings or Bankers’ Acceptances).  Borrowings consisting of Canadian Revolving
Loans may only be converted to a different Type of Canadian Revolving
Loan.  The applicable Borrower may elect
different options 

 

59

 

with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.  Notwithstanding
anything to the contrary, the applicable Borrower shall not be entitled to
request any conversion, rollover or continuation that, if made, would result in
more than fifteen Eurodollar Borrowings or Bankers’ Acceptances having more
than fifteen different Interest Periods being outstanding hereunder at any one
time.  During the existence of a Default,
no Loans may be requested as, converted to or continued as Eurodollar
Borrowings without the consent of the Administrative Agent.  This Section shall not apply to
Borrowings of Swingline Loans, which may not be converted or continued.

 

(b)                                 Interest Election Notice.  To
make an election pursuant to this Section, the applicable Borrower shall
deliver, by hand delivery or telecopier, a duly completed and executed Interest
Election Request to the applicable Administrative Agent not later than the time
that a Borrowing Request would be required under Section 2.03 if
such Borrower were requesting a Revolving Borrowing of the Type resulting from
such election to be made on the effective date of such election.  Each Interest Election Request shall be
irrevocable.  Each Interest Election
Request shall specify the following information in compliance with Section 2.02:

 

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

 

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

 

(iii)                               the Approved Currency of the resulting
Borrowing;

 

(iv)                              whether the resulting Borrowing is to be an
ABR Borrowing, Canadian Prime Rate Borrowing, a Eurodollar Borrowing or an
advance by way of Bankers’ Acceptance; and

 

(v)                                 if the resulting Borrowing is a Eurodollar
Borrowing or an advance by way of Bankers’ Acceptance, the Interest Period to
be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

 

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

 

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

 

(c)                                  Automatic Conversion to ABR Borrowing or
Canadian Prime Rate Borrowings.  If an Interest Election Request with respect
to a Eurodollar Borrowing or a Bankers’ Acceptance is not timely delivered
prior to the end of the Interest Period applicable thereto, then, unless such Borrowing
or Bankers’ Acceptance is repaid as provided herein, at the end of such
Interest Period such Eurodollar Borrowing or Bankers’ Acceptance shall be
converted to (i) in the case of a Eurodollar Borrowing, an ABR Borrowing
and (ii) in the case of a Bankers’ Acceptance, a Canadian Prime Rate
Borrowing.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing, the
applicable Administrative Agent or the Required Lenders may require, by notice
to the applicable 

 

60

 

Borrower, that (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing or a Bankers’ Acceptance and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing and each Banker’s Acceptance
shall be converted into a Canadian Prime Rate Loan, in each case, at the end of
the Interest Period applicable thereto.

 

SECTION 2.09.                                                 [Intentionally Deleted].

 

SECTION 2.10.                                                 Optional and Mandatory Prepayments of Loans.

 

(a)                                  Optional Prepayments.  Each
Borrower shall have the right at any time and from time to time to prepay any
Borrowing, in whole or in part, subject to the requirements of this Section 2.10
and subject to the provisions of Section 9.02(g); provided that each partial prepayment
shall be in an amount that is an integral multiple of $1.0 million (or, if
applicable, Can$100,000) and not less than $3.0 million (or, if applicable,
Can$1.0 million) or, if less, the outstanding principal amount of such Borrowing.

 

(b)                                 Certain Revolving Loan Prepayments.

 

(i)                                     In the event of the Termination Declaration
or a termination of the Revolving Commitment, each Borrower shall, on the date
of such termination, repay or prepay all its outstanding Revolving Borrowings
and all outstanding Swingline Loans and replace all outstanding Letters of
Credit or cash collateralize all outstanding Letters of Credit in accordance
with the procedures set forth in Section 2.18(i) together with
all other Obligations then due and owing.

 

(ii)                                  In the event of any partial reduction of the
Revolving Commitments, then (x) at or prior to the effective date of such
reduction, the Administrative Agents shall notify Borrowers and the Revolving
Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if
the sum of the Revolving Exposures would exceed the aggregate amount of
Revolving Commitments after giving effect to such reduction, then Borrowers
shall, on the date of such reduction, first,
repay or prepay Swingline Loans, second,
repay or prepay Revolving Borrowings and third,
replace outstanding Letters of Credit or cash collateralize outstanding Letters
of Credit in accordance with the procedures set forth in Section 2.18(i),
in an aggregate amount sufficient to eliminate such excess.

 

(iii)                               In the event that (x) the sum of all
Lenders’ Revolving Exposures exceeds the Revolving Commitments (including on
any date on which Dollar Equivalents are determined pursuant to Section 11.17),
(y) the sum of all Lenders’ US Revolving Exposures exceeds the US
Revolving Commitments (including on any date on which Dollar Equivalents are
determined pursuant to Section 11.17) or (z) the sum of all
Lenders’ Canadian Exposures exceeds the Canadian Revolving Commitments
(including on any date on which Dollar Equivalents are determined pursuant to Section 11.17),
then, in each case, Borrowers shall, without notice or demand, immediately first, repay or prepay Revolving
Borrowings, and second, replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance with the procedures set forth in Section 2.18(i),
in an aggregate amount sufficient to eliminate such excess.

 

(iv)                              In the event that the aggregate LC Exposure
exceeds the LC Commitment then in effect (including on any date on which Dollar
Equivalents are determined pursuant to Section 11.17), the
applicable Borrowers shall, without notice or demand, immediately replace
outstanding Letters of Credit or cash collateralize outstanding Letters of
Credit in accordance 

 

61

 

with the procedures set
forth in Section 2.18(i), in an aggregate amount sufficient to
eliminate such excess.

 

(v)                                 In the event that (x) the sum of all
Lenders’ US Revolving Exposures exceeds the result of (I) the Borrowing
Base then in effect minus (II) the U.S. Minimum Availability Requirement
or (y) the sum of all Lenders’ Canadian Exposures exceeds the result of (I) the
Canadian Borrowing Base then in effect minus (II) the Canadian Minimum
Availability Requirement, the Borrowers shall, without notice or demand,
immediately apply an amount equal to such excess to prepay the Loans and any
interest accrued thereon, in accordance with Section 2.10(f) in
an amount sufficient to eliminate such excess.

 

(vi)                              So long as no Event of Default has occurred
and is continuing, each Borrower shall pay, and shall cause each of the other
Loan Parties to pay, all proceeds of (A) DIP Priority Collateral (and,
subject to the Order and, if applicable, the Leasehold Intercreditor Agreement,
proceeds of any other Collateral) into the US Collection Account, for
application in accordance with Section 9.02(g)(i) and (B) Collateral
of Canadian Loan Parties into the Canadian Collection Account, for application
in accordance with Section 9.02(g)(ii).

 

(vii)                           Borrowings by way of Bankers’ Acceptance may
only be prepaid by cash collateralizing the same in accordance with Section 2.03(b)(xi).

 

(c)                                  Asset Sales.  Upon the receipt of any
proceeds of any Asset Sale by Holdings or any of its Subsidiaries and, with
respect to the Debtors, solely to the extent the assets sold in connection
therewith constitute DIP Priority Collateral, including, without limitation,
the proceeds from Permitted Store Closings (and, subject to the Order and, if
applicable, the Leasehold Intercreditor Agreement, proceeds of any other
Collateral), the Borrowers shall apply 100% of such proceeds to the
Obligations, as provided in Section 2.10(f) below.

 

(d)                                 Casualty Events.  Not
later than one Business Day following the receipt of any proceeds from a
Casualty Event by Holdings or any of its Subsidiaries and, to the with respect
to the Debtors, solely to the extent the assets subject to such 

Casualty Event constitute DIP Priority Collateral (and, subject to the Order
and, if applicable, the Leasehold Intercreditor Agreement, proceeds of any
other Collateral), the Borrowers shall apply 100% of such proceeds to the
Obligations, as provided in Section 2.10(f) below.

 

(e)                                  [Intentionally Deleted].

 

(f)                                    Application of Prepayments.

 

(i)                                     Prior to any optional prepayment hereunder,
Borrowers shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to Section 2.10(g),
subject to the provisions of this Section 2.10(f).  Any mandatory prepayments (other than those
required by Section 2.10(b)) shall be applied (i) so long as
no Termination Declaration has occurred, in accordance with Section 9.02(g) and
(ii) at any time after a Termination Declaration, in accordance with Section 8.03.

 

(ii)                                  [intentionally
omitted].

 

(iii)                               Amounts to be applied pursuant to Section 2.10(b) to
the prepayment of Revolving Loans shall, in the absence of direction from the
Borrowers pursuant to Section 2.10(g)(i), be applied to the prepayment of
the ABR Loans and Canadian Prime Rate Loans in the 

 

62

 

discretion of the
Administrative Agents.  Any amounts
remaining after each such application shall be applied to prepay Eurodollar
Revolving Loans or Bankers’ Acceptances, as applicable.  Notwithstanding the foregoing, if the amount
of any prepayment of Loans required under this Section 2.10 shall
be in excess of the amount of the ABR Loans and Canadian Prime Rate Loans at
the time outstanding (an “Excess Amount”),
only the portion of the amount of such prepayment as is equal to the amount of
such outstanding ABR Loans and Canadian Prime Rate Loans shall be immediately
prepaid and, at the election of the applicable Borrower, the Excess Amount
shall be either (A) deposited in an escrow account on terms satisfactory
to the applicable Collateral Agents and applied to the prepayment of Eurodollar
Loans or Bankers’ Acceptances on the last day of the then next-expiring
Interest Period for the applicable Eurodollar Loans or Bankers’ Acceptances, as
the case may be; provided that (i) interest
in respect of such Excess Amount shall continue to accrue thereon at the rate
provided hereunder for the Loans which such Excess Amount is intended to repay
until such Excess Amount shall have been used in full to repay such Loans and (ii) at
any time while a Default has occurred and is continuing, the Administrative
Agent may, and upon written direction from the Required Lenders shall, apply
any or all proceeds then on deposit to the payment of such Loans in an amount
equal to such Excess Amount or (B) prepaid immediately, together with any
amounts owing to the Lenders under Section 2.13.

 

(g)                                 Notice of Prepayment.  The
applicable Borrower shall notify the applicable Administrative Agent (and, in
the case of prepayment of a Swingline Loan, the applicable Swingline Lender) by
written notice of any prepayment hereunder (i) in the case of prepayment
of a Eurodollar Borrowing or Bankers’ Acceptances, not later than 11:00 a.m.,
New York City time, three Business Days before the date of prepayment, (ii) in
the case of prepayment of an ABR Borrowing or a Canadian Prime Rate Loan, not
later than 1:00 p.m., New York City time, one Business Day before the date
of prepayment and (iii) in the case of prepayment of a Swingline Loan, not
later than 2:00 p.m., New York City time, on the date of prepayment.  Each such notice shall be irrevocable; provided that, if a notice of prepayment
is given in connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.07, then such notice of
prepayment may be revoked if such termination is revoked in accordance with Section 2.07.  Each such notice shall specify the prepayment
date, the principal amount of each Borrowing or portion thereof to be prepaid
and, in the case of a mandatory prepayment, a reasonably detailed calculation
of the amount of such prepayment. 
Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), such Administrative Agent shall advise the
Lenders of the contents thereof.  Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of a Credit Extension of the same Type as provided in Section 2.02,
except as necessary to apply fully the required amount of a mandatory
prepayment.  Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing and otherwise in accordance with this Section 2.09.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.06.

 

SECTION 2.11.                                                 Alternate Rate of Interest.

 

(a)                                  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

 

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

 

(ii)                                  the applicable Administrative Agent is
advised in writing by the Required Lenders that the Adjusted LIBOR Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans included in such Borrowing for
such Interest Period;

 

63

 

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

 

(b)                                 If prior to the commencement of any Interest
Period relating to a Bankers’ Acceptance, the Canadian Administrative Agent
determines (which determination shall be final and conclusive absent manifest
error) that, by reason of circumstances affecting the money markets, there is
no active market for Bankers’ Acceptances or the demand for Bankers’
Acceptances is insufficient to allow the sale or trading of the Bankers’
Acceptances to be created hereunder, then:

 

(i)                                     the right of the Canadian Borrower to request
a Canadian Revolving Loan by means of a Bankers’ Acceptance shall be suspended
until such time as the Canadian Administrative Agent determines that the circumstances
causing such suspension no longer exist and the Canadian Administrative Agent
so notifies the Canadian Borrower;

 

(ii)                                  any Borrowing Request which calls for the
issuance of a Bankers’ Acceptance which is outstanding shall be cancelled and
such Borrowing Request shall be deemed to be a request for a Canadian Prime
Rate Loan in the face amount of the requested Bankers’ Acceptance;

 

(iii)                               any outstanding Interest Election Request
requesting a conversion of a Canadian Prime Rate Loan into Bankers’ Acceptances
or BA Equivalent Loan shall be deemed to be revoked; and

 

(iv)                              any outstanding Interest Election Request
requesting a rollover of Bankers’ Acceptances or BA Equivalent Loans shall
(unless revoked by the Canadian Borrower before the Borrowing) be deemed to be
an Interest Election Request requesting a conversion of such Loans into
Canadian Prime Rate Loans.

 

SECTION 2.12.                                                 Yield Protection.

 

(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 credit
extended or participated in, by any Lender (except any reserve requirement
reflected in the Adjusted LIBOR Rate) or the Issuing Bank;

 

(ii)                                  subject any Lender or the Issuing Bank 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 Eurodollar Loan made by
it or any Bankers’ Acceptance purchased or accepted by it, or change the basis
of taxation of payments to such Lender or the Issuing Bank in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 2.15
and the imposition of, or any change in the rate of, any Excluded Tax payable
by such Lender or the Issuing Bank); or

 

(iii)                               impose on any Lender or the Issuing Bank or
the London interbank market any other condition, cost or expense (other than
any Taxes) affecting this Agreement or Eurodollar 

 

64

 

Loans made by such Lender or
any Bankers’ Acceptance purchased or accepted by such Lender or any Letter of
Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan or purchasing or accepting any Bankers’
Acceptance), or to increase the cost to such Lender, the Issuing Bank or such
Lender’s or the Issuing Bank’s holding company, if any, 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 Bank hereunder
(whether of principal, interest or any other amount), then, upon request of
such Lender or the Issuing Bank, the applicable Borrower will pay to such
Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank, as the case may be,
for such additional costs incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If
any Lender or the Issuing Bank determines (in good faith, but in its sole
absolute discretion) that any Change in Law affecting such Lender or the
Issuing Bank or any lending office of such Lender or such Lender’s or the
Issuing Bank’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 Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s
holding company, if any, as a consequence of this Agreement, the Commitments of
such Lender or the Loans made by, the Bankers’ Acceptances purchased or accepted
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Bank, to a level below that which such Lender
or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or
the Issuing Bank’s holding company with respect to capital adequacy), then from
time to time the applicable Borrower will pay to such Lender or the Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding
company for any such reduction suffered.

 

(c)                                  Certificates for Reimbursement.  A
certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company,
as the case may be, as specified in paragraph (a) or (b) of this Section 2.12
and delivered to the applicable Borrower shall be conclusive absent manifest
error.  The applicable Borrower shall pay
such Lender or the Issuing Bank, as the case may be, the amount shown as due on
any such certificate within 10 days after receipt thereof.

 

(d)                                 Delay in Requests. 
Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section 2.12 shall not constitute a
waiver of such Lender’s or the Issuing Bank’s right to demand such
compensation; provided that
Borrowers shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs incurred or reductions
suffered more than nine months prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the applicable Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s or the Issuing Bank’s intention to claim compensation therefor (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 2.13.                                                 Breakage Payments.  In
the event of (a) the payment or prepayment, whether optional or mandatory,
of any principal of any Eurodollar Loan earlier than the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any 

 

65

 

Eurodollar
Loan earlier than the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any Revolving Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
prepayment notice is later revoked in accordance with Section 2.10(g))
or (d) the assignment of any Eurodollar Loan earlier than the last day of
the Interest Period applicable thereto as a result of a request by Borrowers
pursuant to Section 2.16(b), then, in any such event, the
applicable Borrower shall compensate each applicable Lender for the loss, cost
and expense attributable to such event. 
In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on
the principal amount of such Loan had such event not occurred, at the Adjusted
LIBOR Rate that would have been applicable to such Loan, for the period from
the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market.  A certificate of any Lender setting forth in
reasonable detail any amount or amounts that such Lender is entitled to receive
pursuant to this Section 2.13 shall be delivered to the applicable
Borrower (with a copy to the Administrative Agents) and shall be conclusive and
binding absent manifest error.  The
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 5 days after receipt thereof.

 

SECTION 2.14.                                                 Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.

 

(a)                                  Payments Generally. 
Borrowers shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
Reimbursement Obligations, or of amounts payable under Section 2.12,
Section 2.13, Section 2.15 or Section 11.03,
or otherwise) on or before the time expressly required hereunder or under such
other Loan Document for such payment (or, if no such time is expressly
required, prior to 4:00 p.m., New York City time), on the date when due,
in immediately available funds, without setoff, deduction or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the applicable Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of calculating
interest thereon.  All such payments
shall be made to the applicable Administrative Agent at the office designated
by it from time to time, except payments to be made directly to the Issuing
Bank or a Swingline Lender as expressly provided herein and except that
payments pursuant to Section 2.12, Section 2.13, Section 2.15
and Section 11.03 shall be made directly to the persons entitled
thereto and payments pursuant to other Loan Documents shall be made to the
persons specified therein.  The applicable
Administrative Agent shall distribute any such payments received by it for the
account of any other person to the appropriate recipient promptly following
receipt thereof.  If any payment under
any Loan Document shall be due on a day that is not a Business Day, unless
specified otherwise, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.  All payments under each Loan Document shall
be made in dollars, except as expressly specified otherwise.

 

(b)                                 Pro Rata Treatment.

 

(i)                                     Each payment by Borrowers of interest in
respect of its Loans shall be applied to the amounts of such Borrower’s
obligations owing to the applicable Lenders pro
rata according to the respective amounts then due and owing to such
Lenders.

 

66

 

(ii)                                  Each payment by Borrowers on account of
principal of the Revolving Borrowings shall be made to the applicable Lenders pro rata based on the principal amounts of
the Revolving Loans then held by the Lenders.

 

(c)                                  Insufficient Funds.  If
at any time insufficient funds are received by and available to the applicable
Administrative Agent to pay fully all amounts of principal, Reimbursement
Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of interest and fees then due to such parties and (iii) second, toward payment of principal and
Reimbursement Obligations then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and Reimbursement
Obligations then due to such parties.

 

(d)                                 Sharing of Set-Off. 
Subject to the terms of the Intercreditor Agreement, if any Lender
(and/or the Issuing Bank, which shall be deemed a “Lender” for purposes of this
Section 2.14(d)) 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 resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of its Loans and
accrued interest thereon or other Obligations greater than its pro  rata
share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the applicable Administrative Agent of such
fact, and (b) purchase (for cash at face value) participations in the
Loans and such other obligations of the other applicable Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the applicable 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:

 

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

 

(ii)                                  the provisions of this paragraph shall not
apply to (x) any application of proceeds and any payment made by Borrowers
pursuant to and in accordance with the express terms of this Agreement or (y) any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Loans or participations in LC Disbursements to
any assignee or participant, other than to Borrowers or any Subsidiary thereof
(as to which the provisions of this paragraph shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it
may effectively do so under applicable Requirements of Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan
Party in the amount of such participation. 
If under applicable bankruptcy, insolvency or any similar law any
Secured Party receives a secured claim in 

lieu of a setoff or counterclaim to which this Section 2.14(d) applies,
such Secured Party shall to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights to which
the Secured Party is entitled under this Section 2.14(d) to
share in the benefits of the recovery of such secured claim.

 

(e)                                  Borrowers Default. 
Unless the applicable Administrative Agent shall have received notice
from any Borrower prior to the date on which any payment is due to such
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that Borrowers will not make such payment, the Administrative Agent
may assume that such Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
or the Issuing Bank, as the case may be, the amount due.  In such event, if the applicable Borrower has

 

67

 

not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the applicable Administrative Agent forthwith on
demand the amount so distributed to such Lender or the Issuing Bank with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by such Administrative Agent in accordance with banking industry rules on
interbank compensation.

 

(f)                                    Lender Default.  If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 

2.02(c), Section 2.14(e), Section 2.17(d), Section 2.18(d),
Section 2.18(e) or Section 11.03(c), then the
applicable Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by such
Administrative Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are
fully paid.

 

SECTION 2.15.                                                 Taxes.

 

(a)                                  Payments Free of Taxes.  Any
and all payments by or on account of any obligation of the Loan Parties
hereunder or under any other Loan Document shall be made free and clear of and
without deduction or withholding for any Indemnified Taxes or Other Taxes; provided
that if the Loan Parties shall be required by applicable Requirements of 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) the applicable Administrative Agent, the
applicable Collateral Agent, Lender or Issuing Bank, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the applicable Loan Party shall make such
deductions and (iii) the applicable Loan Party shall timely pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable Requirements of Law.

 

(b)                                 Payment of Other Taxes by Borrowers. 
Without limiting the provisions of paragraph (a) above, Borrowers
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable Requirements of Law.

 

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

 

(d)                                 Evidence of Payments.  As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
Borrowers to a Governmental Authority, Borrowers shall deliver to the
Administrative Agents 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 Agents.

 

(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 US Borrowers are
resident for 

 

68

 

tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or
under any other Loan Document shall, to the extent it may lawfully do so,
deliver to US Borrowers (with a copy to the Administrative Agents), at the time
or times prescribed by applicable Requirements of Law or as reasonably
requested by US Borrowers or the Administrative Agents, such properly completed
and executed documentation prescribed by applicable Requirements of 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 US Borrowers or either Administrative Agent, shall deliver such
other documentation prescribed by applicable Requirements of Law or reasonably
requested by US Borrowers or the Administrative Agents as will enable US
Borrowers or the Administrative Agents to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in
the above two sentences, in the case of non-U.S. withholding taxes the
completion, execution and submission of non-U.S. forms shall not be required if
in the Lender’s judgment such completion, execution or submission would subject
such Lender to any material unreimbursed cost or expense or would be otherwise
disadvantageous to such Lender in any material respect.

 

Each initial Canadian Lender of the Canadian
Borrower represents and warrants to the Canadian Borrower that on the Closing
Date (a) (i)  it is not a “non-resident” within the meaning of the
ITA; or (ii) it is an “authorized foreign bank” within the meaning of the Bank Act (Canada) for purposes of the ITA,
and is entering into this Agreement in the ordinary course of its trade and
business that is its “Canadian banking business” for purposes of the ITA, and
each amount paid or credited by or to it in respect of the transactions
contemplated hereunder is, and will be brought into account and recorded and
reported in computing its income for Canadian tax purposes as having been made
or received as the case may be, in respect of its “Canadian banking business”
as so defined; and (b) has no present intention to withdraw from this
Agreement.  Upon the written request of
the Canadian Administrative Agent or the Canadian Borrower acting reasonably,
each such Canadian Lender shall use its best efforts to deliver to the Canadian
Administrative Agent and Canadian Borrower such certificates, documents or
other evidence as may be required from time to time, properly completed and
duly executed by such Canadian Lender, to confirm the continuing accuracy of
the foregoing representation or alternatively, shall deliver a notice to the
Canadian Borrower indicating the facts and circumstances (other than facts and
circumstances brought about unilaterally by such Canadian Lender) which have
resulted in the above representation and warranty no longer continuing to be
true and accurate.  If such Canadian
Lender fails to deliver such requested certificates, documents, other evidence
on the one hand, or such notice on the other or, for greater certainty, the
facts and circumstances relating to the change of the status of the Canadian Lender
have been brought about unilaterally by such Canadian Lender, then the Canadian
Borrower or the Canadian Administrative Agent, as the case may be, shall
withhold from any interest payment to such Canadian Lender an amount equivalent
to the applicable Canadian withholding tax imposed by applicable Canadian laws
(including any applicable tax treaty) and the Canadian Borrower shall not be
required to pay any additional or other amounts to such Canadian Lender under Section 2.15(a).  From time to time, each such Canadian Lender
shall (i) promptly submit to the Canadian Administrative Agent and the
Canadian Borrower such certificates, documents, other evidence or notice as
aforesaid, (ii) promptly notify the Canadian Administrative Agent and the
Canadian Borrower of any change in circumstances which would result in the
above representation and warranty no longer continuing to be true and accurate,
and (iii) take such steps as shall not be materially disadvantageous to
it, in the reasonable judgment of such Canadian Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable laws that the Canadian Borrower make any
deduction or withholding for Taxes from amounts payable to such Canadian
Lender.  Notwithstanding the foregoing,
but subject to Section 11.04(b)(v), the Borrowers acknowledge that
the rights and obligations of a Canadian Lender hereunder may be assigned to an
Eligible Assignee that does not qualify as an Eligible Canadian Lender and
further agree that any Borrower approval required in respect of such an
assignment shall not be withheld on such basis.

 

69

 

Without limiting the generality of any of the
foregoing, any Foreign Lender shall, to the extent it may lawfully do so,
deliver to US Borrowers and the Administrative Agents (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 Administrative Borrower or either 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 of America 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, in substantially the form of Exhibit Q,
or any other form approved by the applicable Administrative Agent, 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
Requirements of 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 Requirements of
Law to permit Borrower to determine the withholding or deduction required to be
made.

 

(v)                                 any Lender that is not a Foreign Lender and
has not otherwise established to the reasonable satisfaction of the
Administrative Borrower and the Administrative Agent that it is an exempt
recipient (as defined in Section 6049(b)(4) of the Code and the
regulations thereunder) shall deliver to the Administrative Borrower (with a
copy to the US Administrative Agent) on or prior to the date on which such
Lender becomes a Lender under this Agreement (and from time to time thereafter
as prescribed by Applicable Law or upon the request of the Administrative
Borrower or the US Administrative Agent) two duly executed and properly
completed copies of Internal Revenue Service Form W-9 (or applicable
successor form).  Each Lender (other than
a Foreign Lender) shall promptly notify the Administrative Borrower and the US
Administrative Agent at any time that it determines any previously delivered
form or certification is no longer accurate.

 

Each Foreign Lender shall promptly notify the
Administrative Borrower and each Administrative Agent at any time that a
previously delivered form of certificate is no longer accurate.

 

(f)                                    Treatment of Certain Refunds.  If
either Administrative Agent, a Lender or the Issuing Bank determines, in its
sole discretion, that it has received a refund of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by Borrowers or with respect to
which Borrowers have paid additional amounts pursuant to this Section, it shall
pay to Borrowers an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by Borrowers under this Section with
respect to the Indemnified Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses of such Administrative Agent, such Lender or
the Issuing Bank, 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 Borrowers, upon the
request of either Administrative Agent, such Lender or the Issuing Bank, agrees
to repay the amount paid over to Borrowers (plus any penalties, 

 

70

 

interest or other charges
imposed by the relevant Governmental Authority) to such Administrative Agent,
such Lender or the Issuing Bank in the event such Administrative Agent, such
Lender or the Issuing Bank is required to repay such refund to such
Governmental Authority.  If and to the
extent that any Lender is able, in its sole opinion, to apply or otherwise take
advantage of any offsetting tax credit or other similar tax benefit arising out
of or in conjunction with any deduction or withholding which gives rise to an
obligation of a Borrower to pay any additional amount pursuant to this Section 2.15,
then such Lender shall, to the extent that in its sole opinion it can do so
without prejudice to the retention of the amount of such credit or benefit and
without any other adverse tax consequences for such Lender, reimburse such
Borrower at such time as such tax credit or benefit shall have actually been
received by such Lender such amount as such Lender shall, in its sole opinion,
have determined to be attributable to the relevant deduction or withholding and
as will leave such Lender in no better or worse position than it would have
been in if the payment of such additional amount had not been required (net of
all out-of-pocket expenses of such Administrative Agent, such Lender or the
Issuing Bank, as the case may be); provided that the Borrowers upon the request
of either Administrative Agent, such Lender or the Issuing Bank agrees to repay
the amount paid over to the Borrowers (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) in the event
Governmental Authority successfully challenges such tax credits or other tax
benefits.

 

This section shall not be construed to require either Administrative
Agent, any Lender or the Issuing Bank to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to
Borrowers or any other person. 
Notwithstanding anything to the contrary, in no event will any
Administrative Agent, any Lender or the Issuing Bank be required to pay any
amount to Borrowers the payment of which would place such Lender, such
Administrative Agent or the Issuing Bank in a less favorable net after-tax
position than such Lender, such Administrative Agent or the Issuing Bank would
have been in if the additional amounts giving rise to such refund of any
Indemnified Taxes or Other Taxes had never been paid.

 

(g)                                 Upon the reasonable request of the Canadian
Borrower, and at the Canadian Borrower’s expense, a Canadian Lender shall use
its reasonable efforts to co-operate with the Canadian Borrower with a view to
obtaining a refund of any Tax which is not, in the Canadian Borrower’s
reasonable opinion, correctly or legally imposed and for which the Canadian
Borrower has indemnified the Canadian Lender under this Agreement, if obtaining
such refund would not, in the sole judgment of the Canadian Lender, be
disadvantageous to the Canadian Lender; provided that nothing in this clause
shall be construed to require the Canadian Lender to institute any
administrative proceeding (other than the filing of a claim for any such
refund) or judicial proceeding to obtain any such refund.  If such Canadian Lender shall receive a
refund from a taxing authority (as a result of any error in the imposition of
Taxes by such taxing authority) or any Taxes paid by the Canadian Borrower
pursuant to this Agreement, the Canadian Lender shall promptly pay to the
Canadian Borrower the amount so received, less any Taxes imposed on the
Canadian Lender as a result of such amount and net out-of-pocket expenses
provided that the Canadian Lender shall only be required to pay the Canadian
Borrower such amounts as the Canadian Lender determines are attributable to
Taxes paid by the Canadian Borrower.  In
the event that the Canadian Lender is required to repay the amount of such
refund (including interest, if any), the Canadian Borrower, upon the request of
the Canadian Lender, agrees to promptly return to the Canadian Lender the
amount of such refund and interest, if any (plus penalties, interest and other
charges imposed in connection with the repayment of such amounts by the
Canadian Lender).

 

SECTION 2.16.                                                 Mitigation Obligations; Replacement of Lenders.

 

(a)                                  Designation of a Different Lending Office.  If
any Lender requests compensation under Section 2.12, or requires
Borrowers to pay any additional amount to any Lender or any 

 

71

 

Governmental Authority for
the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.12 or Section 2.15,
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.  Borrower hereby agrees
to pay all reasonable costs and expenses incurred by any Lender in connection
with any such designation or assignment. 
A certificate setting forth such costs and expenses submitted by such
Lender to Borrower shall be conclusive absent manifest error.

 

(b)                                 Replacement of Lenders.  If
any Lender requests compensation under Section 2.12, or if
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, or if
Borrowers exercises their replacement rights under Section 11.02(d),
then Borrowers may, at their sole expense and effort, upon notice to such
Lender and the Administrative Agents, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in, and consents required by, Section 11.04), all of its
interests, rights and obligations under this Agreement and the other Loan
Documents to an Eligible Assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that:

 

(i)                                     Borrowers shall have paid to the applicable
Administrative Agent the processing and recordation fee specified in Section 11.04(b);

 

(ii)                                  such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements and Swingline Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 2.13), from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or
Borrowers(in the case of all other amounts);

 

(iii)                               in the case of any such assignment resulting
from a claim for compensation under Section 2.12 or payments
required to be made pursuant to Section 2.15, such assignment will
result in a reduction in such compensation or payments thereafter; and

 

(iv)                              such assignment does not conflict with
applicable Requirements of 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 Borrowers to require such assignment and delegation
cease to apply.

 

SECTION 2.17.                                                 Swingline Loans.

 

(a)                                  US Swingline Commitment. 
Subject to the terms and conditions set forth herein, the US Swingline
Lender agrees to make US Swingline Loans to US Borrowers from time to time
during the Revolving Availability Period, in an aggregate principal amount at
any time outstanding that will not result in the aggregate principal amount of
outstanding US Swingline Loans exceeding $50 million and provided that after
making a US Swingline Loan, the sum of the total US Revolving Exposures shall
not exceed the lesser of (A) the total Revolving Commitments and (B) the
Borrowing Base minus the U.S. Minimum Availability Requirement then in effect; provided that the aggregate US Revolving 

 

72

 

Exposure shall not exceed
the amount equal to the Borrowing Base minus the U.S. Minimum
Availability Requirement; provided further
that the US Swingline Lender shall not be required to make a US Swingline Loan
to refinance an outstanding Swingline Loan. 
Within the foregoing limits and subject to the terms and conditions set
forth herein, US Borrowers may borrow, repay and reborrow US Swingline Loans.

 

(b)                                 US Swingline Loans.  To
request a US Swingline Loan, Administrative Borrower shall deliver, by hand
delivery or telecopier, a duly completed and executed Borrowing Request to the
US Administrative Agent and the US Swingline Lender, not later than 2:00 p.m.,
New York City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and the amount
of the requested US Swingline Loan.  Each
US Swingline Loan shall be an ABR Loan. 
The US Swingline Lender shall make each US Swingline Loan available to
the applicable US Borrower by means of a credit to the general deposit account
of such US Borrower with the US Swingline Lender (or, in the case of a US
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.18(e), by remittance to the Issuing Bank) by
3:00 p.m., New York City time, on the requested date of such US Swingline
Loan.  US Borrowers shall not request a
US Swingline Loan if at the time of or immediately after giving effect to the
extension of credit contemplated by such request a Default has occurred and is
continuing or would result therefrom.  US
Swingline Loans shall be made in minimum amounts of $1.0 million and integral
multiples of $500,000 above such amount.

 

(c)                                  Prepayment.  US Borrowers shall have the
right at any time and from time to time to repay any US Swingline Loan, in
whole or in part, upon giving written notice to the US Swingline Lender and the
US Administrative Agent before 2:00 p.m., New York City time, on the
proposed date of repayment.

 

(d)                                 Canadian Swingline Commitment. 
Subject to the terms and conditions set forth herein, the Canadian Swingline
Lender agrees to make Canadian Swingline Loans to Canadian Borrower from time
to time during the Revolving Availability Period, in an aggregate principal
amount at any time outstanding that will not result in the aggregate principal
amount of outstanding Canadian Swingline Loans exceeding $5.0 million and
provided that after making a Canadian Swingline Loan, the sum of the total
Canadian Exposures shall not exceed the lesser of (A) the total Canadian
Revolving Commitments and (B) the Canadian Borrowing Base minus the
Canadian Minimum Availability Requirement then in effect; provided that the Canadian Swingline
Lender shall not be required to make a Canadian Swingline Loan to refinance an
outstanding Swingline Loan.  Within the
foregoing limits and subject to the terms and conditions set forth herein,
Canadian Borrower may borrow, repay and reborrow Canadian Swingline Loans.

 

(e)                                  Canadian Swingline Loans.  To
request a Swingline Loan, Administrative Borrower shall deliver, by hand
delivery or telecopier, a duly completed and executed Borrowing Request to the
Canadian Administrative Agent and the Canadian Swingline Lender, not later than
2:00 p.m., New York City time, on the day of a proposed Canadian Swingline
Loan.  Each such notice shall be irrevocable
and shall specify the requested date (which shall be a Business Day) and the
amount of the requested Canadian Swingline Loan.  Each Canadian Swingline Loan shall be a
Canadian Prime Rate Loan.  The Canadian
Swingline Lender shall make each Canadian Swingline Loan available to Canadian
Borrower by means of a credit to the general deposit account of Canadian
Borrower with the Canadian Swingline Lender by 3:00 p.m., New York City
time, on the requested date of such Canadian Swingline Loan.  Canadian Borrower shall not request a
Canadian Swingline Loan if at the time of or immediately after giving effect to
the extension of credit contemplated by such request a Default has occurred and
is continuing or would result therefrom. 
Canadian Swingline Loans shall be made in minimum amounts of Can$1.0
million and integral multiples of Can$500,000 above such amount.

 

73

 

(f)                                    Prepayment.  Canadian Borrower shall have
the right at any time and from time to time to repay any Canadian Swingline
Loan, in whole or in part, upon giving written notice to the Canadian Swingline
Lender and the Canadian Administrative Agent before 12:00 (noon), New York City
time, on the proposed date of repayment.

 

(g)                                 Participations. 
Either Swingline Lender at any time in its discretion may (and, in any
event, not later than the fifth (5th) Business Day after any Swingline Loan is
made to the relevant Borrower, the applicable Swingline Lender shall) by
written notice given to the applicable Administrative Agent (provided such notice requirement shall not
apply if either (i) the US Swingline Lender and the US Administrative
Agent are the same entity or (ii) the Canadian Swingline Lender and the
Canadian Administrative Agent are the same entity, as applicable) not later
than 11:00 A.M., New York City time, on the next succeeding Business Day
following such notice require the Revolving Lenders to acquire participations
on such Business Day in all or a portion of the Swingline Loans then
outstanding.  Such notice shall specify
the aggregate amount of Swingline Loans in which Revolving Lenders will
participate.  Promptly upon receipt of
such notice, the applicable Administrative Agent will give notice thereof to each
Revolving Lender, specifying in such notice such Lender’s Pro Rata Percentage
of such Swingline Loan or Loans.  Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the applicable Administrative Agent, for
the account of the applicable Swingline Lender, such Lender’s Pro Rata
Percentage of such Swingline Loan or Swingline Loans.  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever (so long as such payment shall not cause such Lender’s Revolving
Exposure to exceed such Lender’s Revolving Commitment).  Each Revolving Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available
funds, in the same manner as provided in Section 2.02(c) with
respect to Loans made by such Lender (and Section 2.02 shall apply,
mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the applicable Administrative Agent shall
promptly pay to the applicable Swingline Lender the amounts so received by it
from the Revolving Lenders.  The
applicable Administrative Agent shall notify Administrative Borrower of any
participations in any Swingline Loan acquired by the Revolving Lenders pursuant
to this paragraph, and thereafter payments in respect of such Swingline Loan
shall be made to such Administrative Agent and not to such Swingline
Lender.  Any amounts received by any
Swingline Lender from any Borrower (or other party on behalf of Borrowers) in
respect of a Swingline Loan after receipt by such Swingline Lender of the
proceeds of a sale of participations therein shall be promptly remitted to the
Administrative Agents.  Any such amounts received
by the Administrative Agents shall be promptly remitted by the Administrative
Agents to the Revolving Lenders that shall have made their payments pursuant to
this paragraph, as their interests may appear. 
The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve Borrowers of any default in the payment thereof.

 

SECTION 2.18.                                                 Letters of Credit.

 

(a)                                  General.  Subject to the terms and
conditions set forth herein, (i) any US Borrower may request the Issuing
Bank, and the Issuing Bank agrees, to issue Letters of Credit denominated in
any Approved Currency for its own account or the account of a Subsidiary (other
than a Canadian Loan Party) in a form reasonably acceptable to the US
Administrative Agent and the Issuing Bank and (ii) the Canadian Borrower may
request the Issuing Bank, and the Issuing Bank agrees, to issue Letters of
Credit denominated in any Approved Currency for its own account or the account
of any other Canadian Loan Party in a form reasonably acceptable to the
Canadian Administrative Agent and the Issuing Bank, in each case, at any time
and from time to time during the Revolving Availability Period 

 

74

 

(provided that a Borrower shall be a co-applicant, and be
jointly and severally liable, with respect to each Letter of Credit issued for
the account of a Subsidiary or, in the case of the Canadian Borrower, another
Canadian Loan Party).  Upon receipt of an
LC Request in accordance with Section 2.18(b) below, the
applicable Administrative Agent shall notify the Issuing Bank as to whether the
issuance of such Letter of Credit is authorized.  The Issuing Bank shall not issue any Letter
of Credit without first receiving such authorization and no Borrower shall
request the issuance of, any Letter of Credit at any time if after giving
effect to such issuance, (i) the LC Exposure would exceed the LC
Commitment, (ii) the US LC Exposure would exceed the LC Commitment less
the Canadian LC Exposure at such time, (iii) the Canadian LC Exposure
would exceed the Canadian LC Sublimit, (iv) the total Revolving Exposure
would exceed the limits set forth in clause (b) below, or (v) the
Canadian Exposure would exceed the limits set forth in clause (b) below.  In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by applicable
Borrower to, or entered into by any Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall
control.  Each of
the parties hereto acknowledge and agree that, effective as of the Closing
Date, each of the Existing Issuing Bank Letters of Credit shall be deemed and
shall each constitute a Letter of Credit as if such Existing Issuing Bank
Letters of Credit were originally issued as a Letter of Credit under and shall
be subject to the terms and conditions of this Agreement.

 

(b)                                 Request for Issuance, Amendment, Renewal,
Extension; Certain Conditions and Notices.  To request the issuance of a
Letter of Credit or the amendment, renewal or extension of an outstanding
Letter of Credit, the applicable Borrowers shall deliver, by hand or telecopier
(or transmit by electronic communication, if arrangements for doing so have
been approved by the Issuing Bank), an LC Request to the Issuing Bank and the
applicable Administrative Agent not later than 2:00 p.m. New York City
time on the third Business Day preceding the requested date of issuance,
amendment, renewal or extension (or such later date and time as is acceptable
to the Issuing Bank).

 

Each LC Request for an initial issuance of a
Letter of Credit shall specify in form and detail satisfactory to the Issuing
Bank the following:

 

(i)                                     the proposed issuance date of the requested
Letter of Credit (which shall be a Business Day);

 

(ii)                                  the amount and the currency thereof (which
shall be any Approved Currency);

 

(iii)                               the expiry date thereof (which shall not be
later than the close of business on the Letter of Credit Expiration Date);

 

(iv)                              the name and address of the beneficiary
thereof;

 

(v)                                 whether the Letter of Credit is to be issued
for its own account or for the account of one of its Subsidiaries (provided that a Borrower shall be a
co-applicant, and be jointly and severally liable, with respect to each Letter
of Credit issued for the account of a Subsidiary or, in the case of the
Canadian Borrower, another Canadian Loan Party);

 

(vi)                              the documents to be presented by such
beneficiary in connection with any drawing thereunder;

 

(vii)                           the full text of any certificate to be
presented by such beneficiary in connection with any drawing thereunder; and

 

75

 

(viii)                        such other matters as the Issuing Bank may
require.

 

A request for an amendment, renewal or
extension of any outstanding Letter of Credit shall specify in form and detail
satisfactory to the Issuing Bank:

 

(ix)                                the Letter of Credit to be amended, renewed
or extended;

 

(x)                                   the proposed date of amendment, renewal or
extension thereof (which shall be a Business Day);

 

(xi)                                the nature of the proposed amendment, renewal
or extension; and

 

(xii)                             such other matters as the Issuing Bank may
require.

 

If requested by the Issuing Bank, the applicable Borrowers also shall
submit a letter of credit application on the Issuing Bank’s standard form in
connection with any request for a Letter of Credit (including, without
limitation a letter of credit application pursuant to the Master Documentary
Agreement or to the Master Standby Documentary Agreement), but in the event of
any inconsistency between such standard form and this Agreement, the terms of
this Agreement shall control.  A Letter
of Credit shall be issued, amended, renewed or extended only if (and, upon
issuance, amendment, renewal or extension of each Letter of Credit, the
applicable Borrower shall be deemed to represent and warrant that), after
giving effect to such issuance, amendment, renewal or extension, (i) the
LC Exposure shall not exceed the LC Commitment, (ii) the US LC Exposure
shall not exceed the LC Commitment, less the
Canadian LC Exposure at such time, (iii) the Canadian LC Exposure shall
not exceed the Canadian LC Sublimit, (iv) total Revolving Exposures shall
not exceed the lesser of the total Revolving Commitments, (v) the US
Revolving Exposures shall not exceed the lesser of (A) the US Revolving
Commitments and (B) the Borrowing Base minus the U.S. Minimum Availability
Requirement then in effect, (vi) the Canadian Exposures shall not exceed
the lesser of (A) the Canadian Revolving Commitments and (B) the
Canadian Borrowing Base minus the Canadian Minimum Availability Requirement
then in effect, (vii) US Excess Availability, determined after giving
effect to the issuance of any Letter of Credit, (A) on the date of the
issuance of such Letter of Credit and (B) on a projected basis determined
by the reference to the Budget then in effect, shall not be less than
$75,000,000, and (viii) the conditions set forth in Article IV
in respect of such issuance, amendment, renewal or extension shall have been
satisfied.  Unless the Issuing Bank shall
agree otherwise, no Letter of Credit shall be in an initial amount less than
$100,000, in the case of a Commercial Letter of Credit, or $500,000, in the
case of a Standby Letter of Credit.

 

Upon the issuance of any Letter of Credit or
amendment, renewal, extension or modification to a Letter of Credit, the
Issuing Bank shall promptly notify the applicable Administrative Agent, who
shall promptly notify each applicable Revolving Lender, thereof, which notice
shall be accompanied by a copy of such Letter of Credit or amendment, renewal,
extension or modification to a Letter of Credit and the amount of such Lender’s
respective participation in such Letter of Credit pursuant to Section 2.18.
 On the first Business Day of each
calendar month, the Issuing Bank shall provide to the Administrative Agents a
report listing all outstanding Letters of Credit and the outstanding amounts
and beneficiaries thereof and the amount and maturities of any LC Acceptances
and the Administrative Agents shall promptly provide such report to each
relevant Revolving Lender.

 

(c)                                  Expiration Date.  Each
Letter of Credit shall expire (or be subject to non-renewal or termination by
the applicable Administrative Agent) at or prior to the close of business on
the earlier of (x) the date which is one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (y) the Letter of
Credit Expiration Date.

 

76

 

(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby irrevocably grants to each applicable Revolving Lender, and (i) each
US Revolving Lender hereby acquires from the Issuing Bank, a participation in
each such Letter of Credit issued for the account of any US Borrower or its
Subsidiaries (other than any Canadian Loan Party) equal to such US Revolving
Lender’s Pro Rata Percentage of the aggregate amount available to be drawn
under such Letter of Credit and (ii) each Canadian Revolving Lender hereby
acquires from the Issuing Bank, a participation in each such Letter of Credit
issued for the account of any Canadian Loan Party equal to such Canadian
Revolving Lender’s Pro Rata Percentage of the aggregate amount available to be
drawn under such Letter of Credit.  In
consideration and in furtherance of the foregoing, each Revolving Lender hereby
absolutely and unconditionally agrees to pay to the applicable Administrative
Agent, for the account of the Issuing Bank, such Revolving Lender’s Pro Rata
Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed
by applicable Borrower on the date due as provided in Section 2.18(d),
or of any reimbursement payment required to be refunded to the applicable
Borrower for any reason.  Each Revolving
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Commitments, or expiration, termination or cash collateralization of any Letter
of Credit and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.

 

(e)           Reimbursement.

 

(i)            If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit or LC Acceptance, the applicable Borrower shall
reimburse such LC Disbursement by paying to the Issuing Bank an amount equal to
such LC Disbursement not later than 3:00 p.m., New York City time, on the
date that such LC Disbursement is made if Administrative Borrower shall have
received notice of such LC Disbursement prior to 11:00 a.m., New York City
time, on such date, or, if such notice has not been received by Administrative
Borrower prior to such time on such date, then not later than 3:00 p.m.,
New York City time, on the Business Day immediately following the day that
Administrative Borrower receives such notice; provided
that the applicable Borrower may, subject to the conditions to borrowing set
forth herein, request in accordance with Section 2.03 that such
payment be financed with (i) in the case of the US Borrowers, ABR
Revolving Loans or Swingline Loans and (ii) in the case of the Canadian
Borrower, Canadian Prime Rate Loans or Canadian Swingline Loans, in each case,
in an equivalent amount and, to the extent so financed, such Borrower’s
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Loans, Swingline Loans, Canadian Prime Rate Loans or
Canadian Swingline Loans, as the case may be.

 

(ii)           If the applicable Borrower fails to
make such payment when due, the Issuing Bank shall notify the applicable
Administrative Agent and the applicable Administrative Agent shall notify each
applicable Revolving Lender of the applicable LC Disbursement, the payment then
due from the applicable Borrower in respect thereof and such Revolving Lender’s
Pro Rata Percentage thereof.  Each
Revolving Lender shall pay by wire transfer of immediately available funds to
the applicable Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Revolving Lender shall have received such
notice later than 12:00 noon, New York City time, on any day, not later than
11:00 a.m., New York City time, on the immediately following Business
Day), an amount equal to such Revolving Lender’s Pro Rata Percentage of the
unreimbursed LC Disbursement in the same manner as provided in Section 2.02(c) with
respect to Revolving Loans made by such Revolving Lender, and the applicable 

 

77

 

Administrative Agent will
promptly pay to the Issuing Bank the amounts so received by it from the
applicable Revolving Lenders.  The
applicable Administrative Agent will promptly pay to the Issuing Bank any
amounts received by it from applicable Borrower pursuant to the above paragraph
prior to the time that any Revolving Lender makes any payment pursuant to the
preceding sentence and any such amounts received by the applicable
Administrative Agent from the applicable Borrower, as the case may be,
thereafter will be promptly remitted by the applicable Administrative Agent to
the applicable Revolving Lenders that shall have made such payments and to the
Issuing Bank, as appropriate.

 

(iii)          If any applicable Revolving Lender
shall not have made its Pro Rata Percentage of such LC Disbursement available
to the applicable Administrative Agent as provided above, each of such
Revolving Lender and the applicable Borrower severally agree to pay interest on
such amount, for each day from and including the date such amount is required
to be paid in accordance with the foregoing to but excluding the date such
amount is paid, to the applicable Administrative Agent for the account of the
Issuing Bank at (i) in the case of a Borrower, the rate per annum set
forth in Section 2.18(h) and (ii) in the case of such
Lender, at a rate determined by the applicable Administrative Agent in
accordance with banking industry rules or practices on interbank
compensation.

 

(iv)          All payments made pursuant to this Section 2.18(e) shall
be in the Approved Currency in which the LC Disbursement giving rise to such
payment is denominated.

 

(f)            Obligations Absolute.  The Reimbursement Obligation of the
applicable Borrower, as provided in 

Section 2.18(e) shall be absolute, unconditional and
irrevocable, and shall be paid and performed strictly in accordance with the
terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter
of Credit or this Agreement, or any term or provision therein; (ii) any
draft or other document presented under a Letter of Credit being proved to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; (iii) payment by the
Issuing Bank (or creation of an LC Acceptance) under a Letter of Credit against
presentation of a draft or other document that fails to comply with the terms
of such Letter of Credit; (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section 2.18, constitute a legal or equitable
discharge of, or provide a right of setoff against, the obligations of any
Borrower hereunder; (v) the fact that a Default shall have occurred and be
continuing; or (vi) any material adverse change in the business, property,
results of operations, prospects or condition, financial or otherwise, of any
Borrowers and its Subsidiaries.  None of
the Agents, the Lenders, the Issuing Bank or any of their Affiliates shall have
any liability or responsibility by reason of or in connection with the issuance
or transfer of any Letter of Credit or any LC Acceptance or any payment or
failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of
the Issuing Bank; provided that
the foregoing shall not be construed to excuse the Issuing Bank from liability
to any Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by
Borrowers to the extent permitted by applicable Requirements of Law) suffered
by such Borrower that are caused by the Issuing Bank’s failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. 
The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of the Issuing Bank (as finally
determined by a court of competent jurisdiction), the Issuing Bank shall be
deemed to have exercised care in each such determination.  In furtherance of the foregoing and without
limiting 

 

78

 

the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

 

(g)           Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment (or creation of an LC Acceptance) under a Letter of Credit.  The Issuing Bank shall promptly give written
notice to the applicable Administrative Agent and the applicable Borrowers of
such demand for payment and whether the Issuing Bank has made or will make an
LC Disbursement thereunder (or, in the case of the creation of an LC
Acceptance, the date payment is due thereunder); provided that any failure to give or delay in giving such
notice shall not relieve the applicable Borrower of its Reimbursement
Obligation to the Issuing Bank and the applicable Revolving Lenders with
respect to any such LC Disbursement (other than with respect to the timing of
such Reimbursement Obligation set forth in Section 2.18(e)).

 

(h)           Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, unless the applicable Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest payable on demand, for each day from and
including the date such LC Disbursement is made to but excluding the date that
the applicable Borrower reimburses such LC Disbursement, at the rate per annum
determined pursuant to Section 2.06(e).  Interest accrued pursuant to this paragraph
shall be for the account of the Issuing Bank, except that interest accrued on
and after the date of payment by any Revolving Lender pursuant to Section 2.18(e) to
reimburse the Issuing Bank shall be for the account of such Lender to the
extent of such payment.

 

(i)            Cash Collateralization.  On the Revolving Maturity Date or if any
Event of Default shall occur and be continuing, on the Business Day that
Administrative Borrower receives notice from the US Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been accelerated,
Revolving Lenders with LC Exposure representing greater than 50% of the total
LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the applicable Borrowers shall deposit on terms and in accounts
satisfactory to the applicable Collateral Agents, in the name of the applicable
Collateral Agents and for the benefit of the Revolving Lenders, an amount in
cash equal to 103% of the LC Exposure as of such date plus any accrued and
unpaid interest or fees thereon.  Funds
so deposited shall be applied by the applicable Collateral Agents to reimburse
the Issuing Bank for LC Disbursements for which it has not been reimbursed and,
to the extent not so applied, shall be held for the satisfaction of outstanding
Reimbursement Obligations or, if the maturity of the Loans has been accelerated
(but subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other Obligations
of the applicable Borrower under this Agreement.  If the applicable Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount plus
any accrued interest or realized profits with respect to such amounts (to the
extent not applied as aforesaid) shall be returned to such Borrowers within
three Business Days after all Events of Default have been cured or waived.

 

(j)            Additional Issuing Banks.  The Administrative Borrower may, at any time
and from time to time, designate one or more additional Revolving Lenders to
act as an issuing bank under the terms of this Agreement, with the consent of
the US Administrative Agent (which consent shall not be unreasonably withheld),
the Issuing Bank and such Revolving Lender(s). 
Any Lender designated as an issuing bank pursuant to this paragraph (j) shall
be deemed (in addition to being a Revolving Lender) 

 

79

 

to be the Issuing Bank with
respect to Letters of Credit issued or to be issued by such Revolving Lender,
and all references herein and in the other Loan Documents to the term “Issuing
Bank” shall, with respect to such Letters of Credit, be deemed to refer to such
Revolving Lender in its capacity as Issuing Bank, as the context shall require.

 

(k)           Resignation or Removal of the
Issuing Bank.  The Issuing Bank may
resign as Issuing Bank hereunder at any time upon at least 30 days’ prior
notice to the Lenders, the Administrative Agents and Administrative
Borrower.  The Issuing Bank may be
replaced at any time by written agreement among US Borrowers, each Agent, the
replaced Issuing Bank and the successor Issuing Bank.  US Administrative Agent shall notify the
Lenders of any such replacement of the Issuing Bank or any such additional
Issuing Bank.  At the time any such
resignation or replacement shall become effective, US Borrowers shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.05(c).  From and after the effective date of any such
resignation or replacement or addition, as applicable, (i) the successor
or additional Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be
issued by it thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or such addition or to any
previous Issuing Bank, or to such successor or such addition and all previous
Issuing Banks, as the context shall require. 
After the resignation or replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such resignation or
replacement, but shall not be required to issue additional Letters of
Credit.  If at any time there is more
than one Issuing Bank hereunder, US Borrowers may, in their discretion, select
which Issuing Bank is to issue any particular Letter of Credit.

 

(l)            Other.  The Issuing Bank shall be under no obligation
to issue any Letter of Credit if

 

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

 

(ii)           the issuance of such Letter of Credit
would violate one or more policies of the Issuing Bank.

 

The Issuing Bank shall be under no obligation to amend any Letter of
Credit if (A) the Issuing Bank would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.

 

(m)          For the avoidance of doubt,
outstanding Letters of Credit issued for the account of any Canadian Loan Party
shall be treated as if issued for the account of the Canadian Borrower for
purposes of calculating the Canadian Borrowing Base.

 

SECTION 2.19.                [Intentionally Deleted.]

 

80

 

SECTION 2.20.                Determination of Borrowing Base.

 

(a)           Eligible Accounts.  On any date
of determination of the Borrowing Base, the term “Eligible Accounts” as used herein shall comprise all of the Credit
Card Receivables of US Borrowers and any of the US Borrowing Base Guarantors as
arise in the ordinary course of business, which have been earned by
performance, that are not excluded as ineligible by virtue of one or more of
the criteria set forth below and are reflected in the most recent Borrowing
Base Certificate delivered by the Borrowers to the Collateral Agents and the
Administrative Agents.  None of the
following shall be deemed to be Eligible Accounts:

 

(i)            Credit Card Receivables due from major
credit card processors that have been outstanding for more than five (5) Business
Days from the date of sale, or for such longer period(s) as may be
approved by the applicable Collateral Agents;

 

(ii)           Credit Card Receivables due from
major credit card processors with respect to which US Borrowers or any of the
US Borrowing Base Guarantors do not have good, valid and marketable title
thereto, free and clear of any Lien (other than Liens granted to the applicable
Administrative Agent for its own benefit and the benefit of the other Secured
Parties pursuant to the Security Documents, those Liens specified in Section 6.02
(a) and (e) and Permitted Liens having priority by
operation of applicable law over the Lien of the Collateral Agents);

 

(iii)          Credit Card Receivables due from major
credit card processors that are not subject to a first priority (except as
provided in clause (ii), above) perfected security interest in favor of the
Collateral Agents, as applicable, for its own benefit and the benefit of the other
Secured Parties;

 

(iv)          Credit Card Receivables due from major
credit card processors which are disputed, or with respect to which a claim,
counterclaim, offset or chargeback has been asserted, by the related credit
card processor (but only to the extent of such dispute, counterclaim, offset or
chargeback) (it being the intent that chargebacks in the ordinary course by the
credit card processors as contemplated by the applicable Control Agreement
shall not be deemed violative of this clause);

 

(v)           Except as otherwise approved by the
US Administrative Agent and applicable Collateral Agents, Credit Card
Receivables due from major credit card processors as to which the credit card
processor has the right under certain circumstances to require the US Borrowers
or any of the US Borrowing Base Guarantors to repurchase such Accounts from
such credit card processor;

 

(vi)          Except as otherwise approved by the US
Administrative Agent and applicable Collateral Agents, Credit Card Receivables due from major credit card processors as to which
the US Administrative Agent and the applicable Collateral Agents have not
received an acceptable Control Agreement;

 

(vii)         Accounts due from major credit card
processors (other than Visa, Mastercard, American Express, Diners Club and
Discover) which the applicable Collateral Agents determine in their
commercially reasonable discretion, acting in good faith, to be unlikely to be
collected; or

 

(viii)        Except as otherwise approved by the
applicable Collateral Agents in their sole discretion, Credit Card Receivables of US Borrowers and any of the US Borrowing Base
Guarantors arising from Private Label Credit Cards.

 

81

 

Notwithstanding the above, the applicable Collateral Agents and the US
Administrative Agent reserve the right, at any time and from time to time after
the Closing Date, to adjust the criteria set forth above, to establish new
criteria and to adjust the applicable advance rate with respect to Eligible
Accounts, in their Permitted Discretion, subject to the approval of the
Supermajority Lenders in the case of adjustments, new criteria or changes in
the applicable advance rates which have the effect of making more credit
available.  The Collateral Agents shall have the right to establish, modify or
eliminate Reserves against Eligible Accounts (including, without limitation,
for estimates, chargeback or other accrued liabilities or offsets by credit
card processors and amounts to adjust for material claims, offsets, defenses or
counterclaims or other material disputes described in Section 9.01)
from time to time in their Permitted Discretion, including with respect to the
Carve-Out Amount.

 

(b)           Eligible Inventory.  For purposes of this Agreement, Eligible
Inventory shall exclude any Inventory to which any of the exclusionary criteria
set forth below applies.  The Collateral
Agents shall have the right to establish, modify or eliminate Reserves against
Eligible Inventory from time to time in their Permitted Discretion.  In addition, the Collateral Agents and the
Administrative Agents reserve the right, at any time and from time to time
after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust the applicable advance rate with respect
to Eligible Inventory, in their Permitted Discretion, subject to the approval
of the Supermajority Lenders in the case of adjustments, new criteria, changes
in the applicable advance rate or the elimination of Reserves which have the
effect of making more credit available; provided, that any reduction in
the applicable advance rate with respect to Eligible Inventory shall require
the consent of the Administrative Borrower. 
Eligible Inventory shall not include any Inventory of US Borrowers or any
US Borrowing Base Guarantor that:

 

(i)            the applicable Collateral Agents, on
behalf of Secured Parties, do not have a first priority and exclusive perfected
Lien on such Inventory;

 

(ii)           (1) is stored at a leased or
rented location where the aggregate value of Inventory exceeds $250,000 unless
the applicable Collateral Agents have given their prior consent thereto or
unless either (x) a Landlord Access Agreement in respect of such location
has been delivered to the applicable Collateral Agents, or (y) Reserves
reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto or (2) is stored with a bailee or
warehouseman where the aggregate value of Inventory exceeds $250,000 unless
either (x) an acknowledged bailee waiver letter which is in form and
substance satisfactory to the applicable Collateral Agents and the US
Administrative Agent has been received by the applicable Collateral Agents or (y) Reserves
reasonably satisfactory to the applicable Collateral Agents have been established
with respect thereto, or (3) is located at an owned location subject to a
mortgage in favor of a lender other than any of the Collateral Agents and the
Senior Note Collateral Agent where the aggregate value of Inventory exceeds
$250,000 unless either (x) mortgagee waiver which is in form and substance
satisfactory to the applicable Collateral Agents and the US Administrative
Agent has been delivered to the applicable Collateral Agents or (y) Reserves
reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto;

 

(iii)          (1) is placed on consignment by a
third party consignor with any US Borrower or US Borrowing Base Guarantor as
consignee or (2) is placed on consignment by any US Borrower or US
Borrowing Base Guarantor as consignor with any third party as consignee, unless
a valid consignment agreement which is reasonably satisfactory to applicable
Collateral Agents is in place with respect to such Inventory;

 

82

 

(iv)          is covered by a negotiable document of title, unless such document has
been delivered to the applicable Collateral Agents with all necessary
endorsements, free and clear of all Liens except those in favor of the
Collateral Agents and the Lenders and landlords, carriers, bailees and
warehousemen if clause (ii) above has been complied with;

 

(v)           is to be returned to suppliers;

 

(vi)          is obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;

 

(vii)         consists of display items, samples or packing or shipping materials,
manufacturing supplies, work-in-process Inventory, replacement parts or spare
parts;

 

(viii)        is not finished goods held for sale in the ordinary course of US
Borrower’s or any US Borrowing Base Guarantor’s, as applicable, business;

 

(ix)           breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;

 

(x)            consists of Hazardous Material or goods that,
in either case, can be transported or sold only with licenses that are not
readily available;

 

(xi)           is not covered by casualty insurance maintained as required by Section 5.04;

 

(xii)          supplies used or consumed in US Borrower’s business;

 

(xiii)         bill and hold goods;

 

(xiv)        unserviceable or slow moving Inventory;

 

(xv)         inventory returned by retail customers that is not held for resale;

 

(xvi)        inventory subject to deposit made by retail customers for sale of
Inventory that have not been delivered to the extent of such deposits; or

 

(xvii)       is subject to any licensing arrangement the effect of which would be to
limit the ability of any Collateral Agent, or any person selling the Inventory
on behalf of such Collateral Agent, to sell such Inventory in enforcement of
such Collateral Agent’s Liens, without further consent or payment to the
licensor or other person.

 

SECTION 2.21.                Determination of Canadian Borrowing Base.

 

(a)           Eligible Canadian Accounts.  On any date of determination of the Canadian
Borrowing Base the term “Eligible Canadian Accounts”
as used herein shall comprise all of the Credit Card Receivables of Canadian
Borrower and any of Canadian Borrowing Base Guarantors as arise in the ordinary
course of business, which have been earned by performance, that are not
excluded as ineligible by virtue of one or more of the criteria set forth below
and are reflected in the most recent Borrowing Base Certificate delivered by
the Borrowers to the Collateral Agents and the Administrative Agents.  None of the following shall be deemed to be
Eligible Accounts:

 

(i)            Credit Card Receivables due from
major credit card processors that have been outstanding for more than five (5) Business
Days from the date of sale or, in the case of Accounts due from American
Express to the Canadian Borrower or any of the Canadian Borrowing Base 

 

83

 

Guarantors, that have been
outstanding for more than ten (10) Business Days from the date of sale, or
for such longer 

period(s) as may be approved by the applicable Collateral Agents;

 

(ii)           Credit Card Receivables due from
major credit card processors with respect to which Canadian Borrower or any of
the Canadian Borrowing Base Guarantors do not have good, valid and marketable
title thereto, free and clear of any Lien (other than Liens granted to the
applicable Administrative Agent for its own benefit and the benefit of the
other Secured Parties pursuant to the Security Documents, those Liens specified
in Section 6.02 (a) and (e) and
Permitted Liens having priority by operation of applicable law over the Lien of
the applicable Collateral Agents);

 

(iii)          Credit Card Receivables due from major
credit card processors that are not subject to a first priority (except as
provided in clause (ii), above) perfected security interest in favor of the
Collateral Agents, as applicable, for its own benefit and the benefit of the
other Secured Parties;

 

(iv)          Credit Card Receivables due from major
credit card processors which are disputed, or with respect to which a claim,
counterclaim, offset or chargeback has been asserted, by the related credit
card processor (but only to the extent of such dispute, counterclaim, offset or
chargeback) (it being the intent that chargebacks in the ordinary course by the
credit card processors shall not be deemed violative of this clause);

 

(v)           Except as otherwise approved by the
Canadian Administrative Agent and applicable Collateral Agents, Credit Card
Receivables due from major credit card processors as to which the credit card
processor has the right under certain circumstances to require the Canadian
Borrower or any of the Canadian Borrowing Base Guarantors to repurchase such
Accounts from such credit card processor;

 

(vi)          Except as otherwise approved by the Canadian
Administrative Agent and applicable Collateral Agents, Credit Card Receivables due from major credit card processors as to which
the Canadian Administrative Agent and the applicable Collateral Agents have not
received an acceptable Control Agreement;

 

(vii)         Accounts due from major credit card
processors (other than Visa, Mastercard, American Express, Diners Club and
Discover) which the applicable Collateral Agents determine in their
commercially reasonable discretion, acting in good faith, to be unlikely to be
collected.; or

 

(viii)        Except as otherwise approved by the
applicable Collateral Agents in their sole discretion, Credit Card Receivables of Canadian Borrower and any of the Canadian
Borrowing Base Guarantors arising from Private Label Credit Cards.

 

Notwithstanding the above, the applicable Collateral Agents and the
Canadian Administrative Agent reserve the right, at any time and from time to
time after the Closing Date, to adjust the criteria set forth above, to
establish new criteria and to adjust the applicable advance rate with respect
to Eligible Canadian Accounts, in their Permitted Discretion, subject to the
approval of the Supermajority Lenders in the case of adjustments, new criteria
or changes in the applicable advance rates which have the effect of making more
credit available. The Collateral Agents shall
have the right to establish, modify or eliminate Reserves against Eligible
Canadian Accounts (including, without limitation, for estimates, chargeback or
other accrued liabilities or offsets by credit card processors and amounts to
adjust for material claims, 

 

84

 

offsets, defenses or counterclaims or other material
disputes described in Section 9.01) from time to time in their
Permitted Discretion.

 

(b)           Eligible Inventory.  For purposes of this Agreement, Eligible
Canadian Inventory shall exclude any Canadian Inventory to which any of the
exclusionary criteria set forth below applies. 
The applicable Collateral Agents shall have the right to establish,
modify or eliminate Reserves against Eligible Canadian Inventory from time to
time in their Permitted Discretion.  In
addition, the applicable Collateral Agents and the Canadian Administrative
Agent reserve the right, at any time and from time to time after the Closing
Date, to adjust any of the criteria set forth below, to establish new criteria
and to adjust the applicable advance rate with respect to Eligible Canadian
Inventory, in their Permitted Discretion, subject to the approval of the
Supermajority Lenders in the case of adjustments, new criteria, changes in the
applicable advance rate or the elimination of Reserves which have the effect of
making more credit available; provided, however, that any
reduction in the applicable advance rate with respect to Eligible Canadian
Inventory shall require the consent of the Administrative Borrower.  Eligible Canadian Inventory shall not include
any Canadian Inventory of Canadian Borrower or any of the Canadian Borrowing
Base Guarantors that:

 

(i)            the applicable Collateral Agents, on
behalf of Secured Parties, do not have a first priority and exclusive perfected
Lien on such Canadian Inventory;

 

(ii)           (1) is stored at a leased or
rental location where the aggregate value of Canadian Inventory exceeds
$250,000 unless the applicable Collateral Agents have given their prior consent
thereto or unless either (x) a Landlord Access Agreement in respect of
such location has been delivered to the applicable Collateral Agents, or (y) Reserves
reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto or (2) is stored with a bailee or
warehouseman where the aggregate value of Canadian Inventory exceeds $250,000
unless either (x) an acknowledged bailee waiver letter which is in form
and substance satisfactory to the applicable Collateral Agents and the Canadian
Administrative Agent has been received by the applicable Collateral Agents or (y) Reserves
reasonably satisfactory to the applicable Collateral Agents have been
established with respect thereto, or (3) is located at an owned location
subject to a mortgage in favor of a lender other than the Collateral Agents and
the Senior Note Collateral Agent where the aggregate value of such Canadian
Inventory exceeds $250,000 unless either (x) a mortgagee waiver which is
in form and substance satisfactory to the applicable Collateral Agents and the
Canadian Administrative Agent has been delivered to the applicable Collateral
Agents or (y) Reserves reasonably satisfactory to the applicable
Collateral Agents have been established with respect thereto;

 

(iii)          (1) is placed on consignment by a
third party consignor with any Canadian Borrower or any Canadian Borrowing Base
Guarantor as consignee or (2) is placed on consignment by any Canadian
Borrower or Canadian Borrowing Base Guarantor as consignor with any third party
as consignee, unless a valid consignment agreement which is reasonably
satisfactory to applicable Collateral Agent is in place with respect to such
Canadian Inventory;

 

(iv)          is covered by a negotiable document of
title, unless such document has been delivered to one of the applicable
Collateral Agents with all necessary endorsements, free and clear of all Liens
except those in favor of the Collateral Agents and the Lenders and landlords,
carriers, bailees and warehousemen if clause (ii) above has been
complied with;

 

(v)           is to be returned to suppliers;

 

(vi)          is obsolete, unsalable, shopworn,
seconds, defective, damaged or unfit for sale;

 

85

 

(vii)         consists of display items, samples or packing or shipping materials,
manufacturing supplies, work-in-process Canadian Inventory, replacement or
spare parts;

 

(viii)        is not finished goods held for sale in the ordinary course of Canadian
Borrower’s or any of the Canadian Borrowing Base Guarantor’s, as applicable,
business;

 

(ix)           breaches any of the representations or warranties pertaining to
Canadian Inventory set forth in the Loan Documents;

 

(x)            consists of Hazardous Material or goods that,
in either case, can be transported or sold only with licenses that are not
readily available;

 

(xi)           is not covered by casualty insurance maintained as required by Section 5.04;

 

(xii)          supplies used or consumed in Canadian Borrower’s business;

 

(xiii)         bill and hold goods;

 

(xiv)        unserviceable or slow moving Canadian Inventory;

 

(xv)         inventory returned by retail customers that is not held for resale;

 

(xvi)        inventory subject to deposit made by retail customers for sale of
Inventory that have not been delivered to the extent of such deposits; or

 

(xvii)       is subject to any licensing arrangement the effect of which would be to
limit the ability of any Collateral Agent, or any person selling the Canadian
Inventory on behalf of such Collateral Agent, to sell such Canadian Inventory
in enforcement of such Collateral Agent’s Liens, without further consent or
payment to the licensor or other person.

 

SECTION 2.22.                Collection Allocation Mechanism.

 

(a)           Notwithstanding any other provision
of this Agreement or any Loan Document, on the CAM Exchange Date, with respect
solely to Revolving Lenders, (i) all Revolving Commitments shall
automatically and without further act be terminated as provided in Section 8
and (ii) the Revolving Lenders shall automatically and without further act
be deemed to have exchanged interests in the Revolving Loans such that in lieu
of the interest of each Revolving Lender in each Revolving Loan in which it
shall participate as of such date, such Revolving Lender shall hold an interest
in every one of the Revolving Loans, whether or not such Revolving Lender shall
previously have participated therein, equal to such Revolving Lender’s CAM
Percentage thereof; provided that such CAM Exchange will not affect the
aggregate amount of the obligations of the Loan Parties to the Revolving
Lenders under the Loan Documents.  Each
Revolving Lender and each Loan Party hereby consents and agrees to the CAM
Exchange, and each Revolving Lender agrees that the CAM Exchange shall be
binding upon its successors and assigns and any person that acquires a
participation in its interests in any Revolving Loan.  Each Loan Party agrees from time to time to
execute and deliver to the Agents all promissory notes and other instruments
and documents as the Agents shall reasonably request to evidence and confirm
the respective interests of the Revolving Lenders after giving effect to the
CAM Exchange, and each Revolving Lender agrees to surrender any promissory
notes originally received by it in connection with its Revolving Loans
hereunder to the Agents against delivery of new promissory notes evidencing its
interests in the Revolving Loans; provided, however, that the
failure of any Loan Party 

 

86

 

to execute or deliver or of
any Revolving Lender to accept any such promissory note, instrument or document
shall not affect the validity or effectiveness of the CAM Exchange.

 

(b)           As a result of the CAM Exchange, upon
and after the CAM Exchange Date, each payment received by the Administrative
Agents pursuant to any Loan Document in respect of the Specified Obligations,
and each distribution made by the Administrative Agents pursuant to any Loan
Document in respect of the Specified Obligations, shall be distributed to the
Revolving Lenders pro rata in accordance with their respective CAM
Percentages.  Any direct payment received
by a Revolving Lender upon or after the CAM Exchange Date, including by way of
setoff, in respect of a Specified Obligation, shall be paid over to the US
Administrative Agent or the Canadian Administrative Agent, as applicable, for
distribution to the Revolving Lenders in accordance herewith.

 

(c)           In the event that on the CAM Exchange
Date any Letter of Credit shall be outstanding and undrawn in whole or in part,
or any amount drawn under any Letter of Credit shall remain unpaid, each
Revolving Lender shall, before giving effect to the CAM Exchange, promptly pay
over to the Administrative Agents, in immediately available funds and in the
currency that such Letter of Credit is denominated, an amount (determined after
deducting any cash collateral held by the Collateral Agents on behalf of the
Loan Parties with respect to such Letter of Credit) equal to such Revolving
Lender’s Pro Rata Percentage (as notified to such Revolving Lender by the
Administrative Agents), of such Letter of Credit’s undrawn face amount or (to
the extent it has not already done so) any unpaid LC Disbursement under Section 2.18(e)(ii),
together with interest thereon from the CAM Exchange Date to the date on which
such amount shall be paid to the applicable Administrative Agent, at the rate
that would be applicable at the time to a Revolving Loan that is an ABR Loan
accruing interest at the ABR Rate in a principal amount equal to such
amount.  The Administrative Agents shall
establish a separate account or accounts for each Revolving Lender (each, an “L/C Reserve Account”) for the amounts received with respect
to each such Letter of Credit pursuant to the preceding sentence.  The applicable Administrative Agent shall
deposit in each Revolving Lender’s L/C Reserve Account such Revolving Lender’s
CAM Percentage of the amounts received from the Revolving Lenders as provided
above.  The Administrative Agents shall
have sole dominion and control over each L/C Reserve Account, and the amounts
deposited in each L/C Reserve Account shall be held in such L/C Reserve Account
until withdrawn as provided in paragraph (d), (e), (f) or (g) below.  The applicable Administrative Agent shall
maintain records enabling it to determine the amounts paid over to it and
deposited in the L/C Reserve Accounts in respect of each Letter of Credit and
the amounts on deposit in respect of each Letter of Credit attributable to each
Revolving Lender’s CAM Percentage.  The
amounts held in each Revolving Lender’s L/C Reserve Account shall be held as a
reserve against the LC Obligations due and owing , shall be the property of
such Revolving Lender, shall not constitute Revolving Loans to or give rise to
any claim of or against any Loan Party and shall not give rise to any
obligation on the part of any Borrower to pay interest to such Revolving Lender,
it being agreed that the reimbursement obligations in respect of Letters of
Credit shall arise only at such times as drawings are made thereunder, as
provided in Section 2.18.

 

(d)           In the event that after the CAM
Exchange Date any drawing shall be made in respect of a Letter of Credit, the
applicable Administrative Agent shall, at the request of the Issuing Bank in
respect of such Letter of Credit, withdraw from the L/C Reserve Account of each
Revolving Lender any amounts, up to the amount of such Revolving Lender’s CAM
Percentage of such drawing, deposited in respect of such Letter of Credit and
remaining on deposit and deliver such amounts to such Issuing Bank in
satisfaction of the reimbursement obligations of the Revolving Lenders under Section 2.18
(but not of any Borrower under Section 2.18).  In the event any Revolving Lender shall
default on its obligation to pay over any amount to the Administrative Agents
in respect of any Letter of Credit as provided in this Section 2.22,
the Issuing Bank in respect thereof shall, in the event of a drawing
thereunder, have a claim against such Revolving Lender to the same extent as if
such 

 

87

 

Revolving Lender had
defaulted on its obligations under Section 2.18, but shall have no
claim against any other Revolving Lender in respect of such defaulted amount,
notwithstanding the exchange of interests in the reimbursement obligations
pursuant to Section 2.22(a). 
Each other Revolving Lender shall have a claim against such defaulting
Revolving Lender for any damages sustained by it as a result of such default,
including, in the event such Letter of Credit shall expire undrawn, its CAM
Percentage of the defaulted amount.

 

(e)           In the event that after the CAM
Exchange Date any Letter of Credit shall expire undrawn, the applicable
Administrative Agent shall withdraw from the L/C Reserve Account of each
Revolving Lender the amount remaining on deposit therein in respect of such
Letter of Credit and distribute such amount to such Revolving Lender.

 

(f)            With the prior written approval of
the US Administrative Agent or the Canadian Administrative Agent, as
applicable, and the Issuing Bank in respect of such Letter of Credit, any
Revolving Lender may withdraw the amount held in its L/C Reserve Account in
respect of the undrawn amount of any Letter of Credit.  Any Revolving Lender making such a withdrawal
shall be unconditionally obligated, in the event there shall subsequently be a
drawing under such Letter of Credit, to pay over to the applicable
Administrative Agent for the account of such Issuing Bank on demand, its CAM
Percentage of such drawing.

 

(g)           Pending the withdrawal by any
Revolving Lender of any amounts from its L/C Reserve Account as contemplated by
the above paragraphs, the applicable Administrative Agent will, at the
direction of such Revolving Lender and subject to such rules as the
applicable Administrative Agent may prescribe for the avoidance of
inconvenience, invest such amounts in Cash Equivalents.  Each Revolving Lender that has not withdrawn
the amounts in its L/C Reserve Account as provided in Section 2.22(f) above
shall have the right, at intervals reasonably specified by the applicable
Administrative Agent to withdraw the earnings on investments so made by the
Administrative Agents with amounts in its L/C Reserve Account and to retain
such earnings for its own account.

 

(h)           Notwithstanding any other provision
of this Agreement, if, as a direct result of the implementation of the CAM
Exchange, any Borrower is required to withhold Taxes from amounts payable to
any Agent, any Revolving Lender or any Participant hereunder, the amounts so
payable to such Agent, such Revolving Lender or such Participant shall be
increased to the extent necessary to yield to such Agent, such Revolving Lender
or such Participant (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that such Borrower shall not be
required to increase any such amounts payable to such Revolving Lender or
Participant under this Section 2.22 (but, rather, shall be required
to increase any such amounts payable to such Revolving Lender or Participant to
the extent required by Section 2.15) if such Revolving Lender or
Participant was prior to or on the CAM Exchange Date already a Revolving Lender
or Participant with respect to such Borrower. 
If a Revolving Lender that is not incorporated in the United States, in
its good faith judgment, is eligible for an exemption from, or reduced rate of,
U.S. federal withholding tax on payments by the U.S. Borrower under this
Agreement, the U.S. Borrowers shall not be required to increase any such
amounts payable to such Revolving Lender if such Revolving Lender fails to
comply with the requirements of Section 2.15(e).

 

SECTION 2.23.                Super Priority Nature of Obligations and
Lenders’ Liens.

 

(a)           Chapter 11 Cases.

 

(i)            The priority of Lenders’ Liens on the
Collateral of the Debtors shall be set forth in the Interim Order and the Final
Order.

 

88

 

(ii)           All US Obligations shall constitute administrative expenses of the
Debtors in the Chapter 11 Cases, with administrative priority and senior
secured status under Sections 364(c) and 364(d) of the Bankruptcy
Code (the “DIP Superpriority Claim”). 
Subject only to (i) the Carve-Out Expenses up to the Carve-Out
Amount (as each such term is defined below) and (ii) the Indenture
Superpriority Claim solely with respect to perfected Indenture Liens in Note
Lien Collateral, such administrative claim shall have priority over any and all
administrative expense claims, unsecured claims and costs and expenses against
the Debtors or their estates in any of the Chapter 11 Cases (or any subsequent
proceeding or case under the Bankruptcy Code), at any time existing or arising,
of any kind or nature whatsoever, including, without limitation, administrative
expenses of the kinds specified in or ordered pursuant to Bankruptcy Code
Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b), 506(c), 507(a), 507(b) (except
as set forth in the Order), 546(c), 546(d), 726 (to the extent permitted by
law), 1113, 1114 or any other provision of the Bankruptcy Code or otherwise and
shall at all times be senior to the rights of the Debtors, any Debtor’s estate
and any successor trustee or estate representative in the Chapter 11 Cases or
any subsequent proceeding or case under the Bankruptcy Code.  The Liens granted to the US Collateral Agent
or the US Administrative Agent on behalf of the Secured Parties on the
Collateral, and the priorities accorded to the Obligations shall have the
priority and senior secured status afforded by Section 364(c) and Section 364(d) of
the Bankruptcy Code (all as more fully set forth in the Interim Order and Final
Order) senior to all claims and interests other than (A) Permitted Prior
Liens, (B) the Carve-Out Expenses up to the Carve-Out Amount, (C) the
perfected Indenture Liens on Note Lien Collateral, (D) the Indenture
Adequate Protection Liens on Note Lien Collateral and (E) to the extent
that the Permitted Leasehold Facility has been consummated, Liens of the
lenders under a Permitted Leasehold Facility solely on Leasehold Priority
Collateral, in each case, as set forth in the Interim Order and the Final
Order.  Pursuant to 364(d) of the Bankruptcy
Code, the Liens granted to the US Collateral Agent or the US Administrative
Agent shall be senior to (A) Indenture Liens on DIP Priority Collateral
and (B) Indenture Adequate Protection Liens on DIP Priority Collateral and
Liens of the Permitted Leasehold Facility on any Collateral (other than
Leasehold Priority Collateral). 
Notwithstanding the foregoing and subject to the Carve-Out Expenses up
to the Carve-Out Amount, the DIP Superpriority Claim shall be (A) senior
to the Revolver Superpriority Claims of the Prior Agent and the Prior Lenders
with respect to any diminution in value of their interests in all the
Prepetition Collateral; (B) senior to the Indenture Superpriority Claims
of the Senior Note Collateral Agent and the Senior Note Secured Parties with
respect to any diminution in value of their interests in all the DIP Priority
Collateral, each as set forth in the Interim Order and the Final Order.

 

(iii)          As used herein “Carve-Out
Expenses” means, upon the
occurrence and during the continuation of a Default or Event of Default, and
unless such Default or Event of Default is otherwise waived by the
Administrative Agents and the Lenders in writing in accordance with this
Agreement, the following expenses:  (a) statutory
fees payable to the U.S. Trustee pursuant to 28 U.S.C. Section 1930(a)(6);
and (b) subject to the terms and conditions of the Interim Order or the
Final Order, the allowed and unpaid professional fees and disbursements
incurred by the Debtors and any official Committee for any professionals
retained by final order of the Court (which order has not been reversed,
vacated or stayed unless such stay is no longer effective) by the Debtors or
such Committee under Sections 327 or 1103(a) of the Bankruptcy Code (the “Case
Professionals”) in an aggregate amount not in excess of $5,000,000 (plus
all unpaid professional fees and disbursements of such Case Professionals
incurred prior to the occurrence of such Default or Event of Default to the
extent allowed and payable pursuant to an order of the Court (which order has
not been reversed, vacated or stayed unless such stay is no longer effective) (“Allowed
Professional Fees”) under Sections 328, 330 and/or 331 of the Bankruptcy
Code and any interim compensation procedures order, but solely to the extent
such Allowed Professional 

 

89

 

Fees were incurred in
accordance with the Budget and reflected in the Borrowing Base Certificate
most-recently delivered prior to the occurrence of such Default or Event of
Default.  The
Agents and Lenders shall not be responsible for the direct payment or
reimbursement of any fees or disbursements of any Case Professionals incurred
in connection with the Chapter 11 Cases or any successor cases under any
chapter of the Bankruptcy Code.  Nothing
in this Agreement or otherwise shall be construed to obligate the Agents or
Lenders, in any way to pay compensation to or to reimburse expenses of any Case
Professional, or to guarantee that the Debtors have sufficient funds to pay
such compensation or reimbursement.

 

(iv)          For purposes of this clause (a), (x) if,
at the time of reference, a Default or an Event of Default shall not have
occurred, the US Borrowers shall be permitted to pay compensation and
reimbursement expenses to the Case Professionals so long as such amounts are in
accordance with the Budget and are reflected in the most-recent Borrowing Base
Certificate delivered to the Agents by the Debtors, as the same may be due and
payable and otherwise allowed and 
payable by order of the U.S. Bankruptcy Court and such amounts shall not
reduce the Carve-Out Amount (as defined below) and (y) if, at the time of
reference, a Default or Event of Default has occurred and is continuing, the
amount of the Carve-Out Expenses for the Case Professionals shall be limited to
$5,000,000 plus the lesser of (A) any fees and expenses of Case
Professionals that are listed in the Budget and are actually incurred but are
unpaid as of the date of the occurrence of such Default or Event of Default and
are set forth by the Debtors in the Borrowing Base Certificate most recently
delivered to the Administrative Agents prior to the occurrence of such Default
or Event of Default in respect of all Carve-Out Expenses and (B) the
actual amount of all Carve-Out Expenses of the Case Professionals incurred and
allowed, but unpaid, provided in each case such fees and expenses are
ultimately approved by the U.S. Bankruptcy Court, or such lesser amount as so
approved (determined, in this clause (y) without regard to fees and expenses
which may be awarded and paid on an interim basis or any Pre-Petition retainer
paid to any Debtor’s or Committee’s counsel in connection with the Chapter 11
Cases) (the amounts referred to in clause (y) herein as the “Carve-Out
Amount”), provided, that the Carve-Out Expenses shall not include
any other claims that are or may be senior to or pari passu with any of the
Carve-Out Expenses or any professional fees and expenses of a Chapter 7 trustee
and, provided, further, that Carve-Out Expenses shall not include
any fees or disbursements (A) arising after the conversion of the Chapter
11 Case to a case under Chapter 7 of the Bankruptcy Code or (B) of the
type prohibited in Section 3.12 hereof.  Cash collateral referenced in the last
sentence of Section 2.04(a) shall not be subject to the Carve-Out
Amount.

 

(v)           No portion of the credit facilities hereunder, the Collateral, the
Carve-Out Amount or any “Cash Collateral” (as defined in Section 363(a) of
the Bankruptcy Code) may be used to
litigate, object, prosecute an objection to, contest or challenge in any
manner, or in connection with raising any defenses to, the debt or collateral
position of the Agents and the Lenders under this Agreement and the other Loan
Documents or the Prior Agents under the Pre-Petition Loan Documents, whether by challenging the validity,
extent, amount, perfection, priority or enforceability of the Indebtedness
under this Agreement and the other Loan Documents or the Pre-Petition
Loan Documents or the validity,
perfection or priority of any mortgage, claim, security interest or Lien with
respect thereto or any other rights or interests or replacement liens with
respect thereto or any other rights or interests of the Agents and the Lenders,
or by seeking to subordinate or recharacterize this Agreement and the other
Loan Documents or the Pre-Petition Loan Documents or disallow any claim, mortgage, security interest, Lien, or
replacement lien or by asserting any claims or causes of action, including,
without limitation, any actions under Chapter 5 of the Bankruptcy Code, against
the Agents, the Lenders, or any of their respective affiliates, agents,
professionals, officers, directors and employees.  In addition, no portion of the credit facilities
hereunder, the Collateral, the Carve-Out 

 

90

 

Amount or any “Cash
Collateral” (as defined in Section 363(a) of the Bankruptcy
Code) shall be used in
connection with (i) preventing, hindering or delaying the Lenders’ or the
Agent’s enforcement or realization upon the Collateral once an Event of Default
has occurred and is continuing, (ii) using or seeking to use cash
collateral or selling or otherwise disposing of the Collateral without the
consent of the Agents and the Lenders, (iii) using or seeking to use any
insurance proceeds constituting Collateral without the consent of the Agents
and Lenders; or (iv) incurring Indebtedness other than in accordance with
the Budget and this Agreement without the consent of the Agents and Lenders; provided,
however, that during the five (5) Business Days following the
Termination Declaration Date (i) the US Borrowers may use cash collateral
to pay payroll and other expenses critical to keep the business of the Debtors
operating in accordance with the Budget and (ii) the Borrowers and the
Committee shall be entitled to an emergency hearing before the U.S. Bankruptcy
Court for the sole purpose of contesting whether an Event of Default has
occurred and/or is continuing.  The
Carve-Out Amount and such collateral proceeds and loans under the Agreement may
be used for allowed fees and expenses, in an amount not to exceed $50,000 in
the aggregate, incurred solely by a Committee, if appointed, in investigating
the validity, enforceability, perfection or priority of the Pre-Petition Liens
within sixty (60) calendar days following the formation of the Committee.

 

SECTION 2.24.                Payment of Obligations.  Upon the maturity (whether by acceleration or
otherwise) of any of the Obligations under this Agreement or any of the other
Loan Documents, Lenders shall be entitled to immediate indefeasible payment in
full in cash of such Obligations without further application to or order of the
U.S. Bankruptcy Court.

 

SECTION 2.25.                No Discharge; Survival of Claims.  US Borrowers agree that (a) the
Obligations hereunder shall not be discharged by the entry of an order
confirming a plan of reorganization, compromise or arrangement in any of the
Chapter 11 Cases (notwithstanding the provisions of Section 1141(d)(4) of
the Bankruptcy Code) and (b) the superpriority administrative claim
granted to the US Administrative Agent and Lenders pursuant to the Interim
Order and Final Order and described in Section 2.23(a) and the
Liens granted to the US Administrative Agent pursuant to the Interim Order and
Final Order and described in Section 2.23(a) shall not be affected
in any manner by the entry of an order confirming a plan of reorganization in
any Chapter 11 Case.

 

SECTION 2.26.                Release.  Each Loan Party hereby acknowledges effective
upon entry of the Final Order, that no Loan Party nor any of their respective
Subsidiaries has any defense, counterclaim, offset, recoupment,
cross-complaint, claim or demand of any kind or nature whatsoever that can be
asserted to reduce or eliminate all of any part of the Loan Parties’ or their
Subsidiaries’ liability to repay the Administrative Agents or any Lender as
provided in this Agreement or to seek affirmative relief or damages of any kind
or nature from Administrative Agent or any Lender.  Each Loan Party, each in their own right and
with respect to the other Loan Parties, on behalf of their bankruptcy estates,
and on behalf of all their successors, assigns, Subsidiaries and any Affiliates
and any Person acting for and on behalf of, or claiming through them, (collectively,
the “Releasing Parties”), hereby fully, finally and forever releases and
discharges each of the Administrative Agents, Collateral Agents and Lenders and
all of such Administrative Agents’, Collateral Agents’ and Lenders’ past and
present officers, directors, servants, agents, attorneys, assigns, heirs,
parents, subsidiaries, and each Person acting for or on behalf of any of them
(collectively, the “Released Parties”) of and from any and all past,
present and future actions, causes of action, demands, suits, claims,
liabilities, Liens, lawsuits, adverse consequences, amounts paid in settlement,
costs, damages, debts, deficiencies, diminution in value, disbursements,
expenses, losses and other obligations of any kind or nature whatsoever, whether
in law, equity or otherwise (including, without limitation, those arising under
Sections 541 through 550 of the Bankruptcy Code and interest or other carrying
costs, penalties, legal, accounting and other professional fees and expenses,
and incidental, consequential and punitive damages payable to third parties),
whether known or unknown, fixed or 

 

91

 

contingent,
direct, indirect, or derivative, asserted or unasserted, foreseen or
unforeseen, suspected or unsuspected, now existing, heretofore existing or
which may heretofore accrue against any of the Released Parties, whether held
in a personal or representative capacity, and which are based on any act, fact,
event or omission or other matter, cause or thing occurring at or from any time
prior to and including the date hereof in any way, directly or indirectly
arising out of, connected with or relating to this Agreement, the Orders and
the transactions contemplated hereby, and all other agreements, certificates,
instruments and other documents and statements (whether written or oral)
related to any of the foregoing.

 

SECTION 2.27.    Waiver
of any Priming Rights.  Upon the Closing Date, and on behalf of
themselves and their estates, and for so long as any Obligations shall be
outstanding, other than as expressly set forth the Interim Order (or the Final
Order, when applicable), each Debtor hereby irrevocably waives any right
(whether pursuant to Sections 364(c) or 364(d) of the Bankruptcy Code
or otherwise) to grant or to confer any Lien of equal or greater priority than
the Liens securing the Obligations.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

Each Loan Party represents and warrants to
the Administrative Agents, the Collateral Agents, the Issuing Bank and each of
the Lenders that:

 

SECTION 3.01.                Organization; Powers.  Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) and
in respect of the Debtors only, upon the entry of the Order by the U.S. Bankruptcy
Court and further subject to the approval of the US Bankruptcy Court for
transactions outside of the ordinary course of business, has all requisite
power and authority to carry on its business as now conducted and to own and
lease its property and (c) is qualified and in good standing (to the
extent such concept is applicable in the applicable jurisdiction) to do
business in every jurisdiction where such qualification is required, except in
such jurisdictions where the failure to so qualify or be in good standing,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  There is no
existing default under any Organizational Document of any Company or any event
(other than the commencement of the Chapter 11 Cases in respect of the Debtors)
which, with the giving of notice or passage of time or both, would constitute a
default by any party thereunder.

 

SECTION 3.02.                Authorization; Enforceability.  Upon the entry of the Interim
Order (or the Final Order, when applicable) by the U.S. Bankruptcy Court, the
transactions contemplated by the Loan Documents to be entered into by each Loan
Party are within such Loan Party’s powers and have been duly authorized by all
necessary action on the part of such Loan Party.  Subject to the entry of the Interim Order (or
the Final Order, when applicable) by the U.S. Bankruptcy Court, this Agreement
has been duly executed and delivered by each Loan Party and constitutes, and
each other Loan Document to which any Loan Party is to be a party, when
executed and delivered by such Loan Party, will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its
terms, subject to (i) with respect to the Canadian Loan Parties,
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and (ii) general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

 

SECTION 3.03.                No Conflicts.  Except as set forth on Schedule 3.03
and upon the entry of the Interim Order (or the Final Order, when applicable)
by the U.S. Bankruptcy Court, the execution, delivery and performance of the
Loan Documents (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except (i) such
as have 

 

92

 

been
obtained or made and are in full force and effect, (ii) filings necessary
to perfect Liens created by the Loan Documents and (iii) consents,
approvals, registrations, filings, permits or actions the failure to obtain or
perform which could not reasonably be expected to result in a Material Adverse
Effect, (b) will not violate the Organizational Documents of any Company, (c) will
not violate any Requirement of Law, except for violations, defaults or the
creation of such rights that could not reasonably be expected to result in a
Material Adverse Effect, (d) will not violate or result in a default or
require any consent or approval under any indenture, agreement or other
instrument including under the Senior Note Documents and under the Permitted
Leasehold Facility (if any) binding upon any Company or its property, or give
rise to a right thereunder to require any payment to be made by any Company,
except for violations, defaults or the creation of such rights that could not
reasonably be expected to result in a Material Adverse Effect, and (e) will
not result in the creation or imposition of any Lien on any property of any
Company, except Liens created by the Loan Documents and Permitted Liens.

 

SECTION 3.04.                Financial Statements; Projections.

 

(a)           Historical Financial Statements.  The
Borrowers have heretofore delivered to the Lenders (i) the consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of Holdings and its Subsidiaries (or their predecessors) as of and for
the fiscal years ended December 30, 2006 and December 29, 2007,
audited by and accompanied by the unqualified opinion of KPMG LLP, independent
public accountants (the “Accountants”),
in each case, certified by the chief financial officer of US Borrowers.  Such financial statements and all financial
statements delivered pursuant to Section 5.01(a), Section 5.01(b)
and Section 5.01(c) since the Closing Date have been prepared in
accordance with GAAP and present fairly and accurately the financial condition
and results of operations and cash flows of the Holdings and its Subsidiaries
(or their predecessors, where applicable) as of the dates and for the periods
to which they relate, subject in the case of unaudited statements, to year-end
audit adjustments.

 

(b)           No Liabilities. 
Except as set forth in the financial statements referred to in Section 3.04(a)
(including the notes thereto), there are no liabilities of any Company of any
kind, whether accrued, contingent, absolute, determined, determinable or
otherwise, which could reasonably be expected to result in a Material Adverse
Effect, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability, other than
liabilities under the Loan Documents and the Senior Note Documents.

 

(c)           Forecasts.  The forecasts of financial
performance of Holdings and its Subsidiaries furnished to the Lenders have been
prepared in good faith by the Borrowers and based on assumptions believed by
the Borrowers to be reasonable.

 

(d)           Budget.  The Borrowers have furnished
to the Administrative Agents the Budget and such Budget was prepared in good
faith based upon assumptions which the Borrowers believe to be reasonable
assumptions and the current Budget sets forth the Debtor’s good faith estimates
of the receipts and disbursements of the Debtors in connection with the Chapter
11 Cases for the period covered by the Budget. 
Borrowers shall thereafter deliver to the Administrative Agents updates
to the Budget as set forth in Section 5.01.

 

SECTION 3.05.                Properties.

 

(a)           Generally.  Each Company has good title
to, or valid leasehold interests in, all its property material to its business,
free and clear of all Liens except for, Permitted Liens and minor
irregularities or deficiencies in title that, individually or in the aggregate,
do not interfere with its ability to conduct its business as currently
conducted or to utilize such property for its intended 

 

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purpose.  The property of the Companies, taken as a
whole, (i) is in good operating order, condition and repair (ordinary wear
and tear excepted), except to the extent that the failure to be in such
condition could not reasonably be expected to result in a Material Adverse
Effect and (ii) constitutes all the property which is required for the
business and operations of the Companies as presently conducted.

 

(b)           Real Property.

 

(i)            Schedules 8(a) and 8(b) to the Perfection Certificate dated the
Closing Date contain a true and complete list of each interest in Real Property
(x) owned by any Company as of the date hereof and describes the type of
interest therein held by such Company and whether such owned Real Property is
leased and if leased whether the underlying Lease contains any option to
purchase all or any portion of such Real Property or any interest therein or
contains any right of first refusal relating to any sale of such Real Property
or any portion thereof or interest therein and (y) leased, subleased or
otherwise occupied or utilized by any Company, as lessee, sublessee, franchisee
or licensee, as of the date hereof and describes the type of interest therein
held by such Company.

 

(ii)           The fair market value (net of existing mortgage debt secured by each
such property) of the Real Property owned by US Borrowers or their US
Subsidiaries located in Colorado Springs, Colorado and Newport News, Virginia
does not exceed $500,000 individually for any such property or $1,000,000 in
the aggregate for all such properties.

 

(c)           No Casualty Event.  No
Company has received any written notice of, nor has any knowledge of, the
occurrence or pendency of any Casualty Event affecting all or any material
portion of its property.  No Mortgage
encumbers improved Real Property that is located in an area that has been
identified by the Secretary of Housing and Urban Development as an area having
special flood hazards within the meaning of the National Flood Insurance Act of
1968 unless flood insurance available under such Act has been obtained in
accordance with Section 5.04 or the applicable Collateral Agent has
waived such requirement in the Mortgage.

 

(d)           Collateral.  Each Company owns or has
rights to use all of the Collateral and all rights with respect to any of the
foregoing used in, necessary for or material to each Company’s business as
currently conducted.  The use by each
Company of such Collateral and all such rights with respect to the foregoing do
not infringe on the rights of any person other than such infringement which
could not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.  No claim
has been made and remains outstanding that any Company’s use of any Collateral
does or may violate the rights of any third party that could, individually or
in the aggregate, reasonably be expected to result in a Material Adverse
Effect.

 

94

 

SECTION 3.06.                Intellectual Property.

 

(a)           Ownership/No Claims.  Each
Loan Party owns, or is licensed to use, all patents, patent applications,
trademarks, industrial designs, trade names, servicemarks, copyrights, technology,
trade secrets, proprietary information, domain names, know-how and processes
necessary for the conduct of its business as currently conducted (the “Intellectual Property”), except for those
the failure to own or license which, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.  No claim has been asserted and is pending by
any person challenging or questioning the use of any such Intellectual Property
or the validity or effectiveness of any such Intellectual Property in any
material respect, nor does any Loan Party know of any valid basis for any such
claim.  The use of such Intellectual
Property by each Loan Party does not infringe the rights of any person, except
for such claims and infringements that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

 

(b)           Registrations. 
Except pursuant to licenses and other user agreements entered into by
each Loan Party in the ordinary course of business that are listed in Schedule
12(a) or 12(b) to the Perfection Certificate, on and as of the date
hereof (i) each Loan Party owns and possesses the right to use, and has
done nothing to authorize or enable any other person to use, any copyright,
patent, industrial designs or trademark (as such terms are defined in the
Security Agreement) listed in Schedule 12(a) or 12(b) to
the Perfection Certificate and (ii) all registrations listed in Schedule
12(a) or 12(b) to the Perfection Certificate are valid and
in full force and effect.

 

(c)           No Violations or Proceedings.  To
each Loan Party’s knowledge, on and as of the date hereof, there is no material
violation by others of any right of such Loan Party with respect to any
copyright, patent, industrial designs or trademark listed in Schedule 12(a)
or 12(b) to the Perfection Certificate, pledged by it under the name of
such Loan Party.

 

SECTION 3.07.                Equity Interests and Subsidiaries.

 

(a)           Equity Interests.  Schedules
1(a) and 10(a) to the Perfection Certificate dated the Closing Date
set forth a list of (i) all the Subsidiaries of Holdings and their
jurisdictions of organization as of the Closing Date and (ii) the number
of each class of its Equity Interests authorized, and the number outstanding,
on the Closing Date and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights at the
Closing Date.  All Equity Interests of
each Company are duly and validly issued and are fully paid and non-assessable,
and, other than the Equity Interests of US Borrowers, are owned by LNT Center,
directly or indirectly through Wholly Owned Subsidiaries.  All Equity Interests of LNT are owned
directly by Holdings.  Each Loan Party is
the record and beneficial owner of, and has good and marketable title to, the
Equity Interests pledged by it under the Security Agreement, free of any and
all Liens, rights or claims of other persons, except the security interest
created by the Security Agreement, and there are no outstanding warrants,
options or other rights to purchase, or shareholder, voting trust or similar
agreements outstanding with respect to, or property that is convertible into,
or that requires the issuance or sale of, any such Equity Interests.

 

(b)           No Consent of Third Parties Required.  No
consent of any person including any other general or limited partner, any other
member of a limited liability company, any other shareholder or any other trust
beneficiary is necessary or reasonably desirable (from the perspective of a secured
party) in connection with the creation, perfection or First Priority status of
the security interest of the applicable Collateral Agent in any Equity
Interests pledged to such Collateral Agent for the benefit of the Secured
Parties under the Security Agreements or the exercise by such Collateral Agent
of the voting or other rights provided for in any such Security Agreement or
the exercise of remedies in respect thereof, except to the extent that,
with respect only to the transfer of any Equity Interests in a 

 

95

 

Nova Scotia unlimited
company pledged to a Collateral Agent, the approval of the board of directors
of the relevant Nova Scotia unlimited company or the pledgor of its Equity
Interests therein may be required under any applicable corporate and securities
laws.

 

(c)           Organizational Chart.  An
accurate organizational chart, showing the ownership structure of Holdings, the
Borrowers and each Subsidiary on the Closing Date is set forth on Schedule
10(a) to the Perfection Certificate dated the Closing Date.

 

SECTION 3.08.                Litigation; Compliance with Laws.  There are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority now
pending or, to the knowledge of any Company, threatened against or affecting
any Company or any business, property or rights of any Company (i) that
involve any Loan Document or (ii) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.  Except for
matters covered by Section 3.18, no Company or any of its property
is in violation of, nor will the continued operation of its property as currently
conducted violate, any Requirements of Law (including any zoning or building
ordinance, code or approval or any building permits) or any restrictions of
record or agreements affecting any Company’s Real Property or is in default
with respect to any Requirement of Law, where such violation or default,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.

 

SECTION 3.09.                Agreements.  No Company is a party to any agreement or
instrument or subject to any corporate or other constitutional restriction that
has resulted or could reasonably be expected to result in a Material Adverse
Effect.  Other than the commencement of
the Chapter 11 Cases, no Company is in default in any manner under any
provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other agreement or instrument to which it is a party or by
which it or any of its property is or may be bound, where such default could
reasonably be expected to result in a Material Adverse Effect, and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute such a default.  Schedule
3.09 accurately and completely lists all material agreements (other than
leases of Real Property set forth on Schedule 8(a) or 8(b) to the
Perfection Certificate dated the Closing Date) to which any Company is a party
which are in effect on the date hereof in connection with the operation of the
business conducted thereby and Borrower has delivered to the Administrative
Agents complete and correct copies of all such material agreements, including
any amendments, supplements or modifications with respect thereto, and all such
agreements are in full force and effect.

 

SECTION 3.10.                Federal Reserve Regulations.  No Company is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.  No part of the proceeds of any Loan or any
Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the regulations
of the Board, including Regulation T, U or X. 
The pledge of the Securities Collateral pursuant to the Security
Agreements does not violate such regulations.

 

SECTION 3.11.                Investment Company Act.  No Company is an “investment company” or a
company “controlled” by an “investment company,” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.

 

96

 

SECTION 3.12.                Use of Proceeds.

 

(a)           The Debtors.  The Debtors will use the
proceeds of their respective Loans and any Letters of Credit issued hereunder (a) which
are incurred on the Closing Date (net of any amounts used on the Closing Date
to pay Fees) to repay in full the Prior Lender Obligations (including the
Canadian Prior Lender Obligations), and (b) thereafter, (x) for
working capital and general corporate purposes consistent with the Budget,
including for the payment of certain fees and expenses of professionals
retained by the Debtors, subject to the Carve-Out Amount, but excluding in any
event the making of any Dividends or other distributions not specifically
permitted in Section 6.08 and (y) to pay the costs and
expenses related to the administration of the Chapter 11 Cases and for payment
of certain other Pre-Petition expenses as contemplated in the Budget and as
approved by the U.S. Bankruptcy Court and consented to by the US Administrative
Agent.  The Debtors may also use Letters
of Credit issued hereunder to support obligations to pooled groups of vendors
pursuant to Letter of Credit documentation acceptable to the applicable Issuing
Bank.  The Debtors shall not be permitted
to use the proceeds of the Loans or any Letter of Credit: (i) for the
payment of interest and principal with respect to subordinated debt or any
other Pre-Petition Indebtedness of the Borrowers or any other Loan Party
(except, as contemplated in the Budget and as approved by the U.S. Bankruptcy
Court and the US Administrative Agent, for: (1) Pre-Petition employee
wages, benefits and related employee taxes as of the Petition Date; (2) Pre-Petition
sales, use and real property taxes; (3) Pre-Petition amounts due in
respect of insurance financings; (4) amounts approved in accordance with
other “first day orders” reasonably satisfactory to the US Administrative
Agent; and (5) cure amounts reasonably acceptable to the US Administrative
Agent under leases and executory contracts assumed with the approval of the
U.S. Bankruptcy Court), (ii) to finance in any way any adversary action,
suit, arbitration, proceeding, application, motion or other litigation of any
type relating to or in connection with the Pre-Petition Credit Agreement of any
of the loan documents or instruments entered in connection therewith, including
without limitation, any challenges to the Prior Lender Obligations under the
Pre-Petition Credit Agreement, or the validity, perfection, priority or
enforceability of any Lien securing such claims or any payment made thereunder,
(iii) to finance in any way any action, suit, arbitration, proceeding,
application, motion or other litigation of any type adverse to the interests of
the Administrative Agents and the Lenders or their rights and remedies under
this Agreement, the other Loan Documents, the Interim Order or the Final Order;
provided, however, that during the five (5) Business Days
following the Termination Declaration Date (y) the US Borrowers may use
cash collateral to pay payroll and other expenses critical to keep the business
of the Debtors operating in accordance with the Budget and (z) the
Borrowers and any Committee shall be entitled to an emergency hearing before
the U.S. Bankruptcy Court for the sole purpose of contesting whether an Event
of Default has occurred and/or is continuing, (iv) to make any payment in
settlement of any Pre-Petition claim, action or proceeding, before any court,
arbitrator or other governmental body without the prior written consent of the
US Administrative Agent (not to be unreasonably withheld or delayed) and (v) to
pay any fees or similar amounts to any person who has proposed or may propose
to purchase interests in any Borrower or any other Loan Party (including
so-called “Topping Fees”, “Exit Fees” and similar amounts) without the prior
written consent of the US Administrative Agent and the Required Lenders.  Schedule 3.12 contains a description of
Borrowers’ sources and uses of funds as of the Closing Date, including Loans
and LC Obligations to be made or incurred on that date, as a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.

 

(b)           The Canadian Borrower.  The
Canadian Borrower will use the proceeds of its respective Revolving Loans,
Swingline Loans and Letters of Credit (a) which are incurred on the
Closing Date (net of any amounts used on the Closing Date to pay Fees), to
repay in full the Canadian Prior Lender Obligations and (b) for working
capital and general corporate purposes on and after the Closing Date.

 

97

 

SECTION 3.13.                Taxes.  Each Company has (a) timely filed or
caused to be timely filed all federal Tax Returns and all material state,
provincial, territorial, local and foreign Tax Returns or materials required to
have been filed by it and all such Tax Returns are true and correct in all
material respects and (b) duly and timely paid, collected or remitted or
caused to be duly and timely paid, collected or remitted all Taxes (whether or
not shown on any Tax Return) due and payable, collectible or remittable by it
and all assessments received by it, except Taxes (i) that are being
contested in good faith by appropriate proceedings and for which such Company
has set aside on its books adequate reserves in accordance with GAAP and (ii) which
could not, individually or in the aggregate, have a Material Adverse
Effect.  Each Company has made adequate
provision in accordance with GAAP for all material Taxes not yet due and
payable.  Each Company is unaware of any
proposed or pending tax assessments, deficiencies or audits that could be
reasonably expected to, individually or in the aggregate, result in a Material
Adverse Effect.  No Company has ever been
a party to any understanding or arrangement constituting a “tax shelter” within
the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii) of
the Code, or has ever “participated” in a “reportable transaction” within the meaning
of Treasury Regulation Section 1.6011-4, except as, in each case, could
not be reasonably expected to, individually or in the aggregate, result in a
Material Adverse Effect in respect of Taxes.

 

SECTION 3.14.                No Material Misstatements.  No information, report,
financial statement, certificate, Borrowing Request, LC Request, exhibit or
schedule furnished by or on behalf of any Company to the Administrative Agents
or any Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto, taken as a whole, contained or
contains any material misstatement of fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading as of the date
such information is dated or certified; provided
that to the extent any such information, report, financial statement, exhibit
or schedule was based upon or constitutes a forecast or projection, each
Company represents only that it acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule.

 

SECTION 3.15.                Labor Matters.  As of the Closing Date, there are no strikes,
lockouts or slowdowns against any Company pending or, to the knowledge of any
Company, threatened.  The hours worked by
and payments made to employees of any Company have not been in violation of the
Fair Labor Standards Act of 1938, as amended, or any other applicable federal,
state, provincial, territorial, local or foreign law dealing with such matters
in any manner which could reasonably be expected to result in a Material
Adverse Effect.  All payments due from
any Company, or for which any claim may be made against any Company, on account
of wages and employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of such Company except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect.  Each Loan Party has
withheld all employee withholdings and has made all employer contributions to
be withheld and made by it pursuant to applicable law on account of any
employee benefit plans, employment insurance and employee income taxes except
where such failure to do so could not reasonably be expected to result in a
Material Adverse Effect.  The
Transactions contemplated herein do not and will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Company is bound.

 

SECTION 3.16.                Solvency.  With respect solely to the Canadian Loan
Parties, as of the Closing Date and after giving effect to the transactions
contemplated by the Loan Documents and after giving effect to the application
of the proceeds of each Loan, (a) the fair value of the assets of each
Canadian Loan Party (individually and on a consolidated basis with its
Subsidiaries) will exceed its debts and liabilities, subordinated, contingent
or otherwise; (b) the present fair saleable value of the property of each
Canadian Loan Party (individually and on a consolidated basis with its Canadian
Subsidiaries) will be greater than the amount that will be required to pay the
probable liability of its debts and other 

 

98

 

liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) each Canadian Loan Party (individually
and on a consolidated basis with its Canadian Subsidiaries) will be able to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured; (d) each Canadian Loan Party
(individually and on a consolidated basis with its Canadian Subsidiaries) will
not have unreasonably small capital with which to conduct its business in which
it is engaged as such business is now conducted and is proposed to be conducted
following the Closing Date and (e) each Canadian Loan Party is not “insolvent”
as such term is defined under any bankruptcy, insolvency or similar laws of any
jurisdiction..

 

SECTION 3.17.                Employee Benefit Plans.  Each Company and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder, except
where such failure could not reasonably be expected to result in a Material
Adverse Effect.  No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in a Material
Adverse Effect of any Company or any of its ERISA Affiliates or the imposition
of a Lien on any of the property of any Company.  The present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not,
as of the date of the most recent financial statements reflecting such amounts,
exceed by more than $1,000,000 the fair market value of the property of all
such underfunded Plans.  Using actuarial
assumptions and computation methods consistent with subpart I of subtitle E of
Title IV of ERISA, the aggregate liabilities of each Company to all
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Multiemployer Plan, could not
reasonably be expected to result in a Material Adverse Effect.

 

To the extent applicable, each Foreign Plan
has been maintained in substantial compliance with its terms and with the
requirements of any and all applicable Requirements of Law and has been
maintained, where required, in good standing with applicable regulatory authorities
except where failure to do so could not reasonably be expected to result in a
Material Adverse Effect.  No Company has
incurred any obligation in connection with the termination of or withdrawal
from any Foreign Plan except where such obligation could not reasonably be
expected to result in a Material Adverse Effect.  The present value of the accrued benefit
liabilities (whether or not vested) under each Foreign Plan which is funded,
determined as of the end of the most recently ended fiscal year of the respective
Company on the basis of actuarial assumptions, each of which is reasonable, did
not exceed by $1,000,000 the current value of the property of such Foreign
Plan, and for each Foreign Plan which is not funded, the obligations of such
Foreign Plan are properly accrued except where such failure to accrue could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.18.                Environmental Matters.

 

(a)           Except as, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect:

 

(i)            The Companies and their businesses,
operations and Real Property are in compliance with, and the Companies have no
liability under, any applicable Environmental Law; and under the currently
effective business plan of the Companies, no expenditures or operational
adjustments will be required in order to comply with applicable Environmental
Laws during the next five years;

 

(ii)           The Companies have obtained all Environmental Permits required for the
conduct of their businesses and operations, and the ownership, operation and
use of their property, under Environmental Law, all such Environmental Permits
are valid and in good standing and, under the currently effective business plan
of the Companies, no expenditures or 

 

99

 

operational adjustments will
be required in order to renew or modify such Environmental Permits during the
next five years;

 

(iii)          There has been no Release or threatened Release of Hazardous Material
on, at, under or from any Real Property or facility presently or formerly
owned, leased or operated by the Companies or their predecessors in interest
that could reasonably be expected to result in liability by the Companies under
any applicable Environmental Law;

 

(iv)          There is no Environmental Claim pending or, to the knowledge of the
Companies, threatened against the Companies, or relating to the Real Property
currently or formerly owned, leased or operated by the Companies or their
predecessors in interest or relating to the operations of the Companies, and
there are no actions, activities, circumstances, conditions, events or
incidents that could reasonably be expected to form the basis of such an
Environmental Claim; and

 

(v)           No person with an indemnity or contribution obligation to the Companies
relating to compliance with or liability under Environmental Law is in default
with respect to such obligation.

 

(b)           (i) No Company is obligated to perform any action or otherwise
incur any expense under Environmental Law pursuant to any order, decree,
judgment or agreement by which it is bound or has assumed by contract,
agreement or operation of law, and no Company is conducting or financing any
Response pursuant to any Environmental Law with respect to any Real Property or
any other location;

 

(i)            No Real Property or facility owned, operated
or leased by the Companies and, to the knowledge of the Companies, no Real
Property or facility formerly owned, operated or leased by the Companies or any
of their predecessors in interest is (i) listed or proposed for listing on
the National Priorities List promulgated pursuant to CERCLA or (ii) listed
on the Comprehensive Environmental Response, Compensation and Liability
Information System promulgated pursuant to CERCLA or (iii) included on any
similar list maintained by any Governmental Authority including any such list
relating to petroleum;

 

(ii)           No Lien has been recorded or, to the knowledge of any Company,
threatened under any Environmental Law with respect to any Real Property or
other assets of the Companies;

 

(iii)          The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not require any
notification, registration, filing, reporting, disclosure, investigation,
remediation or cleanup pursuant to any Governmental Real Property Disclosure
Requirements or any other applicable Environmental Law; and

 

(iv)          The Companies have made available to the Lenders all material records
and files in the possession, custody or control of, or otherwise reasonably
available to, the Companies concerning compliance with or liability under
Environmental Law, including those concerning the actual or suspected existence
of Hazardous Material at Real Property or facilities currently or formerly
owned, operated, leased or used by the Companies.

 

SECTION 3.19.                Insurance.  Schedule 3.19 sets forth a true,
complete and correct description of all insurance maintained by each Company as
of the Closing Date.  All insurance 

 

100

 

maintained
by the Companies is in full force and effect, all premiums have been duly paid,
no Company has received notice of violation or cancellation thereof, the
Premises, and the use, occupancy and operation thereof, comply in all material
respects with all Insurance Requirements, and there exists no default under any
Insurance Requirement, except for minor defaults that, taken as a whole, do not
adversely affect the coverage provided by such insurance.  Each Company has insurance in such amounts
and covering such risks and liabilities as are customary for companies of a
similar size engaged in similar businesses in similar locations.

 

SECTION 3.20.                Security Documents.

 

(a)           Security Agreements.  The
execution and delivery of the Security Documents by the Loan Parties on the
Closing Date, together with the Order and with the actions taken on or prior to
the date hereof (including (i) the filing of financing statements and
other filings in appropriate form in the offices specified on Schedule 7 to the
initial Perfection Certificate, (ii) the filing of the Security Agreements
or a short form thereof in the United States Patent and Trademark Office, the
United States Copyright Office or the Canadian Intellectual Property Office, as
applicable, and (iii) the delivery to the applicable Collateral Agent of
the Security Agreement Collateral with respect to which a security interest may
be perfected only by possession or control (all of which Collateral has been so
delivered to the extent possession or control by such Collateral Agent is
required by the applicable Security Document) was and continues to be effective
to create in favor of the Collateral Agents for the benefit of the Secured
Parties, a legal, valid and enforceable security interest in and Lien on the
Security Agreement Collateral, subject to no Liens other than Permitted Liens,
and all filings and other actions necessary or desirable to perfect and
maintain the perfection and First Priority status of such Liens have been duly
made or taken and remain in full force and effect, other than (i) the
periodic filing of UCC continuation statements and PPSA renewal financing
change statements in respect of UCC and PPSA financing statements filed by or
on behalf of the Collateral Agent and (ii) such Security Agreement
Collateral subject to or referenced in the US Security Agreement or Canadian
Security Agreements in which a security interest cannot be perfected (x) under
the UCC or PPSA as in effect at the relevant time in the relevant jurisdiction
or (y) by other filings in appropriate form filed in the offices specified
on Schedule 7 to the initial Perfection Certificate.

 

(b)           [Intentionally Omitted.]

 

(c)           [Intentionally Omitted.]

 

(d)           Mortgages.  Each Mortgage, together with the
Order, is effective to create, in favor of the applicable Collateral Agent, for
its benefit and the benefit of the Secured Parties, legal, valid and
enforceable First Priority Liens on, and security interests in, all of the Loan
Parties’ right, title and interest in and to the Mortgaged Properties
thereunder and the proceeds thereof, subject only to Permitted Liens or other
Liens reasonably acceptable to the Senior Note Collateral Agent, and when the
Mortgages are filed in the offices specified on Schedule 8(a) to
the Perfection Certificate dated the Closing Date (or, in the case of any
Mortgage executed and delivered after the date thereof in accordance with the
provisions of Section 5.11 and Section 5.12, unless a
Loan Party has disclosed in writing any issues related to perfection thereof or
the security interest therein to the applicable Collateral Agent when such
Mortgage is filed in the offices specified in the local counsel opinion
delivered with respect thereto in accordance with the provisions of Section 5.11
and Section 5.12), the Mortgages shall constitute fully perfected
First Priority Liens on, and security interests in, all right, title and
interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other person, other
than Liens permitted by such Mortgage.

 

101

 

(e)           Valid Liens.  Each Security Document, unless
a Loan Party has disclosed in writing any issues related to the legality,
enforceability, validity or security interest therein, delivered pursuant to Section 5.11
and Section 5.12 will, upon execution and delivery thereof, ,
together with the entry of the Order, be effective to create in favor of the
applicable Collateral Agent, for the benefit of the applicable Secured Parties,
legal, valid and enforceable Liens on, and security interests in, all of the
Loan Parties’ right, title and interest in and to the Collateral thereunder,
and when all appropriate filings or recordings are made in the appropriate
offices as may be required under applicable law, such Security Document will
constitute fully perfected First Priority Liens on, and security interests in,
all right, title and interest of the Loan Parties in such Collateral, in each
case subject to no Liens other than the applicable Permitted Liens.

 

SECTION 3.21.                [Intentionally Omitted].

 

SECTION 3.22.                Anti-Terrorism Law.  No Loan Party and, to the knowledge of the
Loan Parties, none of its Affiliates is in violation of any Requirement of Law
relating to terrorism or money laundering (“Anti-Terrorism
Laws”), including Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, Public Law

107-56.

 

No Loan Party and to the knowledge of the
Loan Parties, no Affiliate or broker or other agent of any Loan Party acting or
benefiting in any capacity in connection with the Loans is any of the
following:

 

(i)            a person that is listed in the annex to, or
is otherwise subject to the provisions of, the Executive Order;

 

(ii)           a person owned or controlled by, or acting for or on behalf of, any
person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;

 

(iii)          a person with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

 

(iv)          a person that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order; or

 

(v)           a person that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control (“OFAC”)
at its official website or any replacement website or other replacement
official publication of such list.

 

No Loan Party and, to the knowledge of the
Loan Parties, no broker or other agent of any Loan Party acting in any capacity
in connection with the Loans (i) conducts any business or engages in
making or receiving any contribution of funds, goods or services to or for the
benefit of any person described in paragraph (b) above, (ii) deals
in, or otherwise engages in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order, or (iii) engages
in or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.

 

SECTION 3.23.                Material Adverse Effect.  Other than with respect to the Chapter 11
Cases, since the Petition Date, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

 

102

 

SECTION 3.24.            Executive Offices; Location of Material
Inventory.  Schedule
3.24 sets forth as of the Closing Date all locations in the United States
and Canada where the aggregate value of Inventory owned by the Loan Parties
exceeds $250,000.  As of the Closing
Date, the location in Canada of each chief executive office, principal place of
business and domicile (within the meaning of the Civil Code of Quebec), as
applicable, of each Canadian Loan Party is as set out in Schedule 3.24.

 

SECTION 3.25.            Accuracy of Borrowing Base.  At the time any Borrowing Base Certificate is
delivered pursuant to this Agreement, (i) each Account and each item of
Inventory included in the calculation of the Borrowing Base satisfies all of
the criteria stated herein to be an Eligible Account and an item of Eligible
Inventory, respectively, and (ii) each Account and each item of Inventory
included in the calculation of the Canadian Borrowing Base satisfies all of the
criteria stated herein to be an Eligible Canadian Account and an item of
Eligible Canadian Inventory, respectively.

 

SECTION 3.26.            [Intentionally Omitted.]

 

SECTION 3.27.            Common Enterprise.  The successful operation and condition of
each of the Loan Parties is dependent on the continued successful performance
of the functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties affects the successful performance and
operation of each other Loan Party.  Each
Loan Party expects to derive benefit (and its board of directors or other
governing body has determined that it may reasonably be expected to derive
benefit), directly or indirectly, from (i) successful operations of each
of the other Loan Parties, and (ii) the credit extended by the Lenders to
the Borrowers hereunder, both in their separate capacities and as members of
the group of companies.  Each Loan Party
has determined that execution, delivery, and performance of this Agreement and
any other Loan Documents to be executed by such Loan Party is within its
purpose, will be of direct and indirect benefit to such Loan Party, and is in
its best interest.

 

SECTION 3.28.            No Defaults.  No event or circumstance has occurred or
exists as of the date of this Agreement that constitutes a Default or Event of
Default.

 

SECTION 3.29.            Reorganization Matters.

 

(a)           The
Chapter 11 Cases were commenced on the Petition Date in accordance with
applicable law and proper notice was given for (x) the motion seeking
approval of the Loan Documents and the Interim Order and Final Order, (y) the
hearing for the approval of the Interim Order and (z) the hearing for the
approval of the Final Order.  The Debtors
shall give, on a timely basis as specified in the Interim Order or the Final
Order, as applicable, all notices required to be given to all parties specified
in the Interim Order or Final Order, as applicable.

 

(b)           After
the entry of the Interim Order, and pursuant to and to the extent permitted in
the Interim Order and the Final Order, the Obligations will constitute allowed
administrative expense claims in the Chapter 11 Cases having priority over any and all
administrative expense claims, unsecured claims, costs and expenses against the
Debtors or their estates in any of the Chapter 11 Cases (or any subsequent
proceeding or case under the Bankruptcy Code), at any time existing or arising,
of any kind or nature whatsoever, including, without limitation, administrative
expenses of the kinds specified in or ordered pursuant to Bankruptcy Code
Sections 105, 326, 328, 330, 331, 365, 503(a), 503(b), 506(c), 507(a), 507(b),
546(c), 546(d), 726 (to the extent permitted by law), 1113, 1114 or any other
provision of the Bankruptcy Code or otherwise and shall at all times be senior
to the rights of the Debtors, any Debtor’s estate and any successor trustee or
estate representative in the Chapter 11 Cases or any subsequent proceeding or
case under the Bankruptcy Code,
subject, as to priority only to (i) the Carve-Out Expenses up to the
Carve-Out Amount and (ii) the Indenture Superpriority
Claim solely with respect to perfected Indenture Liens in Note Lien Collateral.

 

103

 

(c)           After
the entry of the Interim Order and pursuant to and to the extent provided in
the Interim Order and the Final Order, the Obligations will be secured by a
valid and perfected First Priority Lien on all of the Collateral.

 

(d)           The
Interim Order (with respect to the period prior to entry of the Final Order) or
the Final Order (with respect to the period on and after entry of the Final
Order), as the case may be, is in full force and effect has not been reversed,
stayed or (without the consent of the Administrative Agents) modified or
amended.

 

(e)           Notwithstanding
the provisions of Section 362 of the Bankruptcy Code, and subject to the
entry and the applicable provisions of the Interim Order or Final Order, as the
case may be, upon the maturity (whether by acceleration or otherwise) of any of
the Obligations, the Agents and Lenders shall be entitled to immediate payment
of such Obligations and to enforce the remedies provided for hereunder or under
applicable law, without further application to or order by the U.S. Bankruptcy
Court; provided, however, that during the five (5) Business
Days following the Termination Declaration Date (i) the US Borrowers may
use cash collateral to pay payroll and other expenses critical to keep the
business of the Debtors operating in accordance with the Budget and (ii) the
Borrowers and any Committee shall be entitled to an emergency hearing before
the U.S. Bankruptcy Court for the sole purpose of contesting whether an Event
of Default has occurred and/or is continuing.

 

ARTICLE IV.

 

CONDITIONS
TO CREDIT EXTENSIONS AND CONVERSION TO EXIT FACILITIES

 

SECTION 4.01.            Conditions to Effectiveness of this Agreement.  This Agreement shall become effective and the
obligations of each Lender hereunder to undertake and continue the Commitments
shall be subject to the prior or concurrent satisfaction (except to the extent
that such conditions are permitted to be satisfied on a post-closing basis
pursuant to Section 5.14 herein, in each case, upon mutual agreement of
the Borrowers and the Administrative Agents) of each of the conditions
precedent set forth in this Section 4.01.

 

(a)           Loan Documents.  All legal matters incident to this Agreement,
the Credit Extensions hereunder and the other Loan Documents shall be
satisfactory to the Lenders, to the Issuing Bank, the Collateral Agents and to
the Administrative Agents and there shall have been delivered to the
Administrative Agents an executed counterpart of each of the Loan Documents and
the Perfection Certificate.  All
schedules, exhibits, annexes and other attachments to each of the Agreement and
the other Loan Documents will be in form and substance mutually agreeable to the
Borrowers and the Administrative Agents.

 

(b)           Corporate Documents.  The Administrative Agents shall have
received:

 

(i)            a certificate of the
secretary or assistant secretary of each Loan Party dated the Closing Date,
certifying (A) that attached thereto is a true and complete copy of each
Organizational Document of such Loan Party certified (to the extent applicable)
as of a recent date by the Secretary of State of the state of its organization,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the execution,
delivery and performance of the Loan Documents to which such person is a party
and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and effect
and (C) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of such Loan Party (together with 

 

104

 

a certificate of another
officer as to the incumbency and specimen signature of the secretary or
assistant secretary executing the certificate in this clause (i));

 

(ii)           a certificate as to the good
standing of each Loan Party (in so-called “long-form” if available) as of a
recent date, from such Secretary of State (or other applicable Governmental
Authority); and

 

(iii)          such other documents as the
Lenders, the Issuing Bank or the Administrative Agents may reasonably request.

 

(c)           Officers’ Certificate.  The Administrative Agents shall have received
a certificate, dated the Closing Date and signed by the chief executive officer(s) and
the chief financial officer(s) of the Borrowers, confirming compliance
with the conditions precedent set forth in this Section 4.01 and Section 4.02(b),
(c), (d), (e), (g) and (h).

 

(d)           Financial Statements;
Projections.  The Lenders
shall have received the financial statements described in Section 3.04
and an updated version of the forecasts of the Borrowing Base (on a monthly
basis through December 2008), Excess Availability (on a monthly basis
through December 2008) and the financial performance of Holdings, the
Borrowers, and their respective Subsidiaries.

 

(e)           Budget.  The Agents and Lenders shall have received
and approved the Budget.

 

(f)            Indebtedness and Minority
Interests.  No Company
shall have outstanding any Indebtedness or preferred stock other than (i) the
Loans and Credit Extensions hereunder, (ii) the Senior Notes, (iii) the
Indebtedness listed on Schedule 6.01(b) and (iv) Indebtedness owed
to any Borrower or any Guarantor.

 

(g)           Opinions of Counsel.  The Administrative Agents shall have
received, on behalf of themselves, the other Agents, the Arranger, the Lenders
and the Issuing Bank, a favorable written opinion of (i) Morgan, Lewis & Bockius LLP, special counsel for the
Loan Parties, and Blake, Cassels & Graydon LLP, Canadian special
counsel for the Canadian Loan Parties, (ii) each local and foreign counsel
listed on Schedule 4.01(g), in each case (A) dated the Closing
Date, (B) addressed to the Agents, the Issuing Bank and the Lenders and (C) covering
the matters set forth in Exhibit N and such other matters relating
to the Loan Documents as the Administrative Agents shall reasonably request.

 

(h)           [Intentionally Omitted].

 

(i)            Requirements of Law.  The Lenders shall be satisfied that Holdings,
its Subsidiaries and the Refinancing shall be in full compliance with all
material Requirements of Law, including Regulations T, U and X of the Board,
and shall have received satisfactory evidence of such compliance reasonably
requested by them.

 

(j)            Consents.  The Lenders shall be satisfied that all
requisite Governmental Authorities, including in connection with the filing of
the Chapter 11 Cases, and third parties shall have approved or consented to the
transactions contemplated hereby, except for such consents or approvals the
absence of which could not reasonably be expected to have a Material Adverse
Effect, and there shall be no governmental or judicial action, actual or
threatened, that has or would have, singly or in the aggregate, a reasonable
likelihood of restraining, preventing or imposing burdensome conditions on the
transactions contemplated hereby.

 

105

 

(k)           Litigation.  There shall be no litigation, public or
private, or administrative proceedings, governmental investigation or other
legal or regulatory developments, actual or threatened, that, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or could materially and adversely affect the ability of Holdings, the Borrowers
and their respective Subsidiaries to fully and timely perform their respective
obligations under the Loan Documents, or the ability of the parties to
consummate the financings or transactions contemplated hereby.

 

(l)            No Material Adverse Effect.  A certificate of a Responsible Officer of
each of the Loan Parties certifying that there shall have been (i) since
the Petition Date other than those resulting from the commencement of the
Chapter 11 Cases, no event, circumstance or occurrence which could reasonably
be expected to have Material Adverse Effect, individually or in the aggregate,
on the business, prospects, operations, property, assets, or condition,
financial or otherwise, of the Borrowers and the Guarantors taken as a whole,
or the Collateral taken as a whole, (ii) since the Petition Date no
material increase in the liabilities, liquidated or contingent, of the
Borrowers and the Guarantors taken as a whole, or material decrease in the
assets of the Borrowers and the Guarantors taken as a whole and (iii) other
than those resulting from the commencement of the Chapter 11 Cases, since the
Petition Date no adverse change in the ability of the Administrative Agents and
the Lenders to enforce the Loan Documents and the Obligations of the Borrowers
hereunder.

 

(m)          Sources and Uses.  The sources and uses of the Loans shall be as
set forth in Section 3.12 and Schedule 3.12 hereto.

 

(n)           Fees.  The Arranger, Administrative Agents and
Collateral Agents shall have received all Fees, interest and other amounts due
and payable on or prior to the Closing Date, including, to the extent invoiced,
reimbursement or payment of all reasonable out-of-pocket expenses (including
the reasonable legal fees and expenses of Bingham McCutchen LLP, special
counsel to the applicable Administrative Agents and the applicable Collateral
Agents, and the reasonable fees and expenses of any local counsel, foreign
counsel, appraisers, consultants and other advisors) required to be reimbursed
or paid by the Borrowers hereunder or under any other Loan Document.

 

(o)           Security Documents.  The Agents shall have received the Security
Documents (including, without limitation,
documentation in respect of all Collateral consisting of Real Estate such as
Mortgages and related Real Estate documents and deliverables) in effect on
and after the Closing Date and evidence that all other actions that Agents may
deem necessary or desirable in order to perfect and protect, and continue the
perfection and protection of, the First Priority Liens and security interests
created under the Security Documents have been taken.

 

(p)           Insurance.  The Administrative Agents shall have confirmed
receipt by Collateral Agents of copies of, or certificates as to coverage
under, the insurance policies and endorsements required by Section 5.04
and the applicable provisions of the Security Documents, each of which shall be
in form and substance satisfactory to the Administrative Agents and Collateral
Agents.

 

(q)           USA Patriot Act.  The Lenders shall have received, sufficiently
in advance of the Closing Date, all documentation and other information
required by bank regulatory authorities under applicable “know your customer”
and anti-money laundering rules and regulations, including without
limitation, the United States PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) including, without limitation, the information
described in Section 11.13.

 

(r)            Initial Borrowing Base
Certificate.  The
Collateral Agents and the Administrative Agents shall have received a Borrowing
Base Certificate dated as of the Closing Date.

 

106

 

(s)           Excess Availability.  As of the Closing Date, Excess Availability
shall not be less than $75,000,000 or such lesser amount as the Administrative
Agents, after consultation with the Lenders, may approve.

 

(t)            Outstanding Letters of
Credit.  All outstanding letters of
credit issued by Prior Lenders shall either (i) be terminated, (ii) be
cash collateralized or (iii) be supported by back to back Letters of
Credit issued hereunder or (iv) become Letters of Credit hereunder as
Existing Issuing Bank Letters of Credit, in each case, as provided for in the
Pre-Petition Credit Agreement;

 

(u)           Repayment of Pre-Petition
Credit Agreement.  The Agents
shall have received a fully executed copy of a pay-off letter reasonably
satisfactory to Agents confirming that all outstanding Prior Lender Obligations
(except for Contingent Obligations (as defined in the Pre-Petition Credit
Agreement) which by their terms survive the termination of the Pre-Petition
Credit Agreement) consisting of, but not limited to, principal and interest,
will be repaid in full from the proceeds of the Loans.

 

(v)           Solvency.  The Agents shall have received a certificate,
in form and substance reasonably satisfactory to each of them, from a Financial
Officer of the Canadian Borrower as to the solvency of the Canadian Loan
Parties.

 

(w)          Indenture Compliance
Certificate.  The US
Administrative Agent shall have received a certificate, dated as of the Closing
Date and in form and substance reasonably satisfactory to the US Administrative
Agent, from a Financial Officer of the Companies certifying that the Companies
are in compliance with Sections 4.09 and 4.12 of the Indenture (after giving
effect to this Agreement, the other Loan Documents and the transactions
contemplated thereby and after giving effect to any Permitted Leasehold
Facility and any other Indebtedness included in the compliance calculation
under Sections 4.09(b)(1) and (14) of the Senior Note Agreement).

 

(x)            Bankruptcy Matters.

 

(i)            The U.S. Bankruptcy Court shall
have entered the Interim Order, by no later than May 2,
2008, in form and substance satisfactory to Lenders, among other things, (A) approving
the transactions contemplated hereby, (B) granting a first priority
perfected security interest in the Collateral subject only to (i) the
Carve-Out Expenses up to the Carve-Out Amount, (ii) the Indenture Liens on
Note Lien Collateral, (iii) the Indenture Adequate Protection Liens on
Note Lien Collateral and (iv) Leasehold Priority Collateral Liens; (w) granting
the Liens referenced in clause (iv) above, as well as the junior
Indenture Adequate Protection on the DIP Priority Collateral; (C) authorizing
the Credit Extensions hereunder in an amount not less than an amount otherwise
sufficient to pay in full the obligations outstanding under the Pre-Petition
Loan Documents; (D) modifying the automatic stay to permit the creation
and perfection of Lenders’ Liens and automatically vacating the automatic stay
to permit enforcement of Lenders’ default-related rights and remedies under
this Agreement, the other Loan Documents and applicable law; (E) containing
a good faith finding under Section 364(e) of the Bankruptcy Code and
setting a time limit consistent with Del. Bankr. L.R. 4001-2(a)(i)(B) for
challenges to the Prior Lender Obligations and such Interim Order shall not
have been reversed, stayed, or (without the consent of the Administrative
Agents) modified or amended.  The Interim
Order shall also include provisions, in form and substance satisfactory to the
Administrative Agents, (V) granting permission for the use of cash and
other collateral of the holders of the obligations under the Pre-Petition
Credit Agreement, (W) providing adequate protection as provided above, (X) with
respect to collateral securing the obligations under the Pre-Petition Credit
Agreement, granting waivers in respect of the “equities of the case” cutoff
under Section 552(b) of the Bankruptcy 

 

107

 

Code, (Y) preventing Section 551
of the Bankruptcy Code from applying to preserve for the benefit of any Debtor’s
estate any avoided security interest or Lien senior to a security interest or
Lien securing the Obligations hereunder or the obligations under the
Pre-Petition Credit Agreement and (Z) subject to the entry of the Final
Order, including waivers of any charge to the collateral securing the
Obligations hereunder or the obligations under the Pre-Petition Credit
Agreement under Section 506(c) of the Bankruptcy Code;

 

(ii)           US Borrowers shall have established
or shall maintain the cash management services described in Section 9.02
pursuant to the Cash Management Order;

 

(iii)          The Interim Order, Cash
Management Order and such other orders as may be necessary for the
implementation of the Transactions or reasonably requested by the
Administrative Agents shall have been approved and entered by the U.S.
Bankruptcy Court and shall be in form and substance satisfactory to the
Administrative Agents.

 

(iv)          The Administrative Agent
shall have received drafts of the first day pleadings in form and substance
reasonably satisfactory to the US Administrative Agent not later than a  reasonable time in advance of the Petition
Date for US Administrative Agent’s counsel to review and analyze the same;

 

(v)           The “first day orders”
described on Schedule 4.01(x)(v), in form and substance reasonably
satisfactory to the US Administrative Agent, shall have been approved and
entered in the Chapter 11 Cases, with such “first day orders to (A) provide
for the continuation of the Debtors’ Pre-Petition cash management system (or
other cash management system satisfactory to the US Administrative Agent) and
deposit and disbursement accounts and (B) providing for a guarantee of all
of the Canadian Obligations.

 

SECTION 4.02.    Conditions to All Credit Extensions.  The obligation of each Lender and each
Issuing Bank to make any Credit Extension (including on the Closing Date) shall
be subject to, and to the satisfaction of, each of the conditions precedent set
forth below.

 

(a)           Notice.  The applicable Administrative Agent shall
have received a Borrowing Request as required by Section 2.03 (or
such notice shall have been deemed given in accordance with Section 2.03)
if Loans are being requested or, in the case of the issuance, amendment, extension
or renewal of a Letter of Credit, the Issuing Bank and the applicable
Administrative Agent shall have received an LC Request as required by Section 2.18(b)
or, in the case of the Borrowing of a Swingline Loan, the applicable Swingline
Lender and the applicable Administrative Agent shall have received a Borrowing
Request as required by Section 2.17(b).

 

(b)           Requested Credit Extension.  The Credit Extension requested shall not
cause the aggregate outstanding amount of the Loans and or LC Exposure to exceed
the amount then authorized by the Interim Order or the Final Order, as the case
may be.

 

(c)           No Default.  The Borrowers and each other Loan Party shall
be in compliance in all material respects with all the terms and provisions set
forth herein and in each other Loan Document on its part to be observed or
performed, and, at the time of and immediately after giving effect to such
Credit Extension and the application of the proceeds thereof, no Default shall
have occurred and be continuing on such date.

 

(d)           Representations and
Warranties.  Each of the
representations and warranties made by any Loan Party set forth in Article III
hereof or in any other Loan Document shall be true and correct 

 

108

 

in all material respects
(except that any representation and warranty that is qualified as to “materiality”
or “Material Adverse Effect” shall be true and correct in all respects) on and
as of the date of such Credit Extension with the same effect as though made on and
as of such date, except to the extent such representations and warranties
expressly relate to an earlier date.

 

(e)           Compliance with Borrowing
Base.  After giving pro forma effect to the proposed Credit Extension and as
evidenced by a Borrowing Base Certificate delivered concurrently with the
Borrowing Request, (i) the outstanding Revolving Exposure shall not exceed
the result of the Borrowing Base minus the U.S. Minimum Availability
Requirement plus (without duplication) the Canadian Borrowing Base minus
the Canadian Minimum Availability Requirement, in each case as then in effect, (ii) the
sum of all Lenders’ US Revolving Exposures shall not exceed the result of (A) the
Borrowing Base minus (B) the U.S. Minimum Availability Requirement,
in each case as then in effect, (iii) the sum of all Lenders’ Canadian
Exposures shall not exceed the result of (A) the Canadian Borrowing Base minus
(B) the Canadian Minimum Availability Requirement, in each case as then in
effect and (iv) the sum of all Lenders’ Revolving Exposures shall not
exceed the Revolving Commitments.

 

(f)            Compliance with Senior Note
Agreement.  The US
Administrative Agent shall have received an Indenture Compliance Certificate
required to be delivered pursuant to Section 5.01(i).

 

(g)           No Legal Bar.  No order, judgment or decree of any
Governmental Authority shall purport to restrain any Lender from making any
Loans to be made by it.  No injunction or
other restraining order shall have been issued, shall be pending or noticed
with respect to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by this Agreement or the making of
Loans hereunder.

 

(h)           Entry
of Interim Order or Final Order.  The Interim Order or the Final Order, as the
case may be, shall be in full force and effect, and no order amending or
modifying (without the consent of the Administrative Agents) or reversing,
staying or vacating such order shall have been entered, and, if the Interim
Order or the Final Order, as applicable, is the subject of a pending appeal in
any respect, neither the making of any Credit Extension nor the performance by
any Borrower or any of the Guarantors of any of their respective obligations
hereunder or under the Loan Documents or under any other instrument or
agreement referred to herein shall be the subject of a presently effective stay
pending appeal.

 

(i)            Fees.  The Borrowers shall have paid the balance of
all Fees and expenses then due and payable as referenced herein.

 

Each of the delivery of a Borrowing Request
or an LC Request and the acceptance by the Borrowers of the proceeds of such
Credit Extension shall constitute a representation and warranty by the
Borrowers and each other Loan Party that on the date of such Credit Extension
(both immediately before and after giving effect to such Credit Extension and
the application of the proceeds thereof) the conditions contained in Section 4.02(b)
– (e) have been satisfied.  The
Borrowers shall provide such information as the Administrative Agents and
Collateral Agents may reasonably request to confirm that the conditions in Section 4.02(b)
– (e) have been satisfied.

 

SECTION 4.03.    Exit Facilities Option.  The Lenders hereby grant the Debtors the
option (the “Exit Facilities Option”) to cause the Facilities to be converted to Exit
Facilities upon the effective date of a Plan of Reorganization for the Debtors
satisfactory to the Administrative Agents and the lenders under the Exit
Facilities in all respects, such option subject to terms and conditions
acceptable to the 

 

109

 

Agent
and the lenders under the Exit Facilities including, without limitation the
conditions of Section 4.04 of this Agreement.

 

SECTION 4.04.    Conditions to Exit Facilities Option.  On and after the Exit Facilities Conversion
Date, the obligations of each Lender to continue to make or hold Loans (or of
any Issuing Bank to issue any Letter of Credit on and after the Exit Facilities
Conversion Date) and to extend the maturity thereof beyond the first
anniversary of the Closing Date, as respectively set forth in the definitions
of “Revolving Maturity Date” are subject to the satisfaction, or waiver in
accordance with Section 11.02, of the following conditions on or before
the Exit Facilities Conversion Date:

 

(a)           The Exit Facilities
Conversion Date shall occur not later than the first anniversary of the Closing
Date.

 

(b)           All legal matters and documents incident to the Exit Facility, the
credit extensions thereunder and the credit agreement and the other loan
documents relating to the Exit Facility shall be satisfactory to the Lenders,
the Issuing Bank, the Collateral Agents and the Administrative Agents hereunder
and thereunder and there shall have been delivered to the Administrative Agents
an executed counterpart of each of such documents.  All schedules, exhibits, annexes and other
attachments to the credit agreement in respect of the Exit Facility and the
other Loan Documents (as defined under the documentation of the Exit Facility)
will be in form and substance mutually agreeable to the Borrowers and the
Administrative Agents hereunder and thereunder.

 

(c)           In order to create in favor
of Collateral Agents, for the benefit of the Secured Parties, a valid,
perfected First Priority security interest in the personal property Collateral,
Collateral Agent shall have received:

 

(i)            the
Security Documents of the type and kind described and delivered or to have been
delivered under the Pre-Petition Credit Agreement (including, without
limitation, documentation in respect of all Collateral consisting of Real
Estate such as Mortgages and related Real Estate documents and deliverables) in
effect on and after the Exit Facilities Conversion Date and evidence that all
other actions that Agents may deem necessary or desirable in order to perfect
and protect, and continue the perfection and protection of, the First Priority
Liens and security interests created under the Security Documents have been
taken;

 

(ii)           opinions of counsel (which
counsel shall be reasonably satisfactory to Collateral Agents) with respect to
the creation and perfection of the security interests in favor of Collateral
Agents in such collateral and such other matters governed by the laws of each
jurisdiction in which any Loan Party or any collateral is located as Collateral
Agents may reasonably request, in each case substantially similar to those
delivered on the Closing Date with such changes as the Collateral Agents or Administrative
Agents may reasonably require; and

 

(iii)          evidence that each Loan
Party shall have taken or caused to be taken any other action, executed and
delivered or caused to be executed and delivered any other agreement, document
and instrument (including without limitation, (i) a Landlord Access
Agreement executed by the landlord of any leasehold Property and by the
applicable Loan Party and (ii) any intercompany notes evidencing
Indebtedness permitted to be incurred pursuant to Section 6.01(e)) and made
or caused to be made any other filing and recording (other than as set forth
herein) reasonably required by Collateral Agents.

 

(d)           Collateral Agents shall have
received a certificate from Borrowers’ insurance broker or other evidence
reasonably satisfactory to it that all insurance required to be maintained
pursuant to 

 

110

 

Section 5.04 is in full
force and effect, together with endorsements naming the Collateral Agents, for
the benefit of Secured Parties, as additional insured and loss payee thereunder
to the extent required under Section 5.04.

 

(e)           All partnership, corporate
and other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Administrative Agents and its counsel shall be reasonably
satisfactory in form and substance to Administrative Agents and such counsel,
and Administrative Agent and such counsel shall have received all such counterpart
originals or certified copies of such documents as Administrative Agents may
reasonably request.

 

(f)            The Borrower shall have paid
to the Administrative Agents, for the account of the Administrative Agents and
the Lenders, as applicable, all properly documented fees and expenses
(including reasonable fees and expenses of counsel payable hereunder) due and
payable on or before the Exit Facilities Conversion Date (including all such
fees referred to in Section 2.05 and the any commitment letter executed in
respect of the Exit Facility).

 

(g)           (A) The U.S. Bankruptcy
Court shall have entered an order in form and substance satisfactory to the US
Administrative Agent and the Required Lenders confirming a Plan of
Reorganization; (B) the Plan of Reorganization (including the sponsors
thereof) and all documents filed in connection therewith shall be in form and
substance satisfactory to each of the Administrative Agents, including with
respect to the settlement or discharge of all claims and other debts and liabilities,
and shall not have been modified, altered, amended or otherwise changed or
supplemented without the prior written consent of the US Administrative Agent
and the Required Lenders; and (C) all conditions precedent to the
effectiveness of the Plan of Reorganization (other than the extension of credit
under the Exit Facilities) shall have been satisfied (or waived in accordance
with the Plan of Reorganization) and the effective date (as defined in the Plan
of Reorganization) shall have occurred and such Plan of Reorganization shall be
in full force and effect.

 

(h)           The Administrative Agents
shall have received a pro forma  consolidated
balance sheet and any other applicable financial statements of Holdings and its
Subsidiaries prepared on a fresh-start accounting basis as of the last date
prior to the Exit Facilities Conversion Date for which financial statements are
available, together with a certification of a Financial Officer of Holdings
certifying that such balance sheet and other financial statements accurately
present the financial position of Holdings and its Subsidiaries, in accordance
with GAAP, as of such date.

 

(i)            Lenders and their respective
counsel shall have received executed copies of the favorable written opinions
(substantially similar to those delivered on the Closing Date with such changes
as the Administrative Agents may reasonably require) of Morgan, Lewis &
Bockius LLP, counsel for the Loan Parties, dated as of the Exit Facilities
Conversion Date (and each Loan Party hereby instructs such counsel to deliver
such opinions to Agents and Lenders).

 

(j)            Each entity proposed to be a
Loan Party subsequent to the Exit Facilities Conversion Date shall have
obtained all Governmental Authorizations and all consents of other Persons, in
each case that are necessary in connection with the transactions contemplated
by the Loan Documents and each of the foregoing shall be in full force and
effect and in form and substance reasonably satisfactory to Administrative
Agents.  No change in law or regulation
shall be applicable in the reasonable judgment of the Administrative Agents
that would restrain, prevent or otherwise impose materially adverse conditions
on the transactions contemplated by the Loan Documents or the financing
thereof.  All applicable waiting periods
shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose materially
adverse conditions on 

 

111

 

the transactions
contemplated by the Loan Documents or the financing thereof and no action,
request for stay, petition for review or rehearing, reconsideration, or appeal
with respect to any of the foregoing shall be pending, and the time for any
applicable agency to take action to set aside its consent on its own motion
shall have expired.

 

(k)           The Borrowers shall have
given and the Lenders shall have received not less than ten Business Days’
prior written irrevocable notice of the exercise of the Exit Facilities Option.

 

(l)            The Lenders shall have
received a Solvency Certificate in the form of Exhibit O from the
chief financial officer of Holdings, on a pro forma basis after giving effect
to the confirmation of the Plan of Reorganization, the consummation of the
transactions contemplated thereby and the occurrence of the Exit Facilities
Conversion Date.

 

(m)          As of the Exit Facilities
Conversion Date, the representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all material respects on and
as of the Exit Facilities Conversion Date to the same extent as though made on
and as of such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects on and as of such
earlier date.

 

(n)           As of the Exit Facilities
Conversion Date, no event shall have occurred and be continuing or would result
from the exercise by the Borrowers of the Exit Facilities Option that would
constitute an Event of Default or a Default.

 

(o)           Such other terms, conditions
and documentation as the Administrative Agents may require or reasonably
request, in each case, in form and substance reasonably satisfactory to the
Administrative Agents.

 

ARTICLE V.

 

AFFIRMATIVE
COVENANTS

 

Each Loan Party warrants, covenants and
agrees with each Administrative Agent, Collateral Agent and Lender that so long
as this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full and all Letters of Credit have been canceled or have expired or been
fully cash collateralized and all amounts drawn thereunder have been reimbursed
in full, unless the Required Lenders shall otherwise consent in writing, each
Loan Party will, and will cause each of its Subsidiaries to:

 

SECTION 5.01.            Financial Statements, Reports, etc.  Furnish to the Administrative Agents and each
Lender:

 

(a)           Annual Reports.  As soon as available and in any event, within
90 days after the end of each fiscal year, beginning with the fiscal year
ending December 31, 2007, (i) the consolidated balance sheet of Holdings
as of the end of each such fiscal year and related consolidated statements of
income, cash flows and stockholders’ equity for such fiscal year in comparative
form with such financial statements as of the end of, and for, the preceding
fiscal year, and, in each case, notes thereto (including a note with a
consolidating balance sheet and statements of income and cash flows separating
out the results of Holdings, the Borrowers, each Borrowing Base Guarantor and
the aggregate results of all Subsidiaries), all prepared in accordance with
Regulation S-X and accompanied 

 

112

 

by an opinion of KPMG LLP or
other independent public accountants of recognized national standing
satisfactory to the Administrative Agents (which opinion shall not be qualified
as to scope or contain any going concern or other qualification), stating that
such financial statements fairly present, in all material respects, the
consolidated financial condition, results of operations, cash flows of Holdings
as of the dates and for the periods specified in accordance with GAAP, (ii) a
management report in a form reasonably satisfactory to the Administrative
Agents setting forth (A) statement of income items of Holdings for such
fiscal year, showing variance, by dollar amount and percentage, from amounts
for the previous fiscal year and budgeted amounts and (B) key operational
information and statistics for such fiscal year consistent with internal and
industry-wide reporting standards, including same-store sales, and (iii) a
narrative report and management’s discussion and analysis, in a form reasonably
satisfactory to the Administrative Agents, of the financial condition and
results of operations of Holdings for such fiscal year, as compared to amounts
for the previous fiscal year and budgeted amounts (it being understood that the
information required by clause (i) may be furnished in the form of a Form 10-K);

 

(b)           Quarterly Reports.  As soon as available and in any event within
45 days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the first fiscal quarter ending after the date hereof, (i)(A) the
consolidated balance sheet of Holdings as of the end of each of the first three
fiscal quarters and related consolidated statements of income and cash flows
for each such fiscal quarter and for the then elapsed portion of the fiscal
year and (B) the consolidated balance sheet of Holdings as of the end of
each of the first three fiscal quarters of each fiscal year, beginning with the
first fiscal quarter ending after the date hereof, and related consolidated
statements of income and cash flows for such fiscal quarter and for the then
elapsed portion of the fiscal year, in comparative form with the consolidated
statements of income and cash flows for the comparable periods in the previous
fiscal year, and notes, in each case, thereto (including a note with a
consolidating balance sheet and statements of income and cash flows separating
out Holdings, the Borrowers and the Subsidiaries), all prepared in accordance
with Regulation S-X under the Securities Act and accompanied by a certificate
of a Financial Officer stating that such financial statements fairly present,
in all material respects, the consolidated financial condition, results of
operations and cash flows of Holdings as of the date and for the periods
specified in accordance with GAAP consistently applied, and on a basis
consistent with audited financial statements referred to in clause (a) of
this Section, subject to normal year-end audit adjustments, (ii) a
management report in a form reasonably satisfactory to the Administrative
Agents setting forth (A) statement of income items of Holdings for such
fiscal quarter and for the then elapsed portion of the fiscal year, showing
variance, by dollar amount and percentage, from amounts for the comparable
periods in the previous fiscal year and budgeted amounts and (B) key
operational information and statistics for such fiscal quarter and for the then
elapsed portion of the fiscal year consistent with internal and industry-wide
reporting standards, including same-store sales and (iii) management’s
discussion and analysis, in a form reasonably satisfactory to the
Administrative Agents, of the financial condition and results of operations for
such fiscal quarter and the then elapsed portion of the fiscal year, as
compared to the comparable periods in the previous fiscal year and budgeted
amounts (it being understood that the information required by clause (i) may
be furnished in the form of a Form 10-Q);

 

(c)           Monthly Reports. Within
30 days after the end of each of the first two months of each fiscal
quarter (i) the unaudited consolidated balance sheet of Holdings and its
Subsidiaries as of the end of such two months and the related consolidated
statements of income and cash flows of Holdings and its Subsidiaries for such
month and for the then elapsed portion of the fiscal year, in comparative form
with the consolidated statements of income and cash flows for the comparable
periods in the previous fiscal year, and (ii) same store sales information
and statistics for such month and for the then elapsed portion of the fiscal
year consistent with internal and industry-wide reporting standards, each in
form and substance reasonably satisfactory to the Administrative Agent;

 

113

 

(d)           Financial Officer’s
Certificate.  (i) Concurrently
with any delivery of financial statements under

Section 5.01(a) or (b), a Compliance Certificate
certifying that no Default has occurred or, if such a Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto; and (ii) concurrently with any
delivery of financial statements under Section 5.01(a) above,
beginning with the fiscal year ending December 31, 2007, a report of the
accounting firm opining on or certifying such financial statements stating that
in the course of its regular audit of the financial statements of Holdings and
its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge that
any Default insofar as it relates to financial or accounting matters has
occurred or, if in the opinion of such accounting firm such a Default has
occurred, specifying the nature and extent thereof;

 

(e)           Financial Officer’s
Certificate Regarding Collateral.  Concurrently with any delivery of financial
statements under Section 5.01(a), a certificate of a Financial
Officer setting forth the information required pursuant to the Perfection
Certificate Supplement or confirming that there has been no change in such
information since the date of the Perfection Certificate or latest Perfection
Certificate Supplement;

 

(f)            Public Reports.  Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by any Company with the Securities and Exchange Commission, the
Ontario Securities Commission or any Governmental Authority succeeding to any
or all of the functions of any said Commission, or with any national or other
securities exchange or securities commission, or distributed to holders of its
Indebtedness pursuant to the terms of the documentation governing such
Indebtedness (or any trustee, agent or other representative therefor), as the
case may be;

 

(g)           Management Letters.  Promptly after the receipt thereof by any
Company, a copy of any “management letter” received by any such person from its
certified public accountants and the management’s responses thereto;

 

(h)           Budget.

 

(i)            The use of Credit Extensions
by the Borrowers under this Agreement and the other Loan Documents shall be
limited in accordance with the Budget. 
The Budget shall depict, on a weekly basis, cash revenues, receipts,
expenses and disbursements and other information for the first 13 week period
from the Closing Date in the initial Budget delivered by the Debtors and the
Canadian Loan Parties to the Administrative Agents and the Lenders on the
Closing Date and such Budget shall be approved by, and in form and substance
satisfactory to, the Administrative Agents, the Required Lenders and their
financial advisors in their sole discretion. 
The Budget shall be updated, modified or supplemented (with the consent
and/or at the request of the US Administrative Agent or the Required Lenders)
from time to time, but in any event not less than on a monthly basis (with the
delivery to the Administrative Agents on or before the 10th day of each
calendar month), and each such updated, modified or supplemented Budget shall
be approved by, and in form and substance satisfactory to, the Administrative
Agents, the Required Lenders and their financial advisors in their sole
discretion and no such updated, modified or supplemented Budget shall be
effective until so approved.  Each Budget
delivered to the Administrative Agents shall be accompanied by such supporting documentation as reasonably requested by the
Administrative Agents and/or the Required Lenders.  Each Budget shall be prepared in good faith
based upon assumptions which the Loan Parties believe to be reasonable and
satisfactory to the Administrative Agents, the Required Lenders and their financial
advisors.

 

114

 

(ii)           The
Borrowers shall deliver to the Administrative Agents on or before 2:00 p.m.
on Tuesday of each week (unless such day is not a Business Day, in which event
the next succeeding Business Day) a compliance certificate, in
form and substance satisfactory to the US Administrative Agent, signed by a
Financial Officer certifying that (x) the Borrowers are in compliance with
the covenants contained in Section 6.21 and (y) no Default or Event
of Default has occurred or, if such a Default or Event of Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto, together with (A) comparison for the Prior Week of the Actual Inventory
Amount, Actual Receipts Amount, Actual Sale Receipts and Actual Disbursement
Amount for such Prior Week to the Budgeted Inventory Amount, Budgeted Receipts
Amount, Budgeted Sales Receipts,  and
Budgeted Disbursement Amount for such Prior Week, respectively, (B) a
cumulative comparison for the Cumulative Four Week Period of the Actual
Inventory Amount, Actual Receipts Amount, Actual Sale Receipts and Actual
Disbursement Amount for such Cumulative Four Week Period to the Budgeted
Inventory Amount, Budgeted Receipts Amount, Budgeted Sales Receipts,  and Budgeted Disbursement Amount for such
Cumulative Four Week Period, respectively, and (C) a cumulative comparison
for the Cumulative Period of the Actual Inventory Amount, Actual Receipts
Amount, Actual Sale Receipts and Actual Disbursement Amount for such Cumulative
Period to the Budgeted Inventory Amount, Budgeted Receipts Amount, Budgeted
Sales Receipts,  and Budgeted
Disbursement Amount for such Cumulative Period, respectively, each of which
shall be prepared by the Borrower Representative as of the last day of the
Prior Week, the Cumulative Four Week Period or the Cumulative Period, as
applicable, and shall be in form and substance satisfactory to the Agents.  The Borrowers shall also
deliver to the Administrative Agents on a weekly basis, a Budget reconciliation
report.

 

(i)            Indenture Compliance
Certificate.  On a
monthly basis (with the delivery to the US Administrative Agent on or before
the 10th day of each calendar month), the Borrowers shall cause to be delivered
to the US Administrative Agent a certificate from a Financial Officer of the
Companies (the “Indenture Compliance Certificate”), dated as of such
date and in form and substance reasonably satisfactory to the US Administrative
Agent, certifying that the Companies are in compliance with Sections 4.09 and
4.12 of the Indenture (after giving effect to any Permitted Leasehold Facility
and any other Indebtedness included in the compliance calculation under
Sections 4.09(b)(1) and (14) of the Senior Note Agreement).

 

(j)            Organization.  Concurrently with any delivery of financial
statements under Section 5.01(a), an accurate organizational chart
as required by Section 3.07(c), or confirmation that there are no
changes to Schedule 10(a) to the Perfection Certificate;

 

(k)           Organizational Documents.  Promptly provide copies of any Organizational
Documents that have been amended or modified in accordance with the terms
hereof and deliver a copy of any notice of default given or received by any
Company under any Organizational Document within 15 days after such Company
gives or receives such notice;

 

(l)            Other Information.  Promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of any Company, or compliance with the terms of any Loan Document or matters
regarding the Collateral (beyond the requirements contained in Section 9.04)
as the Administrative Agents or any Lender may reasonably request;

 

(m)          Bankruptcy Matters.  Promptly, copies of all monthly reports,
projections or other information in respect of each Debtor’s or any of their
Domestic Subsidiaries’ business or financial condition or prospects as well as
all pleadings, motions, applications and judicial information filed by or on
behalf of the Debtors with the U.S. Bankruptcy Court or provided by or to the
U.S. Trustee (or 

 

115

 

any monitor or interim
receiver, if any, appointed in any Chapter 11 Case) or the Committee, promptly
after such document is filed with the U.S. Bankruptcy Court, or provided by or
to the U.S. Trustee (or any monitor or interim receiver, if any, appointed in
any Chapter 11 Case) or the Committee; and

 

(n)           Communications
with Accountants and other Financial Advisors.  Each Loan Party executing this Agreement
authorizes (a) the Agents and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, financial advisors, investment
bankers and consultants, including Conway, Del Genio, Gries & Co. LLC
and Asset Disposition Advisors, LLC, and authorizes and shall instruct those
accountants, financial advisors, investment bankers and consultants to
communicate to agent and each lender information relating to any credit party
with respect to the business, results of operations and financial condition of
any Loan Party.

 

SECTION 5.02.            Litigation and Other Notices.  Furnish to the Administrative Agents and each
Lender written notice of the following promptly (and, in any event, within three
Business Days of the occurrence thereof):

 

(a)           any Default, specifying the
nature and extent thereof and the corrective action (if any) taken or proposed
to be taken with respect thereto and including the delivery of any notice (i) to
the Senior Note Collateral Agent, of any “defaults” or “events of default”
under the Senior Note Documents and (ii) of any “defaults” or “events of
default” under the Permitted Leasehold Facility;

 

(b)           the filing or commencement
of, or any threat or notice of intention of any person to file or commence, any
action, suit, litigation or proceeding, whether at law or in equity by or
before any Governmental Authority, (i) against any Company or any
Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect or (ii) with respect to any Loan Document;

 

(c)           any development that has
resulted in, or could reasonably be expected to result in a Material Adverse
Effect;

 

(d)           the occurrence of a Casualty
Event; and

 

(e)           (i) the incurrence of
any material Lien (other than Permitted Liens) on, or claim asserted against
any of the Collateral or (ii) the occurrence of any other event which
could materially affect the value of the Collateral.

 

SECTION 5.03.            Existence; Businesses and Properties.  Except as occasioned by the Chapter 11 Cases:

 

(a)           do or cause to be done all
things necessary to preserve, renew and maintain in full force and effect its
legal existence, except as otherwise expressly permitted under Section 6.05
or Section 6.06 or, in the case of any Subsidiary, where the
failure to perform such obligations, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect.

 

(b)           do or cause to be done all
things necessary to obtain, preserve, renew, extend and keep in full force and
effect the rights, licenses, permits, privileges, franchises, authorizations,
patents, copyrights, trademarks and trade names material to the conduct of its
business except where such failure could reasonably be expected to result in a
Material Adverse Effect; maintain and operate such business in substantially
the manner in which it is presently conducted and operated; comply with all
applicable Requirements of Law (including any and all zoning, building,
Environmental Law, 

 

116

 

ordinance, code or approval
or any building permits or any restrictions of record or agreements affecting
the Real Property) and decrees and orders of any Governmental Authority,
whether now in effect or hereafter enacted, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect; pay and perform its obligations under all Leases,
Loan Documents, the Senior Note Documents and the Permitted Leasehold Facility;
and at all times maintain, preserve and protect all property material to the
conduct of such business and keep such property in good repair, working order
and condition (other than wear and tear occurring in the ordinary course of business)
and from time to time make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto necessary
in order that the business carried on in connection therewith may be properly
conducted at all times; provided
that nothing in this

Section 5.03(b) shall prevent (i) sales of property,
consolidations or mergers or amalgamations by or involving any Company in
accordance with Section 6.05 or Section 6.06; (ii) the
withdrawal by any Company of its qualification as a foreign corporation in any
jurisdiction where such withdrawal, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect; or (iii) the
abandonment by any Company of any rights, franchises, licenses, trademarks,
trade names, copyrights or patents that such person reasonably determines are
not useful to its business or no longer commercially desirable.

 

SECTION 5.04.            Insurance.

 

(a)           Generally.  Keep its insurable property adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including insurance with respect to Mortgaged Properties and other
properties material to the business of the Companies against such casualties
and contingencies and of such types and in such amounts with such deductibles
as is customary in the case of similar businesses operating in the same or
similar locations, including (i) physical hazard insurance on an “all risk”
basis, (ii) commercial general liability against claims for bodily injury,
death or property damage covering any and all insurable claims, (iii) explosion
insurance in respect of any boilers, machinery or similar apparatus
constituting Collateral, (iv) business interruption insurance, (v) worker’s
compensation insurance and such other insurance as may be required by any
Requirement of Law and (vi) such other insurance against risks as the
Administrative Agents and the Collateral Agents may from time to time
reasonably require (such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the applicable
Administrative Agent and applicable Collateral Agent); provided that with respect to physical
hazard insurance, neither Collateral Agent nor the applicable Company shall
agree to the adjustment of any claim for more than $5.0 million thereunder
without the consent of the other (such consent not to be unreasonably withheld
or delayed); provided, further,
that no consent of any Company shall be required during an Event of Default.

 

(b)           Requirements of Insurance.  All such insurance shall (i) provide
that no cancellation, material reduction in amount or material reduction in
coverage thereof shall be effective until at least 30 days after receipt by the
applicable Collateral Agent of written notice thereof, (ii) with respect
to the Collateral, name the applicable Collateral Agents as mortgagee (in the
case of property insurance) or additional insured on behalf of the applicable
Secured Parties (in the case of liability insurance) or loss payee (in the case
of property insurance), as applicable, (iii) if reasonably requested by
such Collateral Agents, include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to such Collateral Agents.

 

(c)           Notice to Agents.  Notify the Administrative Agents and the
Collateral Agents immediately whenever any separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 5.04 is taken out by any Company; and promptly 

 

117

 

deliver to the
Administrative Agents and the Collateral Agents a duplicate original copy of
such policy or policies.

 

(d)           Flood Insurance.  With respect to each Mortgaged Property,
obtain flood insurance in such total amount as the Administrative Agents or the
Required Lenders may from time to time reasonably require, if at any time the
area in which any improvements located on any Mortgaged Property is designated
a “flood hazard area” in any Flood Insurance Rate Map published by the Federal
Emergency Management Agency (or any successor agency), and otherwise comply
with the National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973, as amended from time to time.

 

(e)           Broker’s Report.  Deliver to the Administrative Agents and the
Collateral Agents and the Lenders a report of a reputable insurance broker with
respect to such insurance and such supplemental reports with respect thereto as
the Administrative Agents or the Collateral Agents may from time to time
reasonably request.

 

(f)            Mortgaged Properties.  Each Loan Party shall otherwise comply in all
material respects with all Insurance Requirements in respect of the Premises; provided, however, that each Loan Party
may, at its own expense and after written notice to the Administrative Agents
and the Collateral Agents, (i) contest the applicability or enforceability
of any such Insurance Requirements by appropriate legal proceedings, or (ii) cause
the Insurance Policy containing any such Insurance Requirement to be replaced
by a new policy complying with the provisions of this Section 5.04.

 

SECTION 5.05.            Obligations and Taxes.

 

(a)           Payment of Obligations.  Pay its Indebtedness and other obligations
promptly and in accordance with their terms and pay and discharge promptly when
due all Taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
services, materials and supplies or otherwise that, if unpaid, might give rise
to a Lien other than a Permitted Lien upon such properties or any part thereof;
provided that no Debtors shall be
required to make such payment and/or discharge with respect to any such Tax,
assessment, charge, levy or claim to the extent such nonpayment is permitted in
the Bankruptcy Code; provided  further that such payment and discharge shall not be
required with respect to any such Tax, assessment, charge, levy or claim so
long as (x)(i) the validity or amount thereof shall be contested in good
faith by appropriate proceedings timely instituted and diligently conducted and
the applicable Company shall have set aside on its books adequate reserves or
other appropriate provisions with respect thereto in accordance with GAAP, (ii) such
contest operates to suspend collection of the contested obligation, Tax,
assessment or charge and enforcement of a Lien other than a Permitted Lien and (iii) in
the case of Collateral, the applicable Company shall have otherwise complied
with the Contested Collateral Lien Conditions and (y) the failure to pay
could not reasonably be expected to result in a Material Adverse Effect.

 

(b)           Filing of Returns.  Timely and correctly file all material Tax
Returns required to be filed by it. 
Withhold, collect and remit all Taxes that it is required to collect,
withhold or remit.

 

(c)           Tax Shelter Reporting.  Each Borrower does not intend to treat the
Loans as being a “reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4.  In the
event any Borrower determines to take any action inconsistent with such
intention, such Borrower will promptly notify the Administrative Agents
thereof.

 

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SECTION 5.06.            Employee Benefits.  (a) Comply in all material respects with
the applicable provisions of ERISA and the Code except where such
non-compliance could not reasonably be expected to result in a Material Adverse
Effect and (b) furnish to the Administrative Agents (x) as soon as
possible after, and in any event within 5 Business Days after any Responsible
Officer of any Company knows or has reason to know that, any ERISA Event has
occurred that, alone or together with any other ERISA Event could reasonably be
expected to result in liability of the Companies or any of their ERISA
Affiliates in an aggregate amount that could reasonably be expected to result
in a Material Adverse Effect or the imposition of a Lien, a statement of a
Financial Officer of the Borrowers setting forth details as to such ERISA Event
and the action, if any, that the Companies propose to take with respect
thereto, and (y) upon request by the Administrative Agents, copies of (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by any Company with the Internal Revenue Service with respect to each
Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) all
notices received by any Company from a Multiemployer Plan sponsor or any
governmental agency concerning an ERISA Event; and (iv) such other
documents or governmental reports or filings relating to any Plan as the
Administrative Agents shall reasonably request.

 

SECTION 5.07.            Maintaining Records; Access to Properties and
Inspections; Annual Meetings.

 

(a)           Keep proper books of record
and account in which full, true and correct entries in conformity with GAAP and
all Requirements of Law are made of all dealings and transactions in relation
to its business and activities, including, without limitation, proper records
of intercompany transaction and the Borrowing Base Guarantor Intercompany Loan
Amounts with full, true and correct entries reflecting all payments received
and paid (including, without limitation, funds received by or for the account
of Borrower from deposit accounts of the other Companies).  Each Company will permit any representatives
designated by the Administrative Agents or any Lender (including, without
limitation, any of their officers, employees, consultants, financial advisors,
agents and other designees) to visit and inspect the financial records and the
property of such Company at reasonable times during regular business hours and
as often as reasonably requested and to make extracts from and copies of such
financial records, and permit any representatives designated by the
Administrative Agents or any Lender (including, without limitation, any of
their officers, employees, consultants, financial advisors, agents and other
designees) to discuss the affairs, finances, accounts and condition of any
Company with the officers and employees thereof and advisors therefor
(including independent accountants).

 

(b)           Within 150 days after the
end of each fiscal year of the Companies, at the request of the Administrative
Agents or Required Lenders, hold a meeting (at a mutually agreeable location,
venue and time or, at the option of the Administrative Agents, by conference
call, the costs of such venue or call to be paid by the Borrowers) with all
Lenders who choose to attend such meeting, at which meeting shall be reviewed
the financial results of the previous fiscal year and the financial condition
of the Companies and the budgets presented for the current fiscal year of the
Companies.

 

SECTION 5.08.            Use of Proceeds.  Use the proceeds of the Loans only for the
purposes set forth in Section 3.12 and request the issuance of
Letters of Credit only for the purposes set forth in the definition of
Commercial Letter of Credit or Standby Letter of Credit, as the case may be.

 

SECTION 5.09.            Compliance with
Environmental Laws; Environmental Reports.

 

(a)           Comply, and cause all
lessees and other persons occupying Real Property of any Company to comply, in
all material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Real Property; obtain and renew all material
Environmental Permits applicable to its operations and Real Property; and
conduct all Responses required by, and in 

 

119

 

accordance with,
Environmental Laws; provided that
no Company shall be required to undertake any Response to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves are being maintained with respect to such
circumstances in accordance with GAAP.

 

(b)           If a Default caused by
reason of a breach of Section 3.18 or Section 5.09(a) shall
have occurred and be continuing for more than 20 days without the Companies
commencing activities reasonably likely to cure such Default in accordance with
Environmental Laws, at the written request of the Administrative Agents or the
Required Lenders through the Administrative Agents, provide to the Lenders
within 45 days after such request, at the expense of the Borrowers, an
environmental assessment report regarding the matters which are the subject of
such Default, including, where appropriate in the reasonable judgment of the
Administrative Agents, soil and/or groundwater sampling, prepared by an
environmental consulting firm and, in the form and substance, reasonably
acceptable to the Administrative Agents and indicating the presence or absence
of Hazardous Materials and the estimated cost of any compliance or Response to
address them.

 

SECTION 5.10.            [Intentionally Deleted].

 

SECTION 5.11.            Additional Collateral; Additional Guarantors.

 

(a)           Subject to the terms of the
Order and this Section 5.11, with respect to any property acquired
after the Closing Date by any Loan Party that is intended to be subject to the
Lien created by any of the Security Documents (as specified in this Section 5.11)
or the Orders, promptly (and in any event within 60 days after the acquisition
thereof) (i) execute and deliver to the applicable Administrative Agent
and the applicable Collateral Agents such amendments or supplements to the
relevant Security Documents or such other documents as such Administrative
Agent or such Collateral Agents shall deem reasonably necessary or advisable to
grant to such Collateral Agents, for their benefit and for the benefit of the
Secured Parties, a Lien on such property subject to no Liens other than
Permitted Liens, and (ii) take all actions necessary to cause such Lien to
be duly perfected to the extent required by such Security Document in
accordance with all applicable Requirements of Law, including the filing of
financing statements in such jurisdictions as may be reasonably requested by
such Administrative Agent.  The Borrowers
shall otherwise take such actions and execute and/or deliver to the applicable
Collateral Agents such documents as the applicable Administrative Agent or such
Collateral Agents shall require to confirm the validity, perfection and
priority of the Lien of the Security Documents against such after-acquired
properties.

 

(b)           Subject to the terms of the
Orders, with respect to any person that is or becomes a Subsidiary after the
Closing Date, promptly (and in any event within 30 days after such person
becomes a Subsidiary) (i) pledge and deliver to the applicable Collateral
Agent the certificates, if any, representing all of the Equity Interests of
such Subsidiary, provided that with respect to any Foreign Subsidiary no more
than 65% of the Equity Interests of any first-tier Foreign Subsidiary of US
Borrowers or any US Subsidiary (and no stock of any other Foreign Subsidiary)
shall be so pledged and delivered as security for the Obligations, together
with undated stock powers or other appropriate instruments of transfer executed
and delivered in blank by a duly authorized officer of the holder(s) of
such Equity Interests, (ii)(A) deliver to the US Collateral Agent as
security for the Obligations all intercompany notes owing from such Subsidiary
to any Loan Party that is a US Borrower or US Subsidiary and (B) deliver
to the Canadian Collateral Agent as security for the Canadian Obligations all
intercompany notes owing from such Subsidiary to any Loan Party that is a
Canadian Borrower or Foreign Subsidiary, in each case, together with
instruments of transfer executed and delivered in blank by a duly authorized
officer of such Loan Party and  (iii) (A) if
such new Subsidiary is a US Subsidiary, cause such new US Subsidiary to execute
and deliver a Joinder Agreement or such 

 

120

 

comparable documentation to
become a Subsidiary Guarantor and a joinder agreement to the applicable
Security Agreement, substantially in the form annexed thereto, (B) if such
new Subsidiary is a Foreign Subsidiary, cause such new Foreign Subsidiary to
execute and deliver a pledge agreement, security agreement and guarantee
substantially in the form of the applicable Canadian Pledge Agreement, Canadian
Security Agreement and Canadian Guaranty and (C) cause to take all actions
necessary or advisable in the opinion of the applicable Administrative Agent or
the applicable Collateral Agent to cause the Lien created by the applicable
Security Agreement to be duly perfected to the extent required by such
agreement in accordance with all applicable Requirements of Law, including the
filing of financing statements in such jurisdictions as may be reasonably
requested by the applicable Administrative Agent or the applicable Collateral
Agent.

 

(c)           Subject to the terms of the
Orders, promptly grant to the applicable Collateral Agents, within 60 days of
the acquisition thereof, a security interest in and Mortgage on each Real
Property owned in fee by such Loan Party that is a US Borrower or US
Subsidiary, as is acquired by such Loan Party after the Closing Date and that,
together with any improvements thereon, individually has a fair market value of
at least $5,000,000, in each case, as additional security for the Secured
Obligations (unless the subject property is already mortgaged to a third party
to the extent permitted by Section 6.02).  Subject to the terms of the Intercreditor
Agreements, such Mortgages shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the applicable Administrative
Agents and the applicable Collateral Agents and shall constitute valid and
enforceable perfected First Priority Liens subject only to Permitted Liens or
other Liens reasonably acceptable to the such Collateral Agent.  Subject to the terms of the Intercreditor
Agreements, the Mortgages or instruments related thereto shall be duly recorded
or filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the First Priority Liens in favor of the
applicable Collateral Agents required to be granted pursuant to the Mortgages
and all taxes, fees and other charges payable in connection therewith shall be
paid in full.  Such Loan Party shall
otherwise take such actions and execute and/or deliver to the applicable
Collateral Agents such documents as the applicable Administrative Agent or such
Collateral Agent shall reasonably require to confirm the validity, perfection
and priority of the Lien of any existing Mortgage or new Mortgage against such
after-acquired Real Property (including, if requested by the applicable
Administrative Agent, a Title Policy, a Survey and local counsel opinion (in
form and substance reasonably satisfactory to such Administrative Agent and
such Collateral Agent) in respect of such Mortgage).

 

(d)           The Borrowers may designate
any Subsidiary acquired or formed after the Closing Date as a Non-Guarantor
Subsidiary by written notice to the applicable Administrative Agent; provided, however, that if at any time any
Non-Guarantor Subsidiary or group of Non-Guarantor Subsidiaries in the
aggregate (other than any Foreign Subsidiary not otherwise subject to Section 5.11(b))
has assets with either a book value or fair market value in excess of $1.0
million, then the Borrowers shall, and shall cause one or more of such
Subsidiaries to, comply with Section 5.11(b) within the time
frames set forth therein so that no Non-Guarantor Subsidiary or group of
Non-Guarantor Subsidiaries in the aggregate holds property having either a book
value or fair market value in excess of $1.0 million.

 

SECTION 5.12.            Security Interests; Further Assurances.  Subject to the terms of the Intercreditor
Agreements, promptly, upon the reasonable request of any Administrative Agent,
Collateral Agent or Lender, at the applicable Borrower’s expense, execute,
acknowledge and deliver, or cause the execution, acknowledgment and delivery
of, and thereafter register, file or record, or cause to be registered, filed
or recorded, in an appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Security Documents or otherwise deemed
by such Administrative Agent or such Collateral Agent reasonably necessary or
desirable for the continued validity, perfection and priority of the Liens on
the Collateral covered thereby subject to no other Liens except as permitted 

 

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by
the applicable Security Document or this Agreement, or obtain any consents or
waivers as may be reasonably necessary or appropriate in connection
therewith.  Deliver or cause to be
delivered to the applicable Administrative Agent and the applicable Collateral
Agents from time to time such other documentation, consents, authorizations,
approvals and orders in form and substance reasonably satisfactory to such
Administrative Agent and such Collateral Agents as such Administrative Agent
and such Collateral Agents shall reasonably deem necessary to perfect or
maintain the Liens on the Collateral pursuant to the Security Documents.  Upon the exercise by any Administrative
Agent, Collateral Agent or Lender of any power, right, privilege or remedy
pursuant to any Loan Document which requires any consent, approval,
registration, qualification or authorization of any Governmental Authority
execute and deliver all applications, certifications, instruments and other
documents and papers that such Administrative Agent, Collateral Agent or Lender
may require.  If any Administrative
Agent, any Collateral Agent or the Required Lenders determine that they are
required by a Requirement of Law to have appraisals prepared in respect of the
Real Property of any Loan Party constituting Collateral, the Borrowers shall
provide to the applicable Administrative Agent appraisals that satisfy the
applicable requirements of the Real Estate Appraisal Reform Amendments of
FIRREA, as applicable, and are otherwise in form and substance satisfactory to
such Administrative Agent and the applicable Collateral Agent.

 

SECTION 5.13.            Information Regarding Collateral.

 

(a)           Not effect any change (i) in
any Loan Party’s legal name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party’s chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it, domicile (within the meaning of the Quebec Civil Code)
or any office or facility (other than any Store) at which Collateral owned by
it with a value of more than $250,000 is located (including the establishment
of any such new office or facility), (iii) in any Loan Party’s identity or
organizational structure, (iv) in any Loan Party’s Federal Taxpayer
Identification Number or organizational identification number, if any, or (v) in
any Loan Party’s jurisdiction of organization (in each case, including by
merging or amalgamating with or into any other entity, reorganizing,
dissolving, liquidating, reorganizing or organizing in any other jurisdiction),
until (A) it shall have given the applicable Collateral Agents and the
applicable Administrative Agent not less than 30 days’ prior written notice (in
the form of an Officers’ Certificate), or such lesser notice period agreed to
by such Collateral Agents, of its intention so to do, clearly describing such
change and providing such other information in connection therewith as such
Collateral Agents or such Administrative Agent may reasonably request and (B) it
shall have taken all action reasonably satisfactory to such Collateral Agents
to maintain the perfection and priority of the security interest of such
Collateral Agents for the benefit of the Secured Parties in the Collateral, if
applicable.  Each Loan Party agrees to
promptly provide the applicable Collateral Agents with certified Organizational
Documents reflecting any of the changes described in the preceding sentence.  Each Loan Party also agrees to promptly
notify the applicable Collateral Agents of any change in the location of any
office in which it maintains books or records relating to Collateral owned by
it or any office or facility at which Collateral is located (including the
establishment of any such new office or facility), other than changes in
location to a Mortgaged Property or a leased property subject to a Landlord
Access Agreement.

 

(b)           Concurrently with the
delivery of financial statements pursuant to Section 5.01(a),
deliver to the applicable Administrative Agents and applicable Collateral
Agents a Perfection Certificate Supplement and a certificate of a Financial
Officer and the chief legal officer(s) of the Borrowers certifying that
all UCC financing statements (including fixture filings, as applicable), PPSA
financing statements or financing change statements or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the 

 

122

 

Collateral have been filed
of record in each governmental, municipal or other appropriate office in each
jurisdiction necessary to protect and perfect the security interests and Liens
under the Security Documents for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).

 

SECTION 5.14.            Post Closing Matters.  Execute and deliver the documents and
complete the tasks set forth on Schedule 5.14, in each case, (i) upon
mutual agreement of the Borrowers and the Administrative Agents in respect of
such documents and tasks to be listed on such schedule and (ii) within the
time limits specified on such schedule. 
The Administrative Agents may, in their sole and Permitted Discretion, (i) waive
the requirement for the delivery of any of the documents set forth on such
schedule or any actions to be taken by the Borrowers or any Loan Parties as set
forth on such schedule and (ii) waive or extend the time deadlines set
forth on such schedule.

 

SECTION 5.15.            Affirmative Covenants with Respect to Leases.  With respect to each Lease, the respective
Loan Party shall perform all the obligations imposed upon the landlord under
such Lease and enforce all of the tenant’s obligations thereunder, except where
the failure to so perform or enforce could not reasonably be expected to result
in a Material Adverse Effect.

 

SECTION 5.16.            Interest Rate Agreements.  Within one hundred eighty (180) days after
the Closing Date, US Borrowers shall enter into, and shall maintain, Hedging
Agreements providing for interest rate protection for an amount equal to fifty
percent (50%) of the outstanding principal due on the Senior Notes at any time
on terms and conditions reasonably satisfactory to US Administrative Agent.

 

SECTION 5.17.            Restructure Advisors; Permitted Store
Closings.  The Debtors
shall continue to retain Conway, Del Genio, Gries & Co. LLC as
restructuring advisors or retain such other advisor reasonably acceptable to
the Agents and on terms and conditions reasonably satisfactory to the Agents
until the Debtors have substantially consummated a Plan of Reorganization.  The Debtors shall retain and continue to
retain Asset Disposition Advisors, LLC (or another advisor reasonably
acceptable to the Agents) to assist with the evaluation of the liquidation of
stores slated for closure and previously disclosed to the Agents and Lenders in
writing pursuant to terms and conditions acceptable to the US Administrative
Agent and the Required Lenders (the “Permitted Store Closings”).

 

ARTICLE VI.

NEGATIVE COVENANTS

 

Each Loan Party warrants, covenants and
agrees with each Administrative Agent, each Collateral Agent and each Lender
that, so long as this Agreement shall remain in effect and until the
Commitments have been terminated and the principal of and interest on each
Loan, all Fees and all other expenses or amounts payable under any Loan
Document have been paid in full and all Letters of Credit have been canceled or
have expired or been fully cash collateralized and all amounts drawn thereunder
have been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, no Loan Party will, nor will they cause or permit any
Subsidiaries to:

 

SECTION 6.01.            Indebtedness.  Incur, create, assume or permit to exist,
directly or indirectly, any Indebtedness, except

 

(a)           Indebtedness incurred under
this Agreement and the other Loan Documents (including the Canadian
Obligations);

 

123

 

(b)           (i) Indebtedness
outstanding on the Closing Date and listed on Schedule 6.01(b),
including Indebtedness to the Prior Lenders and the Prior Agent arising under
the Pre-Petition Credit Agreement and any other “Loan Documents” (as defined in
the Pre-Petition Credit Agreement), if any, (ii) refinancings or renewals
thereof; provided that (A) any
such refinancing Indebtedness is in an aggregate principal amount not greater
than the aggregate principal amount of the Indebtedness being renewed or
refinanced, plus the amount of
any premiums required to be paid thereon, accrued or capitalized interest and
reasonable fees and expenses associated therewith, (B) such refinancing
Indebtedness has a later or equal final maturity and longer or equal weighted
average life than the Indebtedness being renewed or refinanced and (C) the
covenants, events of default, subordination and other provisions thereof
(including any guarantees thereof) shall be, in the aggregate, no less
favorable to the Lenders than those contained in the Indebtedness being renewed
or refinanced and (iii) the Senior Notes and Senior Note Guarantees
(including any notes and guarantees issued in exchange therefor in accordance
with the registration rights document entered into in connection with the
issuance of the Senior Notes and Senior Note Guarantees);

 

(c)           Indebtedness of any Company
under Hedging Agreements existing as of the Closing Date;

 

(d)           Indebtedness permitted by Section 6.04(i);

 

(e)           To the extent recorded in
the Companies’ intercompany account ledgers and to the extent the U.S.
Bankruptcy Court has entered an order (which has not been reversed, vacated or
stayed, unless such stay has been vacated) approving the incurrence of such
intercompany Indebtedness, and according administrative claim status to such
intercompany Indebtedness, intercompany Indebtedness of the Companies
outstanding to the extent permitted by Section 6.04(h);

 

(f)            Indebtedness in respect of
Purchase Money Obligations and Capital Lease Obligations, and refinancings or
renewals thereof (other than refinancings funded with intercompany advances),
in an aggregate amount not to exceed $10 million;

 

(g)           Indebtedness in respect of
workers’ compensation claims, self-insurance obligations, performance bonds,
surety appeal or similar bonds and completion guarantees provided by a Company
in the ordinary course of its business;

 

(h)           Contingent Obligations of
any Loan Party in respect of Indebtedness otherwise permitted under this Section 6.01;
provided, however, that notwithstanding
the foregoing, and except for the Carve-Out Expenses up to the Carve-Out
Amount, no Contingent Obligations of any Loan Party shall be permitted to have
an administrative expense claim status under the Bankruptcy Code senior to or
pari passu with the superpriority administrative expense claims of the
Administrative Agents and the Lenders as set forth herein and in the Interim
and Final Orders;

 

(i)            Indebtedness arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness
is extinguished within five Business Days of incurrence;

 

(j)            Indebtedness arising in
connection with endorsement of instruments for deposit in the ordinary course
of business;

 

(k)           Indebtedness in respect of
the Permitted Leasehold Facility; and

 

124

 

(l)            Indebtedness under the
Senior Note Documents;

 

provided, however, that no Indebtedness under clauses (b) through
(l) shall be permitted to have an administrative expense claim status
under the Bankruptcy Code senior to or pari passu with the
superpriority administrative expense claims of the Administrative Agents and
the Lender and the Prior Agent and the Prior Lenders, as set forth herein and
in the Interim Order and the Final Order.

 

SECTION 6.02.            Liens.  Create, incur, assume or permit to exist,
directly or indirectly, any Lien on any property now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any
thereof, except the following (collectively, the “Permitted Liens”):

 

(a)           inchoate Liens for taxes,
assessments or governmental charges or levies not yet due and payable or
delinquent and Liens for taxes, assessments or governmental charges or levies,
which (i) are being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, which
proceedings (or orders entered in connection with such proceedings) have the
effect of preventing the forfeiture or sale of the property subject to any such
Lien, and (ii) in the case of any such charge or claim which has or may
become a Lien against any of the Collateral, such Lien and the contest thereof
shall satisfy the Contested Collateral Lien Conditions;

 

(b)           Liens in respect of property
of any Company imposed by Requirements of Law, and do not secure Indebtedness
for borrowed money, such as carriers’, warehousemen’s, materialmen’s, landlords’,
workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other similar
Liens, and (i) which do not in the aggregate materially detract from the
value of the property of the Companies, taken as a whole, and do not materially
impair the use thereof in the operation of the business of the Companies, taken
as a whole, (ii) which, if they secure obligations that are then due and
unpaid, are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, which
proceedings (or orders entered in connection with such proceedings) have the
effect of preventing the forfeiture or sale of the property subject to any such
Lien, and (iii) in the case of any such Lien which has become a Lien
against any of the Collateral, such Lien and the contest thereof shall satisfy
the Contested Collateral Lien Conditions;

 

(c)           any Lien in existence on the
Closing Date and set forth on Schedule 6.02(c) and any Lien granted as a
replacement or substitute therefor; provided
that any such replacement or substitute Lien (i) except as permitted by Section 6.01(b) (ii)(A),
does not secure an aggregate amount of Indebtedness, if any, greater than that
secured on the Closing Date and (ii) does not encumber any property other
than the property subject thereto on the Closing Date (any such Lien, an “Existing Lien”);

 

(d)           easements, rights-of-way,
restrictions (including zoning restrictions), covenants, licenses, encroachments,
protrusions and other similar charges or encumbrances, and minor title
deficiencies on or with respect to any Real Property, in each case whether now
or hereafter in existence, not (i) securing Indebtedness, (ii) individually
or in the aggregate materially impairing the value or marketability of such
Real Property or (iii) individually or in the aggregate materially
interfering with the ordinary conduct of the business of the Companies at such
Real Property;

 

(e)           Liens arising out of
judgments, attachments or awards not resulting in a Default and in respect of
which such Company shall in good faith be prosecuting an appeal or proceedings
for review in respect of which there shall be secured a subsisting stay of
execution pending such appeal or proceedings and, in the case of any such Lien
which has or may become a Lien against any of the Collateral, such Lien and the
contest thereof shall satisfy the Contested Collateral Lien Conditions;

 

125

 

(f)            Liens (other than any Lien
imposed by ERISA) (x) imposed by Requirements of Law or deposits made in
connection therewith in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, social security and similar
legislation, (y) incurred in the ordinary course of business to secure the
performance of tenders, statutory obligations (other than excise taxes),
surety, stay, customs and appeal bonds, statutory bonds, bids, leases,
government contracts, trade contracts, performance and return of money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money) or (z) arising by virtue of deposits made in the ordinary
course of business to secure liability for premiums to insurance carriers; provided that (i) with respect to
clauses (x), (y) and (z) of this paragraph (f), such Liens are for
amounts not yet due and payable or delinquent or, to the extent such amounts
are so due and payable, such amounts are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, which proceedings or orders entered in connection with
such proceedings have the effect of preventing the forfeiture or sale of the
property subject to any such Lien, (ii) to the extent such Liens are not
imposed by Requirements of Law, such Liens shall in no event encumber any
property other than cash and Cash Equivalents, (iii) in the case of any
such Lien against any of the Collateral, such Lien and the contest thereof
shall satisfy the Contested Collateral Lien Conditions and (iv) the
aggregate amount of deposits at any time pursuant to clause (y) and clause
(z) of this paragraph (f) shall not exceed $250,000 in the aggregate;

 

(g)           Leases of the properties of
any Company, so long as such Leases are subordinate in all respects to the
Liens granted and evidenced by the Security Documents and do not, individually
or in the aggregate, (i) interfere in any material respect with the
ordinary conduct of the business of any Company or (ii) materially impair
the use (for its intended purposes) or the value of the property subject
thereto;

 

(h)           Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by any Company in the ordinary course of business in
accordance with the past practices of such Company;

 

(i)            Liens securing Indebtedness
incurred pursuant to Section 6.01(f); provided that any such Liens attach only to the property
being financed pursuant to such Indebtedness and do not encumber any other
property of any Company;

 

(j)            bankers’ Liens, rights of
setoff and other similar Liens existing solely with respect to cash and Cash
Equivalents on deposit in one or more accounts maintained by any Company, in each
case granted in the ordinary course of business in favor of the bank or banks
with which such accounts are maintained, securing amounts owing to such bank
with respect to cash management and operating account arrangements, including
those involving pooled accounts and netting arrangements; provided that, unless such Liens are
non-consensual and arise by operation of law, in no case shall any such Liens
secure (either directly or indirectly) the repayment of any Indebtedness;

 

(k)           Liens on property of a person
existing at the time such person is acquired or merged with or into or
consolidated with any Company to the extent permitted hereunder (and not
created in anticipation or contemplation thereof); provided that such Liens do not extend to property not subject
to such Liens at the time of acquisition (other than improvements thereon) and
are no more favorable to the lienholders than such existing Lien;

 

(l)            Liens granted pursuant to
the Security Documents to secure the Secured Obligations;

 

126

 

(m)          licenses of Intellectual
Property granted by any Company in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of business of
the Companies;

 

(n)           the filing of UCC financing
statements or PPSA financing statements or financing change statements solely
as a precautionary measure in connection with operating leases or consignment
of goods;

 

(o)           the existence of the “equal
and ratable” clause in the Senior Note Documents (but not any security
interests granted pursuant thereto);

 

(p)           Liens securing Indebtedness
incurred pursuant to Section 6.01(l); provided that such Lien are
subject to the Note Indenture Intercreditor Agreement;

 

(q)           Liens securing Indebtedness
incurred pursuant to Section 6.01(k); provided that such Lien is
limited solely to (i) a first priority Lien on Leasehold Priority
Collateral and (ii) such other collateral as may be approved by the US
Administrative Agent in its sole discretion, and, in each case, that such Liens
are subject to the Leasehold Intercreditor Agreement;

 

(r)            adequate protection pari
passu replacement Liens under and in accordance with the Interim Order
and the Final Order in favor of the Prior Agent on behalf of itself and the
Prior Lenders; and

 

(s)           Liens securing the Prior
Lender Obligations;

 

provided,
however, that no consensual Liens shall be permitted to exist, directly or
indirectly, on any Securities Collateral, other than Liens granted pursuant to
the Security Documents or the Senior Note Documents.  Furthermore, notwithstanding anything to the
contrary contained herein (including any provision for, reference to, or
acknowledgement of, any Lien or Permitted Lien), nothing herein and no approval
by any Administrative Agent, Collateral Agent or Lender of any Lien or
Permitted Lien (whether such approval is verbal or in writing) shall be
construed as or deemed to constitute a subordination by any Administrative
Agent, Collateral Agent or Lender of any Lien or vary any of the terms or
priorities established by the Intercreditor Agreement or other right or
interest held by or for the benefit of any of them in or to any Collateral of
any of the Loan Parties or any part thereof in favor of any Lien or Permitted
Lien held by or for the benefit of any other person.

 

Notwithstanding the foregoing, Liens
permitted by clause (c) above shall at all times be junior and subordinate
to the Liens on (a) with respect to the Debtors, the DIP Priority
Collateral under the Loan Documents and the Order and (b) with respect to
Canadian Loan Parties, the Collateral of the Canadian Loan Parties under the
Loan Documents.  The prohibition provided
for in this Section 6.02 specifically includes, without limitation,
any effort by any Debtor, any Committee or any other party in interest in any
Chapter 11 Case to prime or create pari passu to any Liens or interests of the
Secured Parties on the DIP Priority Collateral.

 

SECTION 6.03.            Sale and Leaseback Transactions.  Enter into any Sale and Leaseback Transaction.

 

SECTION 6.04.            Investment, Loan and Advances.  Directly or indirectly, lend money or credit
(by way of guarantee or otherwise) or make advances to any person, or purchase
or acquire any stock, bonds, notes, debentures or other obligations or
securities of, or any other interest in, or make any capital contribution to,
any other person, or purchase or own a futures contract or otherwise become
liable 

 

127

 

for
the purchase or sale of currency or other commodities at a future date in the
nature of a futures contract (all of the foregoing, collectively, “Investments”), except that the following
shall be permitted:

 

(a)           Investments outstanding on
the Closing Date and identified on Schedule 6.04(a);

 

(b)           the Companies may (i) acquire
and hold accounts receivables owing to any of them if created or acquired in
the ordinary course of business and payable or dischargeable in accordance with
customary terms, (ii) invest in, acquire and hold cash and Cash
Equivalents, (iii) endorse negotiable instruments held for collection in
the ordinary course of business or (iv) make lease, utility and other
similar deposits in the ordinary course of business;

 

(c)           [intentionally omitted];

 

(d)           The Borrowers and the
Borrowing Base Guarantors may make loans and advances (including payroll,
travel and entertainment related advances) in the ordinary course of business
to their respective employees (other than any loans or advances to any director
or executive officer (or equivalent thereof) that would be in violation of Section 402
of the Sarbanes-Oxley Act) so long as the aggregate principal amount thereof at
any time outstanding (determined without regard to any write-downs or
write-offs of such loans and advances) shall not exceed $1.0 million;

 

(e)           Any Borrower may enter into
Hedging Agreements to the extent existing on the Closing Date;

 

(f)            The Borrowers and the
Borrowing Base Guarantors may sell or transfer amounts and acquire assets to
the extent permitted by Section 6.06;

 

(g)           loans and advances to
directors, employees and officers of the Borrowers and the Subsidiaries for bona fide business purposes and to
purchase Equity Interests of Holdings, in aggregate amount not to exceed $1.0
million at any time outstanding;

 

(h)           Investments (i) by any
Debtor in any other Debtor, (ii) by any Canadian Loan Party in another
Canadian Loan Party, (iii) by any Debtor in any Canadian Loan Party in an
amount not to exceed $10,000,000 at any time outstanding and (iv) by any
Canadian Loan Party in any Debtor; provided
that any of the foregoing Investments shall be in the form of a loan or advance
and shall be evidenced by the Intercompany Note and be pledged by such Loan
Party as Collateral pursuant to the Security Documents and the Order; and

 

(i)            Investments in securities of
trade creditors or customers in the ordinary course of business received upon
foreclosure or pursuant to any plan of reorganization or liquidation or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers.

 

An
Investment shall be deemed to be outstanding to the extent not returned in the
same form as the original Investment to any Borrower or any Subsidiary
Guarantor.

 

SECTION 6.05.            Mergers and Consolidations.  Wind up, liquidate or dissolve its affairs or
enter into any transaction of merger, amalgamation or consolidation (or agree
to do any of the foregoing at any future time), except that the following shall
be permitted:

 

(a)           Asset Sales in compliance
with Section 6.06;

 

128

 

(b)           any Company (other than
Canadian Loan Parties) may merge or consolidate with or into any US Borrower or
any US Subsidiary Guarantor (as long as such US Borrower is the surviving
person in the case of any merger, amalgamation or consolidation involving such
Borrower and such US Subsidiary Guarantor is the surviving Person and remains a
Wholly Owned Subsidiary of Holdings in any other case) and any Company (other
than US Loan Parties) may merge or consolidate with or into the Canadian
Borrower or any Canadian Guarantor (as long as such Canadian Borrower is the
surviving Person in the case of any merger, amalgamation or consolidation
involving such Borrower and such Canadian Guarantor is the surviving Person and
remains a Wholly Owned Subsidiary of Holdings in any other case); provided that the Lien on and security
interest in such property granted or to be granted in favor of the applicable
Collateral Agents under the Security Documents and the Order shall be
maintained or created in accordance with the provisions of Section 5.11
or Section 5.12, as applicable; and

 

(c)           acquisitions in compliance
with Section 6.07.

 

To the extent the Required Lenders waive the
provisions of this Section 6.05 with respect to the sale of any
Collateral, or any Collateral is sold as permitted by this Section 6.05,
such Collateral (unless sold to a Company) shall be sold, subject to the terms
of the Intercreditor Agreement, free and clear of the Liens created by the
Security Documents, and the Agents shall take all actions they deem appropriate
in order to effect the foregoing.

 

SECTION 6.06.            Asset Sales.  Effect any Asset Sale, or agree to effect any
Asset Sale, except that the following shall be permitted:

 

(a)           disposition of used, worn
out, obsolete or surplus property by any Company in the ordinary course of
business and the abandonment or other disposition of Intellectual Property that
is, in the reasonable judgment of the Borrowers, no longer economically
practicable to maintain or useful in the conduct of the business of the
Companies taken as a whole;

 

(b)           leases and subleases of real
or personal property in the ordinary course of business and in accordance with
the applicable Security Documents;

 

(c)           Permitted Store Closings;
and

 

(d)           Investments in compliance
with Section 6.04.

 

To the extent the Required Lenders waive the
provisions of this Section 6.06 with respect to the sale of any
Collateral, or any Collateral is sold as permitted by this Section 6.06,
such Collateral (unless sold to a Company) shall be sold free and clear of the
Liens created by the Security Documents, and the Agents shall take all actions
they deem appropriate in order to effect the foregoing.

 

SECTION 6.07.            Acquisitions.  Purchase or otherwise acquire (in one or a
series of related transactions) any part of the property (whether tangible or
intangible) of any person (or agree to do any of the foregoing at any future
time), except that the following shall be permitted:

 

(a)           Capital Expenditures by the
Borrowers and the Subsidiaries in an amount not greater than that set forth in
the Budget;

 

(b)           purchases and other
acquisitions of inventory, materials, equipment and intangible property in the
ordinary course of business;

 

129

 

(c)           Investments in compliance
with Section 6.04;

 

(d)           leases or subleases of real
or personal property in the ordinary course of business and in accordance with
the applicable Security Documents; and

 

(e)           Mergers, amalgamations and
consolidations in compliance with Section 6.05;

 

provided that the Lien on and
security interest in such property granted or to be granted in favor of the
applicable Collateral Agents under the Security Documents shall be maintained
or created in accordance with the provisions of Section 5.11 or Section 5.12,
as applicable.

 

SECTION 6.08.            Dividends.  Until all Obligations have been repaid in
full in cash, all Commitments terminated, the termination or cancellation of
all Letters of Credit, authorize, declare or pay, directly or indirectly, any
Dividends with respect to any Company, except that the following shall be
permitted:

 

(a)           Dividends by (i) any
Debtor to any US Borrower or any Domestic Guarantor (other than Holdings), (ii) any
Canadian Loan Party to any other Canadian Loan Party and (iii) any
Canadian Loan Party to any US Borrower or any Domestic Guarantor (other than
Holdings);

 

(b)           so long as no Default shall
then exist or would arise therefrom, (A) to the extent actually used by
Holdings to pay such taxes, costs and expenses, payments by any Borrower to or
on behalf of Holdings in an amount sufficient to pay franchise taxes and other
fees required to maintain the legal existence of Holdings and (B) payments
by any Borrower to or on behalf of Holdings in an amount sufficient to pay
out-of-pocket legal, accounting and filing costs and other expenses in the
nature of overhead in the ordinary course of business of Holdings, in the case
of clauses (A) and (B) in an aggregate amount not to exceed $5
million in any fiscal year; and

 

(c)           Permitted Tax Distributions,
so long as Holdings uses such distributions to pay its taxes.

 

SECTION 6.09.            Transactions with Affiliates.  Enter into, directly or indirectly, any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate of any Company (other than between or
among one or both Borrowers and one or more Subsidiary Guarantors, including
between the Debtors and the Canadian Loan Parties), other than on terms and
conditions at least as favorable to such Company as would reasonably be
obtained by such Company at that time in a comparable arm’s-length transaction
with a person other than an Affiliate, except that the following shall be
permitted:

 

(a)           Dividends permitted by Section 6.08;

 

(b)           Investments permitted by Section 6.04(h)
and Section 6.04(i);

 

(c)           reasonable and customary
director, officer and employee compensation (including bonuses) and other
benefits (including retirement, health, stock option and other benefit plans)
and indemnification arrangements, which in the case of director and executive
officer compensation is approved by the Board of Directors of Borrower; and

 

(d)           transactions with customers,
clients, suppliers, joint venture partners or purchasers or sellers of goods
and services, in each case in the ordinary course of business and otherwise not
prohibited by the Loan Documents.

 

130

 

SECTION 6.10.            Cancellation of Indebtedness.  Cancel any claim or debt owing to it, except
for reasonable consideration negotiated on an arm’s length basis and in the
ordinary course of business.

 

SECTION 6.11.            Prepayments of Other Indebtedness;
Modifications of Organizational Documents and Other Documents, etc.  Directly or indirectly:

 

(a)           make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment on or
redemption or acquisition for value of, or any prepayment or redemption as a
result of any asset sale, change of control or similar event of, any
Indebtedness outstanding under the Senior Notes or the Permitted Leasehold
Facility without the consent of the Administrative Agents;

 

(b)           amend or modify, or permit
the amendment or modification of, any provision of any Loan Document, Senior
Note or the Permitted Leasehold Facility in any manner that is adverse in any
material respect to the interests of the Lenders;

 

(c)           terminate, amend, modify
(including electing to treat any Pledged Interests (as defined in the Security
Agreement) as a “security” under Section 8-103 of the UCC or under the
PPSA) or change any of its Organizational Documents (including by the filing or
modification of any certificate of designation) or any agreement to which it is
a party with respect to its Equity Interests (including any stockholders’
agreement), or enter into any new agreement with respect to its Equity
Interests, other than any such amendments, modifications or changes or such new
agreements which are not adverse in any material respect to the interests of
the Lenders; provided that
Holdings may issue such Equity Interests, so long as such issuance is not
prohibited by Section 6.13 or any other provision of this
Agreement, and may amend its Organizational Documents to authorize any such
Equity Interests; or

 

(d)           change, waive or otherwise
modify any existing agency documents or purchase agreements executed on and
after the Petition Date in connection with the Permitted Store Closings.

 

In addition, notwithstanding
anything to the contrary in this Section 6, the Borrowers shall not make
any payment on account of, purchase, defease, redeem, repay decrease or
otherwise acquire or return for value any Pre-Petition Indebtedness other than,
prior to the occurrence and during the continuance of any Event of Default,
payment of the following as contemplated in the Budget: (1) Pre-Petition
employee wages, benefits and related employee taxes as of the Petition Date; (2) Pre-Petition
sales, use and real property taxes; (3) Pre-Petition amounts due in
respect of insurance financings; (4) amounts approved in accordance with
other “first day orders” satisfactory to the US Administrative Agent; and (5) cure
amounts acceptable to the US Administrative Agent under leases and executory
contracts assumed with the approval of the U.S. Bankruptcy Court.

 

SECTION 6.12.            Limitation on Certain Restrictions on
Subsidiaries.  Directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrowers or any
Subsidiary, or pay any Indebtedness owed to the Borrowers or a Subsidiary, (b) make
loans or advances to the Borrowers or any Subsidiary or (c) transfer any of
its properties to the Borrowers or any Subsidiary, except for such encumbrances
or restrictions existing under or by reason of (i) applicable Requirements
of Law; (ii) this Agreement and the other Loan Documents; (iii) the
Senior Note Documents, as in effect on the Closing Date; (iv) the
Permitted Leasehold Facility, (v) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of a
Subsidiary; (vi) customary provisions restricting assignment of any
agreement entered into by a Subsidiary in the ordinary course of business; (vii) any

 

131

 

holder
of a Lien permitted by Section 6.02 restricting the transfer of the
property subject thereto; (viii) customary restrictions and conditions
contained in any agreement relating to the sale of any property permitted under
Section 6.06 pending the consummation of such sale; (ix) any
agreement in effect at the time such Subsidiary becomes a Subsidiary of the
Borrowers, so long as such agreement was not entered into in connection with or
in contemplation of such person becoming a Subsidiary of the Borrowers; (x) without
affecting the Loan Parties’ obligations under Section 5.11,
customary provisions in partnership agreements, limited liability company
organizational governance documents, asset sale and stock sale agreements and
other similar agreements entered into in the ordinary course of business that
restrict the transfer of ownership interests in such partnership, limited liability
company or similar person; (xi) restrictions on cash or other deposits or net
worth imposed by suppliers or landlords under contracts entered into in the
ordinary course of business; (xii) [intentionally omitted]; (xiii) in the case
of any joint venture which is not a Loan Party in respect of any matters
referred to in clauses (b) and (c) above, restrictions in such person’s
Organizational Documents or pursuant to any joint venture agreement or
stockholders agreements solely to the extent of the Equity Interests of or
property held in the subject joint venture or other entity; or (xiv) any
encumbrances or restrictions imposed by any amendments or refinancings that are
otherwise permitted by the Loan Documents or the contracts, instruments or
obligations referred to in clauses (iii), (iv) or (ix) above; provided that such amendments or
refinancings are no more materially restrictive with respect to such
encumbrances and restrictions than those prior to such amendment or
refinancing.

 

SECTION 6.13.            Limitation on Issuance of Capital Stock.

 

(a)           With respect to Holdings,
issue any Equity Interest that is not Qualified Capital Stock.

 

(b)           With respect to the
Borrowers or any Subsidiary, issue any Equity Interest (including by way of
sales of treasury stock) or any options or warrants to purchase, or securities
convertible into, any Equity Interest, except (i) for stock splits, stock
dividends and additional issuances of Equity Interests which do not decrease
the aggregate percentage ownership of the Borrowers and their Subsidiaries in
any class of the Equity Interest of any other Subsidiary; (ii) Subsidiaries
of the Borrowers formed after the Closing Date in accordance with Section 6.14
may issue Equity Interests to Borrower or the Subsidiary of the Borrowers which
is to own such Equity Interests; and (iii) the Borrowers may issue common
stock that is Qualified Capital Stock to Holdings.  All Equity Interests issued in accordance
with this Section 6.13(b) shall, to the extent required by Section 5.11
and Section 5.12 or any Security Agreement, be delivered to the
applicable Collateral Agent for pledge pursuant to the applicable Security
Agreement.

 

SECTION 6.14.            Limitation on Creation of Subsidiaries.  Establish, create or acquire any additional
Subsidiaries without the prior written consent of the Required Lenders.

 

SECTION 6.15.            Business.

 

(a)           With respect to Holdings,
engage in any business activities or have any properties or liabilities, other
than (i) its ownership of the Equity Interests of the Borrowers, (ii) obligations
under the Loan Documents and the Senior Note Documents and any Permitted
Leasehold Facility and (iii) activities and properties incidental to the
foregoing clauses (i) and (ii).

 

(b)           With respect to the
Borrowers and the Subsidiaries, engage (directly or indirectly) in any business
other than those businesses in which the Borrowers and its Subsidiaries are
engaged on the Closing Date.

 

132

 

SECTION 6.16.            Limitation on Accounting Changes.  Make or permit any change in accounting
policies or reporting practices, without the consent of the Required Lenders,
which consent shall not be unreasonably withheld, except changes that are
required by GAAP.

 

SECTION 6.17.            Fiscal Year.  Change its fiscal year-end more than one time
prior to the Revolving Maturity Date (provided that, Administrative Borrower
shall provide the Administrative Agents with forty-five (45) day’s advance
written notice of such change).

 

SECTION 6.18.            No Further Negative Pledge.  Enter into any agreement, instrument, deed or
lease which prohibits or limits the ability of any Loan Party to create, incur,
assume or suffer to exist any Lien upon any of their respective properties or
revenues, whether now owned or hereafter acquired, or which requires the grant
of any security for an obligation if security is granted for another
obligation, except the following:  (1) this
Agreement and the other Loan Documents (including with respect to the Canadian
Obligations); (2) covenants in documents creating Liens permitted by Section 6.02
prohibiting further Liens on the properties encumbered thereby; (3) the
Senior Note Documents, as in effect on the Closing Date; (4) the Permitted
Leasehold Facility; (5) any other agreement that does not restrict in any
manner (directly or indirectly) Liens created pursuant to the Loan Documents on
any Collateral securing the Secured Obligations and does not require the direct
or indirect granting of any Lien securing any Indebtedness or other obligation
by virtue of the granting of Liens on or pledge of property of any Loan Party
to secure the Secured Obligations; and (6) any prohibition or limitation
that (a) exists pursuant to applicable Requirements of Law, (b) consists
of customary restrictions and conditions contained in any agreement relating to
the sale of any property permitted under Section 6.06 pending the
consummation of such sale, (c) restricts subletting or assignment of any
lease governing a leasehold interest of the Borrowers or a Subsidiary, (d) exists
in any agreement in effect at the time such Subsidiary becomes a Subsidiary of
the Borrowers, so long as such agreement was not entered into in contemplation
of such person becoming a Subsidiary or (e) is imposed by any amendments
or refinancings that are otherwise permitted by the Loan Documents of the
contracts, instruments or obligations referred to in clauses (3), (4) or
(6)(d); provided that such
amendments and refinancings are no more materially restrictive with respect to
such prohibitions and limitations than those prior to such amendment or
refinancing.

 

SECTION 6.19.            Anti-Terrorism Law; Anti-Money Laundering.

 

(a)           Directly or indirectly, (i) knowingly
conduct any business or engage in making or receiving any contribution of
funds, goods or services to or for the benefit of any person described in Section 3.22,
(ii) knowingly deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked pursuant to the Executive
Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law (and the Loan Parties shall deliver to the
Lenders any certification or other evidence requested from time to time by any
Lender in its reasonable discretion, confirming the Loan Parties’ compliance
with this Section 6.19).

 

(b)           Cause or permit any of the
funds of such Loan Party that are used to repay the Loans to be derived from
any unlawful activity with the result that the making of the Loans would be in
violation of any Requirement of Law.

 

SECTION 6.20.            Embargoed
Person.  Cause or permit (a) any
of the funds or properties of the Loan Parties that are used to repay the Loans
to constitute property of, or be beneficially owned directly or indirectly by,
any person subject to sanctions or trade restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that is identified on (1) the
“List of Specially Designated Nationals and Blocked Persons” maintained by OFAC
and/or on any other similar list 

 

133

 

maintained
by OFAC pursuant to any authorizing statute including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any
Executive Order or Requirement of Law promulgated thereunder or that is named
as a “listed person” or “listed entity” or any other similar lists made under
any Anti-Terrorism Laws, with the result that the investment in the Loan
Parties (whether directly or indirectly) is prohibited by a Requirement of Law,
or the Loans made by the Lenders would be in violation of a Requirement of Law,
or (2) the Executive Order, any related enabling legislation or any other
similar Executive Orders or (b) any Embargoed Person to have any direct or
indirect interest, of any nature whatsoever in the Loan Parties, with the
result that the investment in the Loan Parties (whether directly or indirectly)
is prohibited by a Requirement of Law or the Loans are in violation of a
Requirement of Law.

 

SECTION 6.21.            Budget Compliance Covenants.  Allow (a) the payment of any expenses or
other disbursements other than those set forth in the Budget; provided
that the Actual Disbursement Amount for any Cumulative Four Week Period may
exceed the Budgeted Disbursement Amount for such Cumulative Four Week Period by
no more than ten percent (10%), (b) Actual Sales Receipts for the
Cumulative Four Week Period to be less than ninety percent (90%) of the
Budgeted Sales Receipts for such Cumulative Four Week Period as set forth in
the Budget, or (c) the Actual Inventory Amount at any time be less than ninety
percent (90%) of the Budgeted Inventory Amount at such time as set forth in the
Budget.

 

SECTION 6.22.            Repayment
of Indebtedness.  Except as specifically permitted hereunder
and as contemplated by the Order, without the express prior written consent of
Administrative Agents and Required Lenders, make any payment or transfer with
respect to any Prepetition Lien or Pre-Petition Indebtedness incurred or
arising prior to the filing of the Chapter 11 Case that is subject to the
automatic stay provisions of the Bankruptcy Code whether by way of “adequate
protection” under the Bankruptcy Code or otherwise.

 

SECTION 6.23.            Reclamation
Claims. 
Enter into any agreement to return any of its Inventory to any of its
creditors for application against any Pre-Petition Indebtedness, Pre-Petition
trade payables or other Pre-Petition claims under Section 546(g) of
the Bankruptcy Code or allow any creditor to take any setoff or recoupment
against any of its Pre-Petition Indebtedness, Pre-Petition trade payables or
other Pre-Petition claims based upon any such return pursuant to Section 553(b)(l) of
the Bankruptcy Code or otherwise.

 

SECTION 6.24.            Chapter
11 Claims.  Incur, create, assume, suffer to exist or
permit any other superpriority administrative claim which is pari passu with or
senior to the claims of the Administrative Agents and Lenders against the
Debtors, except as set forth in Section 2.23.

 

SECTION 6.25.            Leases.  Enter into or assume any
operating lease for Equipment or Real Estate other than as contemplated by the
Budget.

 

ARTICLE VII.

GUARANTEE

 

SECTION 7.01.            The Guarantee.  The Guarantors (other than the Canadian
Guarantors which have executed and delivered the Canadian Guaranty) and each US
Borrower hereby jointly and severally guarantee, as a primary obligor and not
as a surety to each Secured Party and their respective successors and assigns,
the prompt payment in full when due (whether at stated maturity, by required
prepayment, declaration, demand, by acceleration or otherwise) of the principal
of and interest (including any interest, fees, costs or charges that would
accrue but for the provisions of the Title 11 of the United 

 

134

 

States
Code after any bankruptcy or insolvency petition under Title 11 of the United
States Code or the provisions of any Insolvency Law) on the Loans made by the
Lenders to, and the Notes held by each Lender of, the Borrowers, and all other
Secured Obligations from time to time owing to the Secured Parties by any Loan
Party under any Loan Document or any Hedging Agreement entered into with a
counterparty that is a Secured Party, in each case strictly in accordance with
the terms thereof (such obligations being herein collectively called the “Guaranteed Obligations”).  The Guarantors (other than the Canadian
Guarantors) and each US Borrower hereby jointly and severally agree that if the
Borrowers or other Guarantor(s) shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, such Guarantors and each US Borrower will promptly pay the same in
cash, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of the Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.

 

SECTION 7.02.            Obligations Unconditional.  The obligations of the Guarantors and each US
Borrower under Section 7.01 shall constitute a guaranty of payment
and to the fullest extent permitted by applicable Requirements of Law, are
absolute, irrevocable and unconditional, joint and several, irrespective of the
value, genuineness, validity, regularity or enforceability of the Guaranteed
Obligations of the Borrowers under this Agreement, the Notes, if any, or any
other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, irrespective of any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety, Guarantor or US Borrower (except for payment in
full).  Without limiting the generality
of the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of such Guarantors and each
US Borrower hereunder which shall remain absolute, irrevocable and
unconditional under any and all circumstances as described above:

 

(i)            at any time or from time to
time, without notice to the Guarantors or US Borrowers, the time for any
performance of or compliance with any of the Guaranteed Obligations shall be
extended, or such performance or compliance shall be waived;

 

(ii)           any of the acts mentioned in
any of the provisions of this Agreement or the Notes, if any, or any other
agreement or instrument referred to herein or therein shall be done or omitted;

 

(iii)          the maturity of any of the
Guaranteed Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be amended in any respect, or any right under the Loan
Documents or any other agreement or instrument referred to herein or therein
shall be amended or waived in any respect or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or exchanged
in whole or in part or otherwise dealt with;

 

(iv)          any Lien or security
interest granted to, or in favor of, Issuing Bank or any Lender or Agent as security
for any of the Guaranteed Obligations shall fail to be perfected; or

 

(v)           the release of any other
Guarantor or US Borrower pursuant to Section 7.09 or otherwise.

 

The Guarantors (other than the Canadian
Guarantors) and each US Borrower hereby expressly waive diligence, presentment,
demand of payment, protest and all notices whatsoever, and any requirement that
any Secured Party exhaust any right, power or remedy or proceed against the
Borrowers under this Agreement or the Notes, if any, or any other agreement or
instrument referred to herein or 

 

135

 

therein, or against any other person under any other guarantee of, or
security for, any of the Guaranteed Obligations.  The Guarantors (other than the Canadian
Guarantors) and each US Borrower waive any and all notice of the creation,
renewal, extension, waiver, termination or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by any Secured Party upon this
Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guarantee, and all dealings between the
Borrowers and the Secured Parties shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Guarantee.  This Guarantee shall be construed as a
continuing, absolute, irrevocable and unconditional guarantee of payment
without regard to any right of offset with respect to the Guaranteed
Obligations at any time or from time to time held by Secured Parties, and the
obligations and liabilities of the Guarantors hereunder shall not be
conditioned or contingent upon the pursuit by the Secured Parties or any other
person at any time of any right or remedy against the Borrowers or against any
other person which may be or become liable in respect of all or any part of the
Guaranteed Obligations or against any collateral security or guarantee therefor
or right of offset with respect thereto. 
This Guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantors and the
successors and assigns thereof, and shall inure to the benefit of the Lenders,
and their respective successors and assigns, notwithstanding that from time to
time during the term of this Agreement there may be no Guaranteed Obligations
outstanding.

 

SECTION 7.03.            Reinstatement.  The obligations of the Guarantors under this Article VII
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of the Borrowers or other Loan Party in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise. 
The Guarantors jointly and severally agree that they will indemnify each
Secured Party on demand for all reasonable costs and expenses (including
reasonable fees of counsel) incurred by such Secured Party in connection with
such rescission or restoration, including any such costs and expenses incurred
in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law, other than any costs or expenses resulting from the
bad faith or willful misconduct of such Secured Party.

 

SECTION 7.04.            Subrogation; Subordination.  Each Guarantor hereby agrees that until the
indefeasible payment and satisfaction in full in cash of all Guaranteed
Obligations and the expiration and termination of the Commitments of the
Lenders under this Agreement it shall waive any claim and shall not exercise
any right or remedy, direct or indirect, arising by reason of any performance
by it of its guarantee in Section 7.01, whether by subrogation or
otherwise, against the Borrowers or any other Guarantor of any of the
Guaranteed Obligations or any security for any of the Guaranteed
Obligations.  Any Indebtedness of any
Loan Party permitted pursuant to Section 6.01(d) shall be
subordinated to such Loan Party’s Secured Obligations in the manner set forth
in the Intercompany Note evidencing such Indebtedness.

 

SECTION 7.05.            Remedies.  Subject to the terms of the Intercreditor
Agreement, the Guarantors jointly and severally agree that, as between the
Guarantors and the Lenders, the obligations of the Borrowers under this
Agreement and the Notes, if any, may be declared to be forthwith due and
payable as provided in Section 8.01 (and shall be deemed to have
become automatically due and payable in the circumstances provided in Section 8.01)
for purposes of Section 7.01, notwithstanding any stay, injunction
or other prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against the Borrowers and that, in
the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the Borrowers) shall forthwith become due and payable by the Guarantors for
purposes of Section 7.01.

 

136

 

SECTION 7.06.                    Instrument for
the Payment of Money.  Each
Guarantor hereby acknowledges that the guarantee in this Article VII
constitutes an instrument for the payment of money, and consents and agrees
that any Lender or Agent, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring a motion-action under New York CPLR Section 3213.

 

SECTION 7.07.                    Continuing
Guarantee.  The
guarantee in this Article VII is a continuing guarantee of payment,
and shall apply to all Guaranteed Obligations whenever arising.

 

SECTION 7.08.                    General
Limitation on Guarantee Obligations.  In any action or proceeding involving any
state corporate limited partnership or limited liability company law, or any
applicable state, provincial, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under Section 7.01 would otherwise be
held or determined to be void, voidable, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 7.01, then, notwithstanding any other
provision to the contrary, the amount of such liability shall, without any
further action by such Guarantor, any Loan Party or any other person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.

 

SECTION 7.09.                    Release of
Guarantors.  If, in
compliance with the terms and provisions of the Loan Documents, all or
substantially all of the Equity Interests or property of any Guarantor are sold
or otherwise transferred (a “Transferred
Guarantor”) to a person or persons, none of which is a Borrower or a
Subsidiary, such Transferred Guarantor shall, upon the consummation of such
sale or transfer, be released from its obligations under this Agreement
(including under Section 11.03 hereof) and its obligations to
pledge and grant any Collateral owned by it pursuant to any Security Document
and, in the case of a sale of all or substantially all of the Equity Interests
of the Transferred Guarantor, the pledge of such Equity Interests to the
applicable Collateral Agents pursuant to the Security Agreements shall be
released, and the applicable Collateral Agents shall take such actions as are
necessary to effect each release described in this Section 7.09 in
accordance with the relevant provisions of the Security Documents, including
the return of any certificates or securities in the possession of such
Collateral Agents; provided that
such Guarantor is also released from its obligations under the Senior Note
Documents, on the same terms.

 

ARTICLE VIII.

EVENTS
OF DEFAULT

 

SECTION 8.01.                    Events of
Default.  Notwithstanding the provisions
of Section 362 of the Bankruptcy Code and without notice, application or
motion to, hearing before, or order of the U.S. Bankruptcy Court or any notice
to any Debtor or other Loan Party, and subject to Section 8.02, the
occurrence and continuance of any of the following events shall constitute an
event of default (“Events of Default”):

 

(a)           default shall be made in the payment
of any principal of any Loan or any Reimbursement Obligation when and as the
same shall become due and payable, including any failure to make any payment as
required by Section 2.10(b), whether at the due date thereof or at a date
fixed for prepayment (whether voluntary or mandatory) thereof or by
acceleration thereof or otherwise;

 

(b)           default shall be made in the payment
of any interest on any Loan or any Fee or any other amount (other than an
amount referred to in paragraph (a) above) due under any Loan Document, 

 

137

 

when and as the same shall
become due and payable, and such default shall continue unremedied for a period
of three (3) Business Days;

 

(c)           any representation or warranty made
or deemed made in or in connection with any Loan Document or the borrowings or
issuances of Letters of Credit hereunder, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Loan Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;

 

(d)           (x) default shall be made in the
due observance or performance by any Company of any covenant, condition or
agreement contained in Section 2.23, Section 2.24, Section 2.25,
Section 2.26, Section 2.27, Section 5.02, Section 5.03(a),
Section 5.08, or in Articles  VI or IX or (y) default
shall be made in the due observance or performance by any Company of any
covenant, condition or agreement contained in Section 5.01(h), Section 5.01(i),
Section 5.04 or Section 5.17, and such default shall
continue unremedied for a period of five (5) Business Days;

 

(e)           default shall be made in the due
observance or performance by any Company of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
paragraphs (a), (b) or (d) immediately above) and such default shall
continue unremedied or shall not be waived for a period of ten (10) days
after written notice thereof from any Agent or any Lender to the Borrowers;

 

(f)            except for defaults occasioned by
the filing of the Chapter 11 Cases or any Approved Canadian Proceeding and
defaults resulting from obligations with respect to which the Bankruptcy Code
(or any Insolvency Law) prohibits any Loan Party from complying or permits any
Loan Party not to comply, any Company shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of any Indebtedness (other
than the Obligations), when and as the same shall become due and payable beyond
any applicable grace period, or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness entered into either (x) Pre-Petition
and which is affirmed after the Petition Date or is not subject to the
automatic stay provisions of Section 362 of the Bankruptcy Code or (y) Post-Petition,
if the effect of any failure referred to in this clause (ii) is to cause,
or to permit the holder or holders of such Indebtedness or a trustee or other
representative on its or their behalf (with or without the giving of notice,
the lapse of time or both) to cause, such Indebtedness to become due prior to
its stated maturity or become subject to a mandatory offer purchase by the
obligor; provided that it shall
not constitute an Event of Default pursuant to this paragraph (f) unless
the aggregate amount of all such Indebtedness referred to in clauses (i) and
(ii) exceeds $2.5 million at any one time (provided that, in the case of Hedging Obligations, the
amount counted for this purpose shall be the amount payable by all Companies if
such Hedging Obligations were terminated at such time);

 

(g)           other than in respect of the Chapter
11 Cases or an Approved Canadian Proceeding, an involuntary proceeding shall be
commenced (including the filing of any notice of intention in respect thereof)
or an involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Company or of a substantial part of
the property of any Company, under Title 11 of the U.S. Code, as now
constituted or hereafter amended, or any other Insolvency Law, federal, state,
provincial or foreign bankruptcy, insolvency, receivership or similar law; (ii) the
appointment of a receiver, interim receiver, receiver and manager, liquidator,
trustee, custodian, sequestrator, conservator or similar official for any
Company or for a substantial part of the property of any Company or (iii) the
winding-up or liquidation of any Company; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering
any of the foregoing shall be entered;

 

138

 

(h)           other than in respect of the Chapter
11 Cases or any Approved Canadian Proceeding, any Company shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
Insolvency Law, federal, state, provincial or foreign bankruptcy, insolvency,
receivership, incorporation law in any jurisdiction or similar law; (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in clause (g) above;
(iii) apply for or consent to the appointment of a receiver, interim
receiver, receiver and manager, liquidator, trustee, custodian, sequestrator,
conservator or similar official for any Company or for a substantial part of
the property of any Company; (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding; (v) make
a general assignment for the benefit of creditors; (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they
become due; (vii) take any action for the purpose of effecting any of the
foregoing; or (viii) wind up or liquidate;

 

(i)            one or more judgments, orders or
decrees for the payment of money in an aggregate amount in excess of $2.5
million or which would operate to divest the Companies of assets or property
with a market or book value in excess of $2.5 million shall be rendered against
any Company or any combination thereof and the same shall remain undischarged,
unvacated or unbonded for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon properties of any Company to enforce any
such judgment;

 

(j)            one or more ERISA Events or
noncompliance with respect to Foreign Plans shall have occurred that, in the
reasonable opinion of the Required Lenders, when taken together with all other
such ERISA Events and noncompliance with respect to Foreign Plans, could
reasonably be expected to result in a Material Adverse Effect or in the
imposition of a Lien on any properties of a Company;

 

(k)           any security interest and Lien
purported to be created by any Security Document shall cease to be in full
force and effect, or shall cease to give the applicable Collateral Agents for
the benefit of the applicable Secured Parties, the Liens, rights, powers and
privileges purported to be created and granted under such Security Document
(including a perfected first priority security interest in and Lien on all of
the Collateral thereunder (except as otherwise expressly provided in this
Agreement or such Security Document)) in favor of such Collateral Agents, or
shall be asserted by the Borrowers or any other Loan Party not to be a valid,
perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Document) security interest in or Lien on the
Collateral covered thereby;

 

(l)            (x) any Loan Document or any
material provisions thereof (including, without limitation, the provisions of Article 7
hereof with respect to any Guarantor) shall at any time and for any reason be
declared by a court of competent jurisdiction to be null and void, or a
proceeding shall be commenced by any Loan Party or any other person, or by any
Governmental Authority, seeking to establish the invalidity or unenforceability
thereof (exclusive of questions of interpretation of any provision thereof), or
any Loan Party shall repudiate or deny any portion of its liability or
obligation for the Obligations or (y) any Loan Party or any Governmental
Authority, contests in any manner the validity or enforceability of any
provision of any Pre-Petition Loan Document or any of the Prior Lender
Obligations; or any Loan Party denies that it has any or further liability or
obligation under any provision of any Pre-Petition Loan Document, or purports
to revoke, terminate or rescind any provision of any Pre-Petition Loan Document
or any Prior Lender Obligations;

 

(m)          there shall have occurred a Change in
Control;

 

(n)           any Company shall be prohibited or
otherwise restrained from conducting the business theretofore conducted by it
in any manner that has or could reasonably be expected to result in a 

 

139

 

Material Adverse Effect by
virtue of any determination, ruling, decision, decree or order of any court or
Governmental Authority of competent jurisdiction;

 

(o)           any disruption of the material
business operations of any Company or material damage to or loss of material
assets of any Company; or

 

(p)           The occurrence of any of the
following in any Chapter 11 Case:

 

(i)                                     the bringing by
a Debtor of a motion, or the execution by a Debtor of a written agreement, or
the filing by a Debtor of any plan of reorganization or disclosure statement
attendant thereto by a Debtor in any Chapter 11 Case: (w) to obtain
additional financing under Section 364(c) or (d) of the
Bankruptcy Code not otherwise permitted pursuant to this Agreement; (x) to
grant any Lien other than a Permitted Lien upon or affecting any Collateral; (y) except
as provided in the Interim or Final Order, as the case may be, to use cash
collateral of the Secured Parties under Section 363(c) of the
Bankruptcy Code without the prior written consent of the Administrative Agents
and the Required Lenders; or (z) any other action or actions materially
adverse to the Administrative Agents and the Lenders or their rights and
remedies hereunder or their interest in the Collateral;

 

(ii)                                  the failure of the
Debtors to file a Plan of Reorganization and a disclosure statement relating
thereto (each in form and substance satisfactory to the Required Lenders in
their sole discretion) with the U.S. Bankruptcy Court, within 135 calendar days
after the Petition Date;

 

(iii)                               (x) the
filing of any plan of reorganization or disclosure statement attendant thereto,
or any direct or indirect amendment to such plan or disclosure statement, by a
Debtor to which the Required Lenders do not consent or otherwise agree to the
treatment of their claims thereunder or (y) the entry of any order
terminating any Loan Party’s exclusive rights to file a plan of reorganization;

 

(iv)                              the entry of an
order in any of the Chapter 11 Cases confirming a plan or plans of
reorganization that (x) is not acceptable to the Required Lenders in their
sole discretion or (y) does not contain a provision for termination of the
Commitments and repayment in full in cash of all of the Obligations under this
Agreement on or before the effective date of such plan or plans (unless
otherwise consented to by the Required Lenders);

 

(v)                                 the failure of
the Debtors to obtain approval of a disclosure statement (in form and substance
satisfactory to the Required Lenders in their sole discretion) relating to a
Plan of Reorganization from the U.S. Bankruptcy Court within 165 calendar days
after the Petition Date;

 

(vi)                              the failure of
the Debtors to complete the solicitation of a Plan of Reorganization and a
disclosure statement (in form and substance satisfactory to the Required
Lenders in their sole discretion) relating thereto within 200 calendar days
after the Petition Date;

 

(vii)                           the failure of
the Debtors to obtain an order from the U.S. Bankruptcy Court confirming a Plan
of Reorganization (in form and substance satisfactory to the Required Lenders
in their sole discretion) within 210 calendar days after the Petition Date;

 

(viii)                        the entry of an
order amending, supplementing, staying, reversing, vacating or otherwise
modifying the Loan Documents or the Interim Order or the Final Order or any
Cash Management Order without the written consent of the US Agents and all of
the Lenders;

 

140

 

(ix)                                the Final
Order, with respect to those matters covered by the Interim Order and
permitting the Credit Extensions hereunder which are not to exceed $700,000,000
in principal amount and otherwise in form and substance satisfactory to the US
Agents, is not entered immediately following the expiration of the Interim
Order or within thirty (30) days after the entry of the Interim Order by the
U.S. Bankruptcy Court;

 

(x)                                   the payment of,
or application for authority to pay, any Pre-Petition claim without the US
Agents’ and Required Lenders’ prior written consent other than (A) payments
made in accordance with the Budget, (B) payments permitted under this
Agreement, (C) payments to be made under customary first day orders
(including the Cash Management Order) acceptable to the US Agents and the
Required Lenders, (D) payments permitted under the Order or (E) payments
as may be consented to by the US Agents and the Required Lenders in writing and
approved by the U.S. Bankruptcy Court;

 

(xi)                                subject to
entry of the Final Order, the allowance of any claim or claims under Section 506(c) of
the Bankruptcy Code or otherwise against the Administrative Agents, any Lender
or any of the Collateral or against the Prior Agent, any Prior Lender or any
Collateral (as defined in the Pre-Petition Credit Agreement);

 

(xii)                             the appointment
of an interim or permanent trustee in any Chapter 11 Case or the appointment of
a receiver or an examiner in any Chapter 11 Case with expanded powers to
operate or manage the financial affairs, the business, or reorganization of
such Debtor; or the sale without the Administrative Agents’ and Lenders’
consent, of all or substantially all of such Debtor’s assets either through a
sale under Section 363 of the Bankruptcy Code, through a confirmed plan of
reorganization in the Chapter 11 Cases, or otherwise that does not provide for
payment in full in cash of the Obligations and termination of Lenders’
commitment to make Loans;

 

(xiii)                          the dismissal
of any Chapter 11 Case, or the conversion of any Chapter 11 Case from one under
Chapter 11 to one under Chapter 7 of the Bankruptcy Code or any Loan Party
shall file a motion or other pleading seeking the dismissal of any Chapter 11
Case under Section 1112 of the Bankruptcy Code or otherwise;

 

(xiv)                         any Debtor
shall file a motion seeking, or the U.S. Bankruptcy Court shall enter an order
granting, relief from or modifying the automatic stay of Section 362 of
the Bankruptcy Code (x) to allow any creditor to execute upon or enforce a
Lien on any Collateral of the Debtors in an aggregate amount value that exceeds
$100,000, (y) approving any settlement or other stipulation not approved
by the US Administrative Agent and the Required Lenders with any secured
creditor of any Debtor providing for payments as adequate protection or
otherwise to such secured creditor or (z) with respect to any Lien of or
the granting of any Lien on any Collateral to any state or local environmental
or regulatory agency or authority in an aggregate amount value that exceeds
$100,000;

 

(xv)                            the
commencement of a suit or action against either Administrative Agents or any
Lender and, as to any suit or action brought by any Person other than a Loan
Party or a Subsidiary, officer or employee of a Loan Party, the continuation
thereof without dismissal for thirty (30) days after service thereof on either
Administrative Agents or such Lender, that asserts or seeks by or on behalf of
a Debtor, the Environmental Protection Agency, any state environmental
protection or health and safety agency, any official committee in any Chapter
11 Case or any other party in interest in any of the Chapter 11 Cases, a claim
or any legal or equitable remedy that would (a) have the effect of
subordinating any or all of the Obligations or 

 

141

 

Liens of the Agents or any
Lender under the Loan Documents to any other claim, or (b) have a material
adverse effect on the rights and remedies of the Administrative Agents or any
Lender under any Loan Document or the collectability of all or any portion of
the Obligations;

 

(xvi)                         the entry of an
order in any Chapter 11 Case avoiding or requiring repayment of any portion of
the payments made on account of the Obligations owing under this Agreement or
the other Loan Documents;

 

(xvii)                      the failure of
any Debtor to comply with or perform, in any material respect, any of the
terms, conditions, covenants, or other 
obligations under the Budget, the Interim Order, the Final Order or the
Cash Management Order;

 

(xviii)                   the entry of an
order in any of the Chapter 11 Cases granting (A) any other super priority
administrative claim other than the pari passu administrative expense claims of
the Prior Lenders or (B) Lien equal or superior to that granted to the
Agents (or any of them), on behalf of the Secured Parties, other than (x) the
Carve-Out Expenses up to the Carve-Out Amount and (y) the Indenture
Superpriority Claim solely with respect to perfected Indenture Liens in Note
Lien Collateral, in each case as set forth in the Interim Order or the Final
Order, as applicable; or

 

(xix)                           the entry of an
order or judgment by the U.S. Bankruptcy Court or any other court in any of the
Chapter 11 Cases: (y) modifying, limiting, subordinating or avoiding the
priority of the Obligations, the obligations created in the Interim Order or
Final Order, the “Obligations” under the Pre-Petition Credit Agreement, or the
perfection priority or validity of the Liens granted hereunder, the Prepetition
Liens or the Revolver Adequate Protection Liens; or (z) imposing,
surcharging or assessing against the Lenders, Prior Lenders, their respective
claims, the Collateral, or the Prepetition Collateral, any costs or expenses,
whether pursuant to section 506(c) of the Bankruptcy Code or otherwise.

 

In every such event, and at any time thereafter during the continuance
of such event, the Administrative Agents may, and at the request of the
Required Lenders shall, (i) terminate forthwith the Commitments; (ii) reduce
or restrict the further use of the Commitments from time to time, (iii) declare
the Loans and Reimbursement Obligations then outstanding to be forthwith due
and payable in whole or in part and/or require that any outstanding Letters of
Credit be cash collateralized, whereupon the principal of the Loans and
Reimbursement Obligations so declared to be due and payable, together with
accrued interest thereon, such cash collateral shall be provided to the
applicable Administrative Agent and any unpaid accrued Fees and all other
Obligations of the Borrowers accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by each of the Borrowers and the Guarantors, anything contained herein
or in any other Loan Document to the contrary notwithstanding; (iv) in any
event, with respect to Holdings or any Borrower described in paragraph (g) or
(h) above, the Commitments shall automatically terminate and the principal
of the Loans and Reimbursement Obligations then outstanding, together with
accrued interest thereon and any unpaid accrued Fees and all other Obligations
of the Borrowers accrued hereunder and under any other Loan Document, shall
automatically become due and payable, and any outstanding Letters of Credit
shall be required to be cash collateralized, in each case, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Loan Parties, anything contained herein or in any other
Loan Document to the contrary notwithstanding and/or (v) declare a
termination, reduction or restriction on the ability of the Debtors to use cash
collateral derived from the proceeds of Collateral (other than proceeds derived
solely from Note Priority Collateral and, during a Remedies Notice Period (as
defined below), proceeds used to pay employee wage expenses and other expenses
critical to keeping the business of the Debtors operating and such expenses
shall be paid in accordance with the Budget) (any of the events described in
clauses (i) 

 

142

 

through (v) above being referred to as a “Termination
Declaration”).  Any Termination
Declaration (which may be given by facsimile or other electronic means) shall
be given to the Debtors, the counsel to the Debtors, counsel to the Committee(s) and
the United States Trustee.

 

In every such event, and at any time thereafter during the continuance
of such event, on or after five (5) Business Days following the
Termination Declaration Date (such five (5) Business Day period herein
referred to as the “Remedies Notice Period”), the Administrative Agents
may, and at the request of the Required Lenders shall, notwithstanding the
provisions of Section 362 of the Bankruptcy Code, without application,
motion or notice to, hearing before, or order from, the U.S. Bankruptcy Court,
take any or all of the following actions, at the same or different times:  (i) require
that any or all of the Loan Parties sell or otherwise dispose of any or all of
the Collateral on terms and conditions acceptable to the Agents and Lenders
pursuant to Sections 363, 365 and other applicable provisions of the Bankruptcy
Code (and, without limiting the foregoing, direct any Loan Party to assume and
assign any lease or executory contract included in the Collateral to any Agents’
designees in accordance with and subject to Section 365 of the Bankruptcy
Code), (ii) enter onto the premises of any Loan Party in connection with
an orderly liquidation or other disposition of the Collateral, or (iii) exercise
any rights and remedies provided to the Agents or other Secured Party under the
Loan Documents or at law or equity, including all remedies provided under the
Bankruptcy Code; provided, however, that during the Remedies
Notice Period, the US Borrowers and the Committee(s) shall be entitled to
an emergency hearing before the U.S. Bankruptcy Court for the sole purpose of
contesting the occurrence and/or continuance of an Event of Default. 
Unless the U.S. Bankruptcy Court determines during the Remedies Notice
Period that an Event of Default has not occurred and/or is not continuing, and
pursuant to the Interim Order and the Final Order, the automatic stay of Section 362
of the Bankruptcy Code shall be modified and vacated to permit the Agents and
the otherSecured Parties to exercise their remedies under this Agreement and
the other Loan Documents, without further notice, application or motion to,
hearing before, or order from, the U.S. Bankruptcy Court.  During the Remedies Notice Period, the
Debtors shall not use cash collateral (other than to pay employee
wage expenses and other expenses critical to keeping the business of the
Debtors operating and such expenses shall be paid in accordance with the
Budget).  Upon
the occurrence of an Event of Default and the exercise by Agents or other
Secured Parties of their rights and remedies under this Agreement and the other
Loan Documents, each of the Loan Parties shall assist the Agents and other
Secured Parties in effecting a sale or other disposition of the Collateral upon
such terms as are acceptable to the Agents, which shall include, without
limitation, the right to access and utilize, at no cost and expense the
Intellectual Property and Real Property (including leased Real Property) of the
Loan Parties to the extent necessary, appropriate or reasonably requested in
order to sell, lease or otherwise dispose of any of the Collateral.

 

SECTION 8.02.                    Rescission.  If at any time after termination of the
Commitments or acceleration of the maturity of the Loans, the Borrowers shall
pay all arrears of interest and all payments on account of principal of the
Loans and Reimbursement Obligations owing by it that shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified herein) and all
Defaults (other than non-payment of principal of and accrued interest on the
Loans due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant Section 11.02, then upon the written consent of the
Required Lenders and written notice to Administrative Borrower, the termination
of the Commitments or the acceleration and their consequences may be rescinded
and annulled; but such action shall not affect any subsequent Default or impair
any right or remedy consequent thereon. 
The provisions of the preceding sentence are intended merely to bind the
Lenders and the Issuing Bank to a decision that may be made at the election of
the Required Lenders, and such provisions are not intended to benefit the
Borrowers and do not give the Borrowers the right to require the Lenders to
rescind or annul any acceleration hereunder, even if the conditions set forth
herein are met.

 

143

 

SECTION 8.03.                    Application of
Proceeds.  The proceeds
received by the applicable Collateral Agents in respect of any sale of,
collection from or other realization upon all or any part of the Collateral
pursuant to the exercise by such Collateral Agents of their remedies shall be
applied, in full or in part, together with any other sums then held by such
Collateral Agents pursuant to this Agreement, promptly by such Collateral
Agents as follows

 

(a)           With regard to proceeds of the
Collateral of the Debtors:

 

(i)                                     First, to all Prior
Lender Obligations (other than Canadian Obligations under and as defined in the
Pre-Petition Credit Agreement) as provided and set forth in the Pre-Petition
Credit Agreement due and outstanding, if any (except with respect to proceeds
of Collateral constituting Leasehold Priority Collateral, which, subject to the
Leasehold Intercreditor Agreement, shall be applied pursuant to clauses Second through Fifth and Seventh through Tenth and Thirteenth below);

 

(ii)                                  Second, to the
payment of all reasonable costs and expenses, fees, commissions and taxes of
such sale, collection or other realization including compensation to such
Collateral Agents and their agents and counsel, and all expenses, liabilities
and advances made or incurred by such Collateral Agents in connection therewith
and all amounts for which such Collateral Agents are entitled to
indemnification pursuant to the provisions of any Loan Document, together with
interest on each such amount at the highest rate then in effect under this
Agreement from and after the date such amount is due, owing or unpaid until
paid in full;

 

(iii)                               Third, to the
payment of all other reasonable costs and expenses of such sale, collection or
other realization including compensation to the other Secured Parties and their
agents and counsel and all costs, liabilities and advances made or incurred by
the other Secured Parties in connection therewith, together with interest on
each such amount at the highest rate then in effect under this Agreement from
and after the date such amount is due, owing or unpaid until paid in full;

 

(iv)                              Fourth, without
duplication of amounts applied pursuant to clauses (ii) and (iii) above,
to the indefeasible payment in full in cash, pro
rata, of interest and other amounts constituting Obligations (other
than principal, Canadian Obligations, Reimbursement Obligations and obligations
of the type described in clause (d) in the definition of “Obligations”)
and any fees, premiums and scheduled periodic payments due under Hedging
Agreements constituting Secured Obligations and any interest accrued thereon,
in each case equally and ratably in accordance with the respective amounts
thereof then due and owing;

 

(v)                                 Fifth, to the
indefeasible payment in full in cash, pro
rata, of principal amount of the Obligations (including Reimbursement
Obligations and the provision of cash collateral for outstanding Letters of
Credit, but excluding Canadian Obligations and obligations of the type
described in clause (d) in the definition of “Obligations”) and any
breakage, termination or other payments under Hedging Agreements constituting
Secured Obligations and any interest accrued thereon and a concurrent permanent
reduction in the Commitments in an amount equal to such payment of principal;

 

(vi)                              Sixth, to all
Canadian Prior Lender Obligations as provided and set forth in the Pre-Petition
Credit Agreement due and outstanding, if any (except with respect to proceeds
of Collateral constituting Leasehold Priority Collateral, which shall be
applied pursuant to clauses Seventh through
Thirteenth below);

 

144

 

(vii)                           Seventh,
to the indefeasible payment in full in cash, pro rata, of interest and other amounts constituting
Canadian Obligations, (other than principal, Reimbursement Obligations and
obligations of the type described in clause (d) in the definition of “Obligations”)
and any fees, premiums and scheduled periodic payments due under Hedging
Agreements constituting Secured Obligations and any interest accrued thereon,
in each case equally and ratably in accordance with the respective amounts
thereof then due and owing;

 

(viii)                        Eighth, to the
indefeasible payment in full in cash, pro
rata, of principal amount of the Canadian Obligations (including
Reimbursement Obligations and the provision of cash collateral for outstanding
Letters of Credit issued for the account of any Canadian Loan Party, but
excluding obligations of the type described in clause (d) in the
definition of “Obligations”) and any breakage, termination or other payments
under Hedging Agreements constituting Secured Obligations and any interest
accrued thereon;

 

(ix)                                Ninth, to the
indefeasible payment in full in cash, pro
rata, of all other Obligations (including obligations of the type
described in clause (d) in the definition of “Obligations”) then due and
owing to GE Capital, GE Canada or GE Money;

 

(x)                                   Tenth, to the
indefeasible payment in full in cash, pro
rata, of all other Obligations (including obligations of the type
described in clause (d) in the definition of “Obligations”) then due and
owing to any other Person (other than GE Capital, GE Canada or GE Money);

 

(xi)                                Eleventh, to fund the
Revolver Indemnity Account in respect of Revolver Indemnity Obligations
constituting Prior Lender Obligations (other than Canadian Prior Lender
Obligations);

 

(xii)                             Twelfth, to fund the
Revolver Indemnity Account in respect of Revolver Indemnity Obligations
constituting Canadian Prior Lender Obligations; and

 

(xiii)                          Thirteenth, the balance,
if any, to the person lawfully entitled thereto (including the applicable Loan
Party or its successors or assigns) or as a court of competent jurisdiction may
direct.

 

(b)           With regard to proceeds of the Collateral of the
Canadian Loan Parties:

 

(i)                                     First, to all
Canadian Obligations under and as defined in the Pre-Petition Credit Agreement
as provided and set forth in the Pre-Petition Credit Agreement due and
outstanding, if any;

 

(ii)                                  Second, to the
payment of all reasonable costs and expenses, fees, commissions and taxes of
such sale, collection or other realization including compensation to such
Collateral Agents and their agents and counsel, and all expenses, liabilities
and advances made or incurred by such Collateral Agents in connection therewith
and all amounts for which such Collateral Agents are entitled to
indemnification pursuant to the provisions of any Loan Document, together with
interest on each such amount at the highest rate then in effect under this
Agreement from and after the date such amount is due, owing or unpaid until
paid in full;

 

(iii)                               Third, to the
payment of all other reasonable costs and expenses of such sale, collection or
other realization including compensation to the other Secured Parties and their
agents and counsel and all costs, liabilities and advances made or incurred by
the other Secured 

 

145

 

Parties in connection
therewith, together with interest on each such amount at the highest rate then
in effect under this Agreement from and after the date such amount is due,
owing or unpaid until paid in full;

 

(iv)                              Fourth, without
duplication of amounts applied pursuant to clauses (ii) and (iii) above,
to the indefeasible payment in full in cash, pro
rata, of interest and other amounts constituting Canadian
Obligations, (other than principal, Reimbursement Obligations and obligations
of the type described in clause (d) in the definition of “Obligations”)
and any fees, premiums and scheduled periodic payments due under Hedging
Agreements constituting Secured Obligations and any interest accrued thereon,
in each case equally and ratably in accordance with the respective amounts
thereof then due and owing;

 

(v)                                 Fifth, to the
indefeasible payment in full in cash, pro
rata, of principal amount of the Canadian Obligations (including
Reimbursement Obligations and the provision of cash collateral for outstanding
Letters of Credit issued for the account of any Canadian Loan Party, but
excluding obligations of the type described in clause (d) in the
definition of “Obligations”) and any breakage, termination or other payments
under Hedging Agreements constituting Secured Obligations and any interest
accrued thereon and a concurrent permanent reduction in the Commitments in
respect of the Canadian Borrower in an amount equal to such payment of
principal;

 

(vi)                              Sixth, to the
indefeasible payment in full in cash, pro
rata, of obligations of the Canadian Loan Parties of the type
described in clause (d) in the definition of “Obligations” owing to GE
Capital, GE Canada or GE Money;

 

(vii)                           Seventh, to the
indefeasible payment in full in cash, pro
rata, of obligations of the Canadian Loan Parties of the type
described in clause (d) in the definition of “Obligations” owing to any
other Person (other than GE Capital, GE Canada or GE Money);

 

(viii)                        Eighth, to fund the
Revolver Indemnity Account in respect of Revolver Indemnity Obligations
constituting Canadian Prior Lender Obligations; and

 

(ix)                                Ninth, the balance, if
any, to the person lawfully entitled thereto (including the applicable Loan
Party or its successors or assigns) or as a court of competent jurisdiction may
direct.

 

In the event that any such proceeds are
insufficient to pay in full the items described in clauses (a)(i) through
(a)(x) or clauses (b)(i) through (b)(vi) of this Section 8.03,
as applicable, the Loan Parties shall remain liable, jointly and severally, for
any deficiency.  Each Loan Party
acknowledges, subject to the Order, the relative rights, priorities and
agreements of the Senior Note Secured Parties, as set forth in the
Intercreditor Agreement and this Agreement, including as set forth in this Section 8.03.

 

ARTICLE IX.

COLLATERAL
ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS

 

Each Loan Party warrants, covenants and
agrees with each Lender that so long as this Agreement shall remain in effect
and until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts payable under
any Loan Document shall have been paid in full and all Letters of Credit have
been canceled or have expired or been fully cash 

 

146

 

collateralized and all amounts drawn thereunder have been reimbursed in
full, unless Collateral Agents and Administrative Agents or the Required
Lenders shall otherwise consent in writing:

 

SECTION 9.01.                    Collateral
Accounts.

 

(a)           The Borrowers and each Borrowing Base
Guarantor shall notify the Collateral Agents promptly of:  (i) any material delay in the
performance by the Borrowers or any Borrowing Base Guarantor of any of their
material obligations to any Account Debtor or the assertion of any material
claims, offsets, defenses or counterclaims by any Account Debtor, or any
material disputes with Account Debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information known to any
Loan Party relating to the financial condition of any Account Debtor and (iii) any
event or circumstance which, to any Loan Party’s knowledge, would result in any
Account no longer constituting an Eligible Account.  The Borrowers and each Borrowing Base
Guarantor hereby agree not to grant to any Account Debtor any credit, discount,
allowance or extension, or to enter into any agreement for any of the
foregoing, without the applicable Collateral Agents consent, except in the
ordinary course of business in accordance with practices and policies
previously disclosed in writing to the Collateral Agents.  So long as no Event of Default exists or has
occurred and is continuing, the Borrowers and each Borrowing Base Guarantor may
settle, adjust or compromise any claim, offset, counterclaim or dispute with
any Account Debtor.  At any time that an
Event of Default exists or has occurred and is continuing, the applicable
Collateral Agents shall, at their option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with Account
Debtors of any Loan Party or grant any credits, discounts or allowances.

 

(b)           With respect to each Account:  (i) the amounts shown on any invoice
delivered to Collateral Agents or schedule thereof delivered to Collateral
Agents shall be true and complete in all material respects, (ii) no
payments shall be made thereon except payments immediately delivered to
Collateral Agents pursuant to the terms of this Agreement or any applicable
Security Document (to the extent so required), (iii) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Collateral Agents and
promptly reflected in the reporting of the Borrowing Base, in accordance with
the terms of this Agreement, and (iv) none of the transactions giving rise
thereto will violate any applicable laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and
all such documentation will be legally enforceable in accordance with its
terms.

 

(c)           Collateral Agents shall have the
right at any time or times, in Collateral Agents’ name or in the name of a
nominee of a Collateral Agent, to verify the validity, amount or any other
matter relating to any Account or other Collateral, by mail, telephone, e-mail,
facsimile transmission or otherwise.  To
facilitate the exercise of the right described in the immediately preceding
sentence, the Borrowers hereby agrees to provide Collateral Agents upon request
the name and address of each Account Debtor of the Borrowers and Borrowing Base
Guarantors.

 

SECTION 9.02.                    Accounts; Cash
Management.

 

After the entry of the Order and the Cash
Management Order, as applicable, and pursuant to and to the extent permitted in
the Interim Order, the Final Order or the Cash Management Order, as applicable,
the cash management and treasury arrangements in existence and as required
under the Pre-Petition Credit Agreement shall continue in effect (unless otherwise
consented to by the Administrative Agents and the Collateral Agents) and the
Borrowers and the Guarantors hereby agree to comply with such arrangements in
all respects.  The Collateral Agents
shall, pursuant to the Interim Order, the Final Order or the Cash Management
Order, as applicable, be deemed to be the successor in interest to the “Collateral
Agents” (as such term is defined in the Pre-Petition Credit Agreement) with
respect to any and 

 

147

 

all credit card notifications, blocked account or deposit account
control agreements required to have been executed and delivered under the
Pre-Petition Credit Agreement.  In
accordance with the cash management and treasury arrangements under the
Pre-Petition Credit Agreement, each Borrower and each Guarantor shall maintain
a cash management system which is acceptable to the Administrative Agents and
the applicable Collateral Agents (the “Cash
Management System”), which shall operate as follows:

 

(a)           All funds held by Borrowers or any
other Loan Party (other than funds being collected pursuant to the provisions
stated below) shall be deposited in one or more bank accounts or securities
investment accounts, in form and substance reasonably satisfactory to applicable
Collateral Agents subject to the terms of the Security Agreement and applicable
Control Agreements or subject to the Order and the Cash Management Order.

 

(b)           After the entry of the Order and Cash
Management Order, and pursuant to and to the extent permitted in the Order and
the Cash Management Order, the cash management and treasury arrangements in
existence and as required under the Pre-Petition Credit Agreement shall
continue in effect (unless otherwise consented to by the Administrative Agents)
and the Debtors and the Canadian Loan Parties hereby agree to comply with such
arrangements in all respects.  The
Collateral Agents shall, pursuant to Order and the Cash Management Order, be
deemed to be the successor in interest to the “Collateral Agents” (as such term
is defined in the Pre-Petition Credit Agreement) with respect to any and all
credit card notifications, blocked account or deposit account control
agreements required to have been executed and delivered under the Pre-Petition
Credit Agreement.  No Loan Party shall
request that the U.S. Bankruptcy Court modify or amend the Cash Management
Order, as applicable, or the Cash Management System or the right of the
Administrative Agents or the Collateral Agents under any Control Agreements as
successors in interest to the Prior Agents under and as defined in the
Pre-Petition Credit Agreement, in each case, without the prior written consent
of the applicable Collateral Agent.  In
accordance with the cash management and treasury arrangements under the Pre-Petition
Credit Agreement, the Borrowers shall establish and maintain in such Borrower’s
name, at their sole expense, and shall cause each Guarantor to establish and
maintain in such Guarantor’s name, at its sole expense blocked accounts or
lockboxes and related deposit accounts, which, on the Closing Date, shall
consist of accounts and related lockboxes maintained by the financial
institutions as described on Schedule 9.02 hereto (in each case, “Blocked Accounts”), as the applicable Collateral Agent may
specify, with such banks as are acceptable to the applicable Collateral Agents
into which the Borrowers and Guarantors shall promptly deposit and direct their
respective Account Debtors to directly remit all payments on Accounts and all
payments constituting proceeds of Inventory or other Collateral (other than
proceeds of a Casualty Event or an Asset Sale that do not require a permanent
repayment under Loan Documents) in the identical form in which such payments
are made, whether by cash, check or other manner and shall be identified and
segregated from all other funds of the Loan Parties.  The Borrowers and Guarantors shall deliver,
or cause to be delivered, to the applicable Collateral Agents a Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account for the benefit of the Borrowers or any Guarantor is maintained, and by
each bank where any other deposit account is from time to time maintained.  The Borrowers shall further execute and
deliver, and shall cause each Guarantor to execute and deliver, such agreements
and documents as the applicable Collateral Agents may require in connection
with such Blocked Accounts and such Control Agreements.  Subject to the Cash Management Order providing
the US Collateral Agent with a first priority priming security interest in such
deposit accounts consistent with the provisions of this Section 9.02
and otherwise satisfactory to the Administrative Agents and the Collateral
Agents, the Borrowers and Guarantors shall not establish any deposit accounts
after the Closing Date, unless the Borrowers or Guarantor (as applicable) have
complied in full with the provisions of Section 9.01 herein with
respect to such deposit accounts. 
Borrowers agree that all payments made to such Blocked Accounts or other
funds received and collected by the applicable Collateral Agents or any Lender,

 

148

 

whether in respect of the
Accounts, as proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to the applicable Collateral Agents and Lenders in respect
of the Obligations and therefor shall constitute the property of such
Collateral Agents and Lenders to the extent of the then outstanding
Obligations.

 

(c)           With respect to the Blocked Accounts
of US Borrowers and such Guarantors (other than Guarantors organized under the
laws of Canada) as the applicable Collateral Agents shall determine in their
sole discretion, the applicable bank maintaining such Blocked Accounts shall
agree to forward daily all amounts in each Blocked Account to one of the
Blocked Accounts designated as a concentration account in the name of US
Borrowers (the “US  Concentration Account”) at the bank that shall be designated
as the Concentration Account bank for US Borrowers (the “US Concentration Account Bank”),
which, on the Closing Date, shall be account #8900338261 maintained by The Bank
of New York (or other financial institution acceptable to the applicable
Collateral Agents); provided, however, that amounts in the Blocked Accounts
with numbers 2000028308229, 2000028308245, 2000028308261, 2000028308274,
2000028308258 and 2000028308232 maintained at Wachovia Bank, National
Association (the “US Tax Bank”) will be combined into account
#2000028308216 (the “Master Tax Account”) at Wachovia Bank, National
Association.  The US Concentration
Account Bank and US Tax Bank shall agree pursuant to the applicable Control
Agreement, to forward daily all amounts in the US Concentration Account to the
account designated as collection account 
(the “US  Collection Account”) which shall be under the exclusive
dominion and control of the US Administrative Agent.

 

(d)           With respect to the Blocked Accounts
of Canadian Borrower and such Guarantors organized under the laws of Canada as
the applicable Collateral Agents shall determine in their sole discretion, the
applicable bank maintaining such Blocked Accounts shall agree to forward daily
all amounts in each Blocked Account to one of the Blocked Accounts designated
as a concentration accounts in the name of Canadian Borrower (the “Canadian  Concentration
Accounts” and together with the US Concentration Account and Master
Tax Account, the “Concentration Accounts”)
at the bank that shall be designated as the Concentration Account bank for
Canadian Borrower (the “Canadian Concentration Account Bank” and
together with the US Concentration Account Bank, the “Concentration
Account Banks”), which, on the Closing Date, shall be account nos.
1496-666 and 4688-785 maintained by The Bank of Montreal  (or
other financial institution acceptable to the applicable Collateral
Agents).  The Canadian Concentration
Account Bank shall agree pursuant to the applicable Control Agreement, to
forward daily all amounts in the Canadian Concentration Account to the account
designated as collection account (the “Canadian  Collection Account” and together with the
US Collection Account, the “Collection Accounts”)
which shall be under the exclusive dominion and control of the Canadian
Administrative Agent.

 

(e)           With respect to the Blocked Accounts
of such Guarantors as the respective Collateral Agents shall determine in their
sole discretion, the applicable bank maintaining such Blocked Accounts shall
agree to forward all amounts in each Blocked Account to the US Collection Account
and/or Canadian Collection Account, as applicable, and to commence the process
of daily sweeps from such Blocked Account into the applicable Collection
Accounts.

 

(f)            Any provision of this Section 9.02
to the contrary notwithstanding, (A) Loan Parties may maintain payroll
accounts and trust accounts that are not a part of the Cash Management System provided
that no Loan Party shall accumulate or maintain cash in such accounts as of any
date of determination in excess of checks outstanding against such accounts as
of that date and amounts necessary to meet minimum balance requirements and (B) Loan
Parties may maintain local cash accounts that are not a part of the Cash
Management System which individually do not at any time 

 

149

 

contain funds in excess of
$500,000 and, together with all other such local cash accounts, do not exceed
$5 million.

 

(g)           (i)  The US Administrative Agent
shall apply all funds received in the US Collection Account on a daily basis to
the repayment of the Obligations of the US Borrowers and its US Subsidiaries to
either, at its option, (a) outstanding US Swingline Loans or (b) in
accordance with any instructions received under Section 2.10(g).  Unless the Administrative Agents and Collateral
Agents determine to release such funds to Borrowers in accordance with the
following sentence, the US Administrative Agent or the US Collateral Agent, as
applicable, shall apply all such funds in the US Collection Account on a daily
basis to the repayment of (a) first, to all Prior Lender
Obligations (other than Canadian Obligations under and as defined in the
Pre-Petition Credit Agreement) as provided and set forth in the Pre-Petition
Credit Agreement due and outstanding, if any (except with respect to proceeds
of Collateral constituting Leasehold Priority Collateral, which shall be
applied pursuant to clauses (b) through (g) and (i) through (k) below)
(b) second, Fees and reimbursable expenses of the US Administrative
Agent and the US Collateral Agent then due and payable; (c) third,
interest then due and payable on all Loans (other than Canadian Revolving
Loans), (d) fourth, Overadvances (other than such Overadvances
comprised of Canadian Revolving Loans), (e) fifth, the Swingline
Loans, (f) sixth, ABR Revolving Loans (other than Canadian
Revolving Loans), (g) seventh, Eurodollar Revolving Loans (other
than Canadian Revolving Loans), (h) eighth, to all Canadian Prior
Lender Obligations as provided and set forth in the Pre-Petition Loan Documents
due and outstanding, if any (except with respect to proceeds of Collateral
constituting Leasehold Priority Collateral, which shall be applied pursuant to
clause (i) through (k) below), (i) ninth, to the Canadian
Obligations in the order and in the manner set forth in Section 9.02(g)(ii) below,
(j) tenth, to payment of all other Obligations then due (including
obligations of the type described in clause (d) in the definition of “Obligations”)
owing to GE Capital, GE Canada or GE Money and (k) eleventh, payment
of all other Obligations then due (including obligations then due and owing of
the type described in clause (d) in the definition of “Obligations”) owing
to any other Person (other than GE Capital, GE Canada or GE Money), in each
case, together with all accrued and unpaid interest thereon (provided, however,
payments on Eurodollar Revolving Loans with respect to which the application of
such payment would result in the payment of the principal prior to the last day
of the relevant Interest Period shall be transferred to the Cash Collateral
Account to be applied to the Eurodollar Revolving Loans (other than Canadian
Revolving Loans) on the last day of the relevant Interest Period of such
Eurodollar Revolving Loan or to the Obligations of the US Borrowers and its
Domestic Subsidiaries as they come due (whether at stated maturity, by
acceleration or otherwise)).  If
consented to by the Administrative Agents, the Collateral Agents and the
Required Lenders, such funds in the US Collection Account or Cash Collateral
Account may be released to Borrowers. 
Notwithstanding the above, following a Termination Declaration, the
Agents shall apply all funds received in the US Collection Account in
accordance with Section 8.03.

 

(ii)           The Canadian Administrative Agent
shall apply all funds received in the Canadian Collection Account on a daily
basis to the repayment of the Canadian Obligations to either, at its option, (a) outstanding
Canadian Swingline Loans or (b) in accordance with any instructions
received under Section 2.10(g). 
Unless the Administrative Agents and Collateral Agents determine to
release such funds to Borrowers in accordance with the following sentence,
Canadian Administrative Agent shall apply all such funds in the Canadian
Collection Account on a daily basis to the repayment of:  (a) first, to all Canadian Prior
Lender Obligations as provided and set forth in the Pre-Petition Loan Documents
due and outstanding, if any, (b) second, Fees and reimbursable
expenses of the Canadian Administrative Agent and the Canadian Collateral Agent
then due and payable; (c) third, to interest then due and payable
on all Canadian Revolving Loans, (d) fourth, Overadvances comprised
of Canadian Revolving Loans, (e) fifth, the Swingline Loans,  (f) sixth pro rata,
Canadian Prime Rate Loans, (g) seventh, Bankers’ Acceptances in
accordance with Section 2.03(xi), (h) eighth, to
payment of all other Obligations then due by any 

 

150

 

Canadian Loan Party
(including obligations of the type described in clause (d) in the
definition of “Obligations”) owing to GE Capital, GE Canada or GE Money, and (i) ninth,
payment of all other Obligations then due by any Canadian Loan Party (including
obligations of the type described in clause (d) in the definition of “Obligations”)
owing to any other Person (other than GE Capital, GE Canada or GE Money).  If consented to by the Administrative Agents,
the Collateral Agents and the Required Lenders, such funds in the Canadian
Collection Account or Cash Collateral Account may be released to
Borrowers.  Notwithstanding the above,
following a Termination Declaration, the Agents shall apply all funds received
in the Canadian Collection Account in accordance with Section 8.03.

 

(h)           The Borrowers and their directors,
officers, employees, agents and other Affiliates and Borrowing Base Guarantors
(each a “Related Person”) shall (i) hold in trust for the
applicable Administrative Agent, for the benefit of itself and Lenders, all
checks, cash and other items of payment received by such Borrower or any such
Related Person, and (ii) promptly, in any event within two (2) Business
Days, after receipt by such Borrower or any such Related Person, deposit or
cause the same to be deposited, any monies, checks, notes, drafts or any other
payment relating to and/or proceeds of Accounts, Inventory or other Collateral
which come into their possession or under their control in the applicable
Blocked Accounts, or remit the same or cause the same to be remitted, in kind,
to the applicable Collateral Agents. 
Each Borrower on behalf of itself and each Related Person thereof
acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral.  All proceeds of the sale or other disposition
of any Collateral, shall be deposited directly into the applicable Blocked
Accounts.  In no event shall the same be
commingled with Borrowers’ own funds.  US
Borrowers agrees to reimburse US Collateral Agents and Canadian Borrower agrees
to reimburse Canadian Collateral Agent on demand for any amounts owed or paid
to any bank at which a Blocked Account is established or any other bank or
person involved in the transfer of funds to or from the Blocked Accounts
arising out of such Collateral Agents’ payments to or indemnification of such
bank or person.

 

(i)            Each Borrower may maintain, in its
name, an account (each a “Disbursement Account” and collectively, the “Disbursement
Accounts”) at Bank of New York Mellon Corporation or another bank reasonably
acceptable to the applicable Agent into which such Agent shall, from time to
time, deposit proceeds of Loans made to such Borrower pursuant to Section 2.02
for use by such Borrower solely in accordance with the provisions of Section 5.08.

 

SECTION 9.03.                    Inventory.  With respect to the Inventory:  (a) the Borrowers and Borrowing Base
Guarantors shall at all times maintain records of Inventory reasonably
satisfactory to Collateral Agents, keeping correct and accurate records
itemizing and describing the kind, type, quality and quantity of Inventory, the
cost therefor and daily withdrawals therefrom and additions thereto; (b) any
of the Administrative Agents’ and Collateral Agents’ officers, employees or
agents shall have the right, at any time or times, in the name of such
Administrative Agent or Collateral Agent, as applicable, any designee of the
Administrative Agents, Collateral Agents or the Borrowers, to verify the
validity, amount or any other matter relating to Accounts or Inventory by mail,
telephone, electronic communication, personal inspection or otherwise and to
conduct field audits of the financial affairs and Collateral of the Loan
Parties, and the Borrowers shall cooperate fully with the Administrative Agents
and Collateral Agents in an effort to facilitate and promptly conclude any such
verification process; (c) the Loan Parties shall cooperate fully with the
Collateral Agents and their agents during all Collateral field audits and
Inventory Appraisals which shall be conducted, in each case, (i) by
persons acceptable to the Collateral Agents (it being understood that Great
American Appraisal & Valuation Services, L.L.C. and the Durkin Group
are deemed acceptable to the Collateral Agents as at the Closing Date), (ii) at
the expense of the Borrowers and (iii) (A) at any time in Collateral
Agent’s discretion or (B) at such additional other times as Borrowers
shall reasonably determine; (d) neither the Borrowers nor any Borrowing
Base Guarantor 

 

151

 

shall
sell Inventory to any customer on approval, or any other basis which entitles
the customer to return (except for the right of customers for Inventory which
is defective or non-conforming) or may obligate any Loan Party to repurchase
such Inventory; and (e) Borrowers and Borrowing Base Guarantor shall keep
the Inventory in good and marketable condition.

 

SECTION 9.04.                    Borrowing
Base-Related Reports.  The
Borrowers shall deliver or cause to be delivered (at the expense of the
Borrowers) to the Collateral Agents and the Administrative Agents the
following:

 

(a)           on a daily basis, a Borrowing Base
Certificate in form and substance satisfactory to the Collateral Agents and the
Administrative Agents from the Borrowers accompanied by such supporting detail
and documentation as shall be requested by the applicable Collateral Agent in
its reasonable credit judgment, including, without limitation, (y) calculations
of Inventory itemizing separately, In-Transit Inventory, Inventory located at
stores to be closed pursuant to Permitted Store Closings and Inventory located
at continuing stores, together with back-up information for in-transit
Inventory categories and (z) an Inventory and Accounts roll forward, and
in each case, in form and substance satisfactory to the US Administrative
Agent.  Each Borrowing Base Certificate
shall reflect all information through the end of the appropriate period for
Borrowers and each Borrowing Base Guarantor;

 

(b)           upon request by the Collateral
Agents, (i) and in no event less frequently than a weekly basis, (A) a
weekly trial balance showing Accounts (including a summary of both Pre-Petition
and Post-Petition accounts payable) outstanding aged from statement date as
follows:  1 to 30 days, 31 to 60 days, 61
to 90 days and 91 days or more, accompanied by a comparison to the prior month’s
trial balance, (B) an accounts payable and accrual report and (C) such
supporting detail and documentation as shall be requested by the Collateral
Agents in their reasonable credit judgment and (ii) and no less frequently
than each month (and in no event later than ten (10) Business Days from
the end of the previous month), a summary of Inventory by location accompanied
by such supporting detail (including, without limitation, SKU-level detail) and
documentation (including, without limitation, a supporting Inventory report) as
shall be requested by the Collateral Agents in their reasonable credit judgment
and with detail sufficient to permit the preparation of an updated Inventory
Appraisal (in each case, together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date);

 

(c)           on the date any Borrowing Base
Certificate is delivered pursuant to Section 9.04(a) or at
such more frequent intervals as the Collateral Agents may request from time to
time (together with a copy of all or any part of such delivery requested by any
Lender in writing after the Closing Date), (i) a copy of the ledger
registering the Borrowing Base Guarantor Intercompany Loan Amount as of the
date of the Borrowing Base Certificate and (ii) a collateral report with
respect to the Loan Parties, including all additions and reductions (cash and
non-cash) with respect to intercompany loan accounts of the Borrowers and
Borrowing Base Guarantors, accompanied by such supporting detail and
documentation as shall be requested by the Collateral Agents in their
reasonable credit judgment;

 

(d)           at the time of delivery of each of
the financial statements delivered pursuant to Section 5.01(a) and
(b), a reconciliation of the Accounts trial balance and quarter-end
Inventory reports of the Borrowers and Borrowing Base Guarantors to the general
ledger of such Loan Party, in each case, accompanied by such supporting detail
and documentation as shall be requested by the Collateral Agents in their
reasonable credit judgment;

 

152

 

(e)           a list of any applications for the
registration of any patent, trademark or copyright with the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency which any Loan Party has filed in the prior fiscal quarter;
and

 

(f)            such other reports, statements and
reconciliations with respect to the Borrowing Base, Canadian Borrowing Base or
Collateral of any or all Loan Parties as the Collateral Agents shall from time
to time request in its reasonable credit judgment.

 

The delivery of each certificate and report
or any other information delivered pursuant to this Section 9.04
shall constitute a representation and warranty by the Borrowers that the
statements and information contained therein are true and correct in all
material respects on and as of such date.

 

ARTICLE X.

THE
ADMINISTRATIVE AGENTS AND THE COLLATERAL AGENTS

 

SECTION 10.01.      Appointment and
Authority.  Each of the
Lenders and the Issuing Bank hereby irrevocably appoints GE Capital, to act on
its behalf as the US Administrative Agent and as US Collateral Agent hereunder
and under the other Loan Documents and authorizes such Agent to take such
actions on its behalf and to exercise such powers as are delegated to such
Agent by the terms hereof or thereof, together with such actions and powers as
are reasonably incidental thereto.  Each
of the Lenders and the Issuing Bank hereby irrevocably appoints GE Canada, to
act on its behalf as a Canadian Collateral Agent hereunder and under the other
Loan Documents and authorizes such Agent to take such actions on its behalf and
to exercise such powers as are delegated to such Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.  Without limiting the generality
of the foregoing, each Lender hereby authorizes each of GE Capital and GE
Canada to consent, on behalf of each Lender, to an Interim Order substantially
in the form attached as Exhibit J hereto and a Final Order to be
negotiated between the Debtors, the Administrative Agents and the
Committee.  Each of the Lenders and the
Issuing Bank hereby irrevocably appoints The Bank of New York, to act on its
behalf as the Senior Note Collateral Agent hereunder and under the other Loan
Documents and authorizes such Agent to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.  The provisions of this Article are
solely for the benefit of the Administrative Agents, the Collateral Agents, the
Lenders and the Issuing Bank, and neither Borrowers nor any other Loan Party
shall have rights as a third party beneficiary of any of such provisions.

 

SECTION 10.02.      Rights as a
Lender.  Each person serving as an
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 an
Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated or unless the context otherwise requires, include each person serving
as an 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 the
Borrowers or any Subsidiary or other Affiliate thereof as if such person were
not an Agent hereunder and without any duty to account therefor to the Lenders.

 

SECTION 10.03.      Exculpatory
Provisions.

 

(a)           No Agent shall have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents.  Without limiting the
generality of the foregoing, no Agent:

 

153

 

(i)            shall be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing;

 

(ii)           shall 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 such 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 such Agent shall not be
required to take any action that, in its judgment or the judgment of its
counsel, may expose such Agent to liability or that is contrary to any Loan
Document or applicable Requirements of Law; and

 

(iii)          shall, 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 the
Borrowers or any of its Affiliates that is communicated to or obtained by the
person serving as such Agent or any of its Affiliates in any capacity.

 

(b)           No Agent shall be liable for any
action taken or not taken by it (x) 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 such Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Section 11.02) or
(y) in the absence of its own gross negligence or willful misconduct.  No Agent shall be deemed to have knowledge of
any Default unless and until notice describing such Default is given to such
Agent by the Borrowers, a Lender or the Issuing Bank.

 

(c)           No Agent shall be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with 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, (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 IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to such Agent.  Without limiting
the generality of the foregoing, the use of the term “agent” in this Agreement
with reference to the Administrative Agents or the Collateral Agents is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law.  Instead, such term us used merely as a matter
of market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.

 

(d)           Canadian Administrative Agent
represents and warrants to the Canadian Borrower that on the Closing Date and
throughout the term of this Agreement it is not a “non-resident” within the
meaning of the ITA.

 

SECTION 10.04.      Reliance by
Agent.  Each Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(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.  Each 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
Bank, the Administrative Agents and the Collateral Agents may presume that such
condition is 

 

154

 

satisfactory
to such Lender or the Issuing Bank unless such Administrative Agent or such
Collateral Agent shall have received notice to the contrary from such Lender or
the Issuing Bank prior to the making of such Loan or the issuance of such
Letter of Credit.  Each 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 10.05.      Delegation of
Duties.  Each 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 such
Agent.  Each 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 shall apply to any such
sub-agent and to the Related Parties of each 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 Agent.

 

SECTION 10.06.      Resignation of
Agent.  Each Agent may at any time
give notice of its resignation to the Lenders, the Issuing Bank and the
Borrowers.  Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrowers, to appoint a successor, which shall be a bank
with an office in the United States or in the case of a successor to the
Canadian Administrative Agent, a person which 
(i) (A) is not a “non-resident” within the meaning of the ITA,
or (B) is an “Authorized Foreign Bank” within the meaning of the Bank Act for purposes of the ITA and which
becomes a party hereunder in the ordinary course of its trade and business that
is its “Canadian banking business” for purposes of the ITA and (ii) which
has provided a representation and warranty substantially in the form of that
contained in Section 10.03(d), 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 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may on behalf of the Lenders
and the Issuing Bank, appoint a successor Agent meeting the qualifications set
forth above provided that if the Agent shall notify Borrower 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 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 such Agent on behalf of the Lenders or the Issuing Bank under
any of the Loan Documents, the retiring Agent shall continue to hold such
collateral security as nominee until such time as a successor Collateral Agent
is appointed) and (2) all payments, communications and determinations
provided to be made by, to or through an Agent shall instead be made by or to
each Lender and the Issuing Bank directly, until such time as the Required
Lenders appoint a successor Agent as provided for above in this paragraph.  Upon the acceptance of a successor’s appointment
as Agent hereunder, such successor shall succeed to and become vested with all
of the rights, powers, privileges and duties of the retiring (or retired)
Agent, and the retiring 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 paragraph).  The fees payable by the Borrowers to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrowers and such successor.  After the retiring Agent’s resignation
hereunder and under the other Loan Documents, the provisions of this Article X
and Section 11.03 shall continue in effect for the benefit of such
retiring 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
Agent was acting as Agent.

 

SECTION 10.07.      Non-Reliance on
Agent and Other Lenders.  Each
Lender and the Issuing Bank acknowledges that it has, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender and the Issuing Bank also acknowledges that it 

 

155

 

will,
independently and without reliance upon any Agent or any other Lender and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

 

SECTION 10.08.      No Other
Duties, etc.  Anything
herein to the contrary notwithstanding, none of the Bookrunners, Arrangers ,
Syndication Agent or Documentation Agent listed on the cover page 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 an
Administrative Agent, a Collateral Agent, a Lender or the Issuing Bank
hereunder.

 

SECTION 10.09.      Indemnification.  The Lenders severally agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrowers or
the Guarantors and without limiting the obligation of the Borrowers or the
Guarantors to do so), ratably according to their respective outstanding Loans
and Commitments in effect on the date on which indemnification is sought under
this Section 10.09 (or, if indemnification is sought after the date
upon which all Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with such outstanding Loans and Commitments
as in effect immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any
time (whether before or after the payment of the Loans) be imposed on, incurred
by or asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent’s gross negligence or willful misconduct.  The agreements in this Section 10.09
shall survive the payment of the Loans and all other amounts payable hereunder.

 

SECTION 10.10.      Overadvances.  The Administrative Agents shall not, without
the prior consent of Lenders, make (and shall prohibit the Issuing Banks and
Swingline Lenders, as applicable, from making) any Revolving Loans or provide
any Letters of Credit to the Borrowers on behalf of Lenders intentionally and
with actual knowledge that such Revolving Loans, Swingline Loans, or Letters of
Credit would either (i) cause the aggregate amount of the Revolving
Exposure to exceed the Borrowing Base or (ii) be made when one or more of
the other conditions precedent to the making of Loans hereunder cannot be
satisfied except, that, Administrative Agents may make (or cause to be made)
such additional Revolving Loans or Swingline Loans or provide such additional
Letters of Credit on behalf of Lenders (each an “Overadvance” and collectively, the “Overadvances”), intentionally and with actual knowledge that
such Loans or Letters of Credit will be made without the satisfaction of the
foregoing conditions precedent, if the Administrative Agents deem it necessary
or advisable in their discretion to do so, provided, that: (a) the
total principal amount of the Overadvances to the Borrowers which
Administrative Agents may make or provide (or cause to be made or provided)
after obtaining such actual knowledge that the conditions precedent have not
been satisfied, shall not exceed the amount equal to $30 million outstanding at any time and shall not cause the
Revolving Exposure to exceed the Revolving Commitments of all of the Lenders or
the Revolving Exposure of a Lender to exceed such Lender’s Revolving
Commitment, (b) without the consent of all Lenders, (i) no
Overadvance shall be outstanding for more than sixty (60)  days and (ii) after all Overadvances
have been repaid, Administrative Agents shall not make any additional
Overadvance unless sixty (60) days or more have elapsed since the last date on
which any Overadvance was outstanding and (c) Administrative Agents shall
be entitled to recover such funds, on demand from the Borrowers together with
interest thereon for each day from the date such payment was due until the date
such amount is paid to such Administrative Agent at the interest rate 

 

156

 

provided
for in Section 2.06(e).  Each
Lender shall be obligated to pay such Administrative Agent the amount of its
Pro Rata Percentage of any such Overadvance provided,
that such Administrative Agent is acting in accordance with the terms of this Section 10.10
and provided further, if a CAM Exchange shall have occurred, then the
Pro Rata Percentage of any such Overadvance shall be calculated by reference to
the CAM Percentage.  Notwithstanding
anything to the contrary herein, (i) the US Borrowers shall under all
circumstances remain jointly and severally liable for all Overadvances of
either of them and any other Credit Extensions made in excess of the Borrowing
Base or the Canadian Borrowing Base, as applicable, or other limitations
imposed by the Loan Documents (but subject to the Order), and all such
Overadvances and other Credit Extensions shall constitute part of the
Obligations and (ii) the Canadian Borrower shall under all circumstances
remain liable for all Overadvances and any other Credit Extensions made in
excess of the Canadian Borrowing Base or other limitations imposed by the Loan
Documents or any order under any Approved Canadian Proceeding, and all such
Overadvances and other Credit Extensions shall constitute part of the Canadian
Obligations.

 

SECTION 10.11.      Concerning the Collateral and the Related Loan Documents.  Each Lender and Issuing Bank
authorizes and directs Agents to enter into this Agreement and the other Loan
Documents.  Further, each Lender and
Issuing Bank hereby authorizes and directs the Agents to enter into any
modifications, confirmations, reaffirmations, acknowledgements or other
amendments to the Security Documents and the other Loan Documents as such Agent
deems necessary or desirable in order to perfect and protect, and to continue
the perfection, priority and protection of, the Liens and security interests
created under the Security Documents and/or other Loan Documents.  Each Lender
agrees that any action taken by Agents or Required Lenders in accordance with
the terms of this Agreement or the other Loan Documents and the exercise by
Agents or Required Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.

 

SECTION 10.12.      Field Audit, Examination Reports and Other Reports.  By signing this Agreement, each
Lender:

 

(a)           is deemed to have requested that
Agents furnish such Lender, promptly after it becomes available, a copy of each
field audit or examination report and report with respect to the Borrowing Base
prepared or received by Agents (each field audit or examination report and
report with respect to the Borrowing Base being referred to herein as a “Report”
and collectively, “Reports”), appraisals with respect to the Collateral and
financial statements with respect to Borrowers and its Subsidiaries received by
Agents;

 

(b)           expressly agrees and acknowledges
that Agents (i) does not make any representation or warranty as to the
accuracy of any Report, appraisal or financial statement or (ii) shall not
be liable for any information contained in any Report, appraisal or financial
statement;

 

(c)           expressly agrees and acknowledges that
the Reports are not comprehensive audits or examinations, that Agents or any
other party performing any audit or examination will inspect only specific
information regarding Borrowers and Guarantors and will rely significantly upon
Borrowers’ and Guarantors’ books and records, as well as on representations of
Borrowers’ and Guarantors’ personnel; and

 

(d)           agrees to keep all Reports
confidential and strictly for its internal use in accordance with the terms of Section 11.12,
and not to distribute or use any Report in any other manner.

 

157

 

ARTICLE XI.

MISCELLANEOUS

 

SECTION 11.01.      Notices.

 

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

 

(i)            if to any Loan
Party, to US Borrowers at:

 

6 Brighton Road

Clifton, New Jersey 07012

Attention:  Frank Rowan

Telephone: (973) 614-2009

Email:  FRowan@lnt.com

 

with a copy to:

 

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, NY  10178

Attention:  Howard Beltzer, Richard
Petretti

Facsimile No.:  (212) 309-6001

 

(ii)           if to General
Electric Capital Corporation, as US Administrative Agent, US Collateral Agent
and US Swingline Lender, to it at:

 

General Electric Capital Corporation

401 Merritt Seven

Norwalk, Connecticut  06851

Attention: Linens ‘N Things Account Manager

Facsimile No: (203) 956-4002

 

with a copy to each of the other Agents

as set forth herein and, except with respect to

communications under Sections 5.01 and 9.04, to:

 

Bingham McCutchen LLP

150 Federal Street

Boston, Massachusetts  02110

Attention: Robert A.J. Barry

Facsimile No: 
(617) 951-8736

 

(iii)          if to GE Canada
Finance Holding Company, as Canadian Administrative Agent, Canadian Collateral
Agent and Canadian Swingline Lender, to it at:

 

GE
Canada Finance Holding Company

123
Front Street

 

158

 

Suite 1400

Toronto,
Ontario

M5J
2M2

Attention: Linens ‘N Things, Inc.,
Account Manager

Facsimile No.: (416) 202-6226

 

with a copy to each of the other Agents

as set forth herein and, except with respect to

communications under Sections 5.01 and 9.04, to:

 

Bingham McCutchen LLP

150 Federal Street

Boston, Massachusetts  02110

Attention: Robert A.J. Barry

Facsimile No: 
(617) 951-8736

 

(iv)          if to Wells
Fargo Retail Finance, LLC and Affiliates, as Issuing Bank, to it at:

 

Wells Fargo Retail Finance, LLC

One Boston Place

18th Floor

Boston, MA  02108

Attention: Danielle Baldinelli

Facsimile No: 617-523-4027

 

with a copy to the other Agents as set

forth herein

 

(v)           if to Bank of
America, N.A., as Issuing Bank, to it at:

 

Bank of America, N.A.

MA5-100-09-09

100 Federal Street

Boston, MA 02110

Attention: 
Account Specialist

Telecopier No.:  617-434-4339

 

(vi)          if to GE
Capital, as Issuing Bank, to it at:

 

401 Merritt Seven

Norwalk, Connecticut  06851

Attention: Linens ‘N Things Account Manager

Facsimile No: (203) 956-4002

 

(vii)         if to a Lender,
to it at its address (or telecopier number) set forth in its Administrative
Questionnaire.

 

Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient).  Notices delivered 

 

159

 

through electronic communications to the extent provided in paragraph (b) below,
shall be effective as provided in said paragraph (b).

 

(b)           Electronic Communications.  Notices and other communications to the
Lenders and the Issuing Bank hereunder may (subject to Section 11.01(d))
be delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agents; provided
that the foregoing shall not apply to notices to any Lender or the Issuing Bank
pursuant to Article II if such Lender or the Issuing Bank, as
applicable, has notified the Administrative Agents that it is incapable of
receiving notices under such Article by electronic communication.  The Administrative Agents, the Collateral
Agents or the Borrowers may, in their discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it (including as set forth in Section 11.01(d));
provided that approval of such
procedures may be limited to particular notices or communications.

 

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

 

(c)           Change of Address, Etc.  Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to
the other parties hereto.

 

(d)           Posting.  Each Loan Party hereby agrees that it will
provide to the Administrative Agents all information, documents and other
materials that it is obligated to furnish to the Administrative Agents pursuant
to this Agreement and any other Loan Document, including all notices, requests,
financial statements, financial and other reports, certificates and other
information materials, but excluding any such communication that (i) relates
to a request for a new, or a conversion of an existing, Borrowing or other
extension of credit (including any election of an interest rate or interest
period relating thereto), (ii) relates to the payment of any principal or
other amount due under this Agreement prior to the scheduled date therefor, (iii) provides
notice of any Default under this Agreement or (iv) is required to be
delivered to satisfy any condition precedent to the effectiveness of this
Agreement and/or any borrowing or other extension of credit hereunder (all such
non-excluded communications, collectively, the “Communications”), by transmitting the Communications in an
electronic/soft medium in a format reasonably acceptable to the US
Administrative Agent at such e-mail address(es) provided to the Borrowers from
time to time or in such other form, including hard copy delivery thereof, as
the Administrative Agents shall require. 
In addition, each Loan Party agrees to continue to provide the
Communications to the Administrative Agents in the manner specified in this
Agreement or any other Loan Document or in such other form, including hard copy
delivery thereof, as the Administrative Agents shall require.  Nothing in this Section 11.01(d) shall
prejudice the right of the Agents, any Lender or any Loan Party to give any
notice or other communication pursuant to this Agreement or any other Loan
Document in any other manner specified in this Agreement or any other Loan
Document or as any such Agent shall require.

 

To the extent consented to by any
Administrative Agent in writing from time to time, the applicable
Administrative Agent agrees that receipt of the Communications by such
Administrative Agent 

 

160

 

at its e-mail address(es) set forth above shall constitute effective
delivery of the Communications to such Administrative Agent for purposes of the
Loan Documents; provided that the
Borrowers shall also deliver to such Administrative Agent an executed original
of each Compliance Certificate required to be delivered hereunder.

 

Each Loan Party further agrees that the
Administrative Agents may make the Communications available to the Lenders by
posting the Communications on Intralinks or a substantially similar electronic
transmission system (the “Platform”).  The Platform is provided “as is” and “as
available.”  The Agents do not warrant
the accuracy or completeness of the Communications, or the adequacy of the
Platform and expressly disclaim liability for errors or omissions in the
communications.  No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by any
Agent in connection with the Communications or the Platform.  In no event shall the Administrative Agents
or any of its Related Parties have any liability to the Loan Parties, any
Lender or any other person for damages of any kind, including direct or
indirect, special, incidental or consequential damages, losses or expenses
(whether in tort, contract or otherwise) arising out of any Loan Party’s or any
Administrative Agent’s transmission of communications through the Internet,
except to the extent the liability of such person is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such person’s gross negligence or willful misconduct.

 

SECTION 11.02.      Waivers;
Amendment.

 

(a)           Generally.  No failure or delay by any Agent, the Issuing
Bank or any Lender in exercising any right or power hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of each Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
this Section 11.02, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, the making of a Loan or issuance of a Letter of Credit shall
not be construed as a waiver of any Default, regardless of whether any Agent,
any Lender or the Issuing Bank may have had notice or knowledge of such Default
at the time.  No notice or demand on the
Borrowers in any case shall entitle the Borrowers to any other or further
notice or demand in similar or other circumstances.

 

(b)           Required Consents.  Subject to the terms of the Intercreditor
Agreements and to Section 11.02(c) and (d) neither
this Agreement nor any other Loan Document nor any provision hereof or thereof
may be waived, amended, supplemented or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
the Borrowers and the Required Lenders or, in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agents, the Collateral Agents (in the case of any Security
Document) and the Loan Party or Loan Parties that are party thereto, in each case
with the written consent of the Required Lenders; provided that no such agreement shall be effective if the
effect thereof would:

 

(i)            increase the Commitment of any
Lender without the written consent of such Lender (it being understood that no
amendment, modification, termination, waiver or consent 

 

161

 

with respect to any
condition precedent, covenant or Default shall constitute an increase in the
Commitment of any Lender);

 

(ii)                                  reduce the
principal amount or premium of any Loan or LC Disbursement or reduce the rate
of interest thereon (other than interest pursuant to Section 2.06(d)),
or reduce any Fees payable hereunder, or change the form or currency of payment
of any Obligation, without the written consent of each Lender directly affected
thereby (it being understood that any amendment or modification to the
financial definitions in this Agreement shall not constitute a reduction in the
rate of interest for purposes of this clause (ii));

 

(iii)                               (A) change
the scheduled final maturity of any Loan, (B) postpone the date for
payment of any Reimbursement Obligation or any interest or fees payable
hereunder, (C) change the amount of, waive or excuse any such payment
(other than waiver of any increase in the interest rate pursuant to Section 2.06(e)),
or (D) postpone the scheduled date of expiration of any Commitment or any
Letter of Credit beyond the Revolving Maturity Date, in any case, without the
written consent of each Lender directly affected thereby;

 

(iv)                              increase the
maximum duration of Interest Periods hereunder, without the written consent of
each Lender directly affected thereby;

 

(v)                                 permit the
assignment or delegation by the Borrowers of any of their rights or obligations
under any Loan Document, without the written consent of each Lender;

 

(vi)                              release
Holdings or all or substantially all of the Subsidiary Guarantors from their
Guarantee (except as expressly provided in Article VII), or limit
their liability in respect of such Guarantee, without the written consent of
each Lender;

 

(vii)                           except as
provided for in the Intercreditor Agreements, release all or a substantial
portion of the Collateral from the Liens of the Security Documents or alter the
relative priorities of the Secured Obligations entitled to the Liens of the
Security Documents, in each case without the written consent of each Lender (it
being understood that additional Classes of Loans consented to by the Required
Lenders may be equally and ratably secured by the Collateral with the then
existing Secured Obligations under the Security Documents);

 

(viii)                        change Section 2.14(b),
(c) or (d) in a manner that would alter the pro rata sharing of payments or setoffs
required thereby or any other provision in a manner that would alter the pro rata allocation among the Lenders of
Loan disbursements, including the requirements of Section 2.02(a), Section 2.17(d) and
Section 2.18(d), without the written consent of each Lender
directly affected thereby;

 

(ix)                                change any
provision of this Section 11.02(b), (c), or (d),
without the written consent of each Lender directly affected thereby (except
for additional restrictions on amendments or waivers for the benefit of Lenders
of additional Classes of Loans consented to by the Required Lenders);

 

(x)                                   change the
percentage set forth in the definition of “Required Lenders,” “Supermajority
Lenders” or any other provision of any Loan Document (including this Section)
specifying the number or percentage of Lenders (or Lenders of any Class)
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be), other than to
increase such percentage or number or to give any additional Lender or 

 

162

 

group of Lenders such right
to waive, amend or modify or make any such determination or grant any such
consent;

 

(xi)                                change the
application of payments as among or between Classes under Section 2.10(f),
Section 8.03 or Section 9.02(g) without the
written consent of the Lenders of each Class that is being allocated a
lesser prepayment as a result thereof (it being understood that the Required
Lenders may waive, in whole or in part, any prepayment under Section 2.10(f) so
long as the application, as between Classes, of any portion of such prepayment
that is still required to be made is not changed and, if additional Classes of
Revolving Loans under this Agreement consented to by the Required Lenders are
made, such new Revolving Loans may be included on a pro rata basis in the various prepayments required pursuant
to Section 2.10(f));

 

(xii)                             [Intentionally
Deleted];

 

(xiii)                          change or waive
any provision of Article X as the same applies to any Agent, or any
other provision of this Agreement as the same applies to the rights or
obligations of any Agent, in each case without the written consent of such
Agent;

 

(xiv)                         change or waive
any obligation of the Lenders relating to the issuance of or purchase of
participations in Letters of Credit, without the written consent of the
applicable Administrative Agent and the Issuing Bank; or

 

(xv)                            change or waive
any provision hereof relating to Swingline Loans (including the definition of “US
Swingline Commitment” or “Canadian Swingline Commitment”), without the written
consent of the applicable Swingline Lender;

 

(xvi)                         amend or modify
the definition of (a) “U.S. Minimum Availability Requirement” or (b) “Canadian
Minimum Availability Requirement” or the usage of either such term in any of
Sections 2.01(a), 2.01(b), 2.01(c), 2.10(b)(5), 2.10(b)(9), 2.17, 2.18(b) or
4.02(d), without the written consent of each Lender;

 

provided, further, that

 

(1)           any waiver, amendment or modification prior to the completion
of the syndication of the Commitments and Loans (as determined by the Arranger)
may not be effected without the written consent of the Arranger; and

 

(2)           any waiver, amendment or modification of the Intercreditor
Agreement (and any related definitions) may be effected by an agreement or
agreements in writing entered into among the Collateral Agents, the US
Administrative Agent, the Required Lenders and the Senior Note Collateral Agent
(without the consent of any Loan Party, so long as such amendment, waiver or
modification does not impose any additional duties or obligations on the Loan
Parties or alter or impair any right of any Loan Party under the Loan
Documents).

 

(c)           Collateral.  Without the consent of any other person, the
applicable Loan Party or Parties and the Administrative Agents and/or the
Collateral Agents may (in its or their respective sole discretion, or shall, to
the extent required by any Loan Document) enter into any amendment or waiver of
any Loan Document, or enter into any new agreement or instrument, to effect the
granting, perfection, protection, expansion or enhancement of any security
interest in any Collateral or additional property to become Collateral for the
benefit of the Secured Parties, or as required by local law to give 

 

163

 

effect to, or protect any
security interest for the benefit of the Secured Parties, in any property or so
that the security interests therein comply with applicable Requirements of Law.

 

(d)           Dissenting Lenders.  If, in connection with any proposed change,
waiver, discharge or termination of the provisions of this Agreement as
contemplated by Section 11.02(b), the consent of the Required
Lenders or Supermajority Lenders, as applicable, is obtained but the consent of
one or more of such other Lenders whose consent is required is not obtained,
then the Borrowers shall have the right to replace all, but not less than all,
of such non-consenting Lender or Lenders (so long as all non-consenting Lenders
are so replaced) with one or more persons pursuant to Section 2.16
so long as at the time of such replacement each such new Lender consents to the
proposed change, waiver, discharge or termination.

 

SECTION 11.03.      Expenses;
Indemnity; Damage Waiver.

 

(a)           Costs and Expenses.  The Borrowers and Guarantors shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agents, the
Collateral Agents and their respective Affiliates (including the reasonable
fees, charges and disbursements of counsel for the Administrative Agents and/or
the Collateral Agents and all other legal, accounting, collateral examination,
monitoring and appraisal fees, financial advisory fees, fees and expenses of
other consultants and indemnification and reimbursement fees and expenses) in
connection with the syndication of the credit facilities provided for herein
(including the obtaining and maintaining of CUSIP numbers for the Loans), the
preparation, negotiation, execution, delivery and administration of this Agreement
and the other Loan Documents, the Interim Order and the Final Order, including
any Inventory Appraisal, or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), including in connection
with post-closing searches to confirm that security filings and recordations
have been properly made, (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Banks in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder, (iii) all reasonable out-of-pocket expenses incurred by the
Administrative Agents, the Collateral Agents, any Lender or the Issuing Banks
(including the reasonable fees, charges and disbursements of any counsel for
the Administrative Agents, the Collateral Agents, any Lender or the Issuing
Banks and all other legal, accounting, collateral examination, monitoring and
appraisal fees, financial advisory fees, fees and expenses of other consultants
and indemnification and reimbursement fees and expenses), in connection with
the enforcement or protection or attempted enforcement or protection of its
rights (A) in connection with this Agreement, the other Loan Documents,
including, without limitation, (x) its rights under this Section 11.03,
and any efforts to (y) monitor the Loans or any of the other Obligations,
and (z) evaluate, observe or assess any of the Loan Parties or their
respective affairs or (B) related to the Pre-Petition Loan Documents, (C) in
preserving and protecting, or attempting to preserve or protect its interests
in the Collateral, including, without limitation, efforts to verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of
any of the Collateral, or (D) 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, (iv) all documentary and similar taxes and charges in
respect of the Loan Documents, (v) all reasonable out-of-pocket expenses
incurred by the Agents in connection with the obtaining of approval of the Loan
Documents by the U.S. Bankruptcy Court and (vi) all reasonable
out-of-pocket expenses incurred by the Agents in connection with the
preparation and review of pleadings, documents and reports related to any
Chapter 11 Case and any subsequent case under Chapter 7 of the Bankruptcy Code,
attendance at meetings, court hearings or conferences related to any Chapter 11
Case and any subsequent case under Chapter 7 of the Bankruptcy Code, and
general monitoring of any Chapter 11 Case and any subsequent case under Chapter
7 of the Bankruptcy Code.

 

164

 

(b)           Indemnification by Borrower.  Each of the Borrowers and Guarantors shall
indemnify the Administrative Agents (and any sub-agent thereof), the Collateral
Agents (and any sub-agent thereof), each Lender and the Issuing Bank, 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 the Borrowers or any other Loan Party
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 Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or Release or threatened Release of Hazardous
Materials on, at, under or from any property owned, leased or operated by any
Company at any time, or any Environmental Claim related in any way to any
Company, 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 the
Borrowers or any other Loan Party, 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 nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by the Borrowers or any
other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if the
Borrowers or such Loan Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction.  Each of the Borrowers and Guarantors agree to
further indemnify each of the Indemnitees in relation to such Indemnitees’
exercise of its discretionary rights under this Agreement.  In any litigation relating to any of the
foregoing, or the preparation therefor, the Indemnitees shall be entitled to
select one counsel for all such Indemnitees and, in addition to the foregoing
indemnities, the Debtors jointly and severally agree to promptly pay all
reasonable fees and expenses of such counsel; provided that, in the
event of a conflict of interest between or among Indemnitees, the
similarly-situated Indemnitees shall each be entitled to select one counsel for
all such similarly-situated Indemnitees and Debtors jointly and severally agree
to promptly pay all reasonable fees and expenses of each such counsel.

 

(c)           Reimbursement by Lenders.  To the extent that any Borrowers or
Guarantors for any reason fails to indefeasibly pay any amount required under
paragraph (a) or (b) of this Section 11.03 to be paid by
it to the Administrative Agents (or any sub-agent thereof), the Collateral
Agents, the Issuing Bank, the Swingline Lenders or any Related Party of any of
the foregoing, each applicable Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Issuing Bank, the Swingline Lenders or such Related
Party, as the case may be, such Lender’s pro
rata share (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 or asserted against the
Administrative Agent (or any such sub-agent), the Collateral Agents (or any
sub-agent thereof), the Swingline Lenders or the Issuing Bank 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), the Collateral Agents (or any
sub-agent thereof), the Swingline Lenders or Issuing Bank in connection with
such capacity.  The obligations of the
Lenders under this paragraph (c) are subject to the provisions of Section 2.14.  For purposes hereof, a Lender’s “pro  rata
share” shall be determined based upon its share of the sum of the total
Revolving Exposure and unused Commitments at the time.

 

165

 

(d)           Waiver of Consequential Damages,
Etc.  To the fullest extent permitted
by applicable Requirements of Law, no Loan Party shall assert, and each Loan
Party 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 paragraph (b) above
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 shall
be payable not later than three (3) Business Days after demand therefor.

 

SECTION 11.04.     Successors and
Assigns.

 

(a)           Successors and Assigns Generally.  Subject to Section 11.21, 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 the Borrowers may not assign or otherwise transfer any of their rights or
obligations hereunder without the prior written consent of the Administrative
Agent, the Collateral Agents, the Issuing Bank, the Swingline Lenders 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 paragraph (b) of this Section 11.04, (ii) by
way of participation in accordance with the provisions of paragraph (d) of
this Section 11.04 or (iii) by way of pledge or assignment of
a security interest subject to the restrictions of paragraph (f) of this Section (and
any other attempted assignment or transfer by Borrower or any Lender 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 paragraph (d) of
this Section and, to the extent expressly contemplated hereby, the other
Indemnitees) any legal or equitable right, remedy or claim under or by reason
of this Agreement.

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided
that

 

(i)            except in the case of any assignment
made in connection with the syndication of the Commitment and Loans by GE
Capital or an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, 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 $5.0 million, in the
case of any assignment in respect of Revolving Loans and/or Revolving
Commitments, unless the applicable Administrative Agent and, so long as no
Default has occurred and is continuing, the Borrowers otherwise consent (each
such consent not to be unreasonably withheld or delayed);

 

166

 

(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, except that this clause (ii) shall not permit any Lender to
assign all or a portion of its rights and obligations among separate tranches
or to separate Lenders on a non-pro rata
basis;

 

(iii)          after the Effective Date (as defined
in the related Assignment and Assumption), the assigning Lender shall hold the
same percentage of Canadian Revolving Loans as compared to Revolving Loans as
such Lender held prior to the such Effective Date;

 

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

 

(v)           in the case of an assignment of
rights and obligations hereunder by a Canadian Lender, such Lender shall use
its commercially reasonable efforts to assign such rights and obligations to an
Eligible Assignee which qualifies as an Eligible Canadian Lender.

 

Subject to acceptance and recording thereof by the applicable
Administrative Agent pursuant to paragraph (c) of this Section 11.04,
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, including a Canadian Revolving Lender, as
applicable, 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 Section 2.12, Section 2.13,
Section 2.15 and Section 11.03 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 comply
with this paragraph shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (d) of this Section 11.04.

 

(c)           Register.  The applicable Administrative Agent, acting
solely for this purpose as an agent of the Borrowers, shall maintain at one of
its offices, a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans and LC Disbursements owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Borrowers, the
Administrative Agents, the Issuing Bank and the Lenders may treat each person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by the Borrowers, the Issuing Bank, the Collateral
Agents, the Swingline Lenders and any Lender (with respect to its own interest
only), 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, the Borrowers, the Administrative Agents, the Issuing
Bank or the Swingline Lenders sell participations to any person (other than a
natural person or the Borrowers or any of the Borrowers’ Affiliates or Subsidiaries)
(each, a “Participant”) in all or
a portion of such Lender’s rights and/or obligations 

 

167

 

under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it); 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 Agents and
the Lenders and Issuing Bank 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 the Loan Documents and to approve any amendment,
modification or waiver of any  provision
of the Loan Documents; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in clause (i), (ii) or (iii) of the first proviso to
Section 11.02(b) that affects such Participant.  Subject to paragraph (e) of this
Section, the Borrowers agree that each Participant shall be entitled to the
benefits of Section 2.12, Section 2.13 and Section 2.15
(subject to the requirements of those Sections) to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to paragraph
(b) of this Section.  To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 11.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.14
as though it were a Lender.

 

(e)           Limitations on Participant Rights.  A Participant shall not be entitled to
receive any greater payment under Section 2.12, Section 2.13
and Section 2.15 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
Borrowers’ prior written consent.

 

(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.  In the case of
any Lender that is a fund that invests in bank loans, such Lender may, without
the consent of the Borrowers or the Administrative Agents, collaterally assign
or pledge all or any portion of its rights under this Agreement, including the
Loans and Notes or any other instrument evidencing its rights as a Lender under
this Agreement, to any holder of, trustee for, or any other representative of
holders of, obligations owed or securities issued, by such fund, as security
for such obligations or securities.

 

SECTION 11.05.     Survival of
Agreement.  All
covenants, agreements, representations and warranties made by the Loan Parties
in the Loan Documents and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Agents, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid or any Letter of Credit
is outstanding and so long as the Commitments have not expired or
terminated.  The provisions of Section 2.12,
Section 2.14, Section 2.15 and Article X
shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the payment of the Reimbursement Obligations, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.

 

168

 

SECTION 11.06.     Counterparts;
Integration; Effectiveness; Electronic Execution.

 

(a)           Counterparts; Integration;
Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement and the other Loan Documents,
and any separate letter agreements with respect to fees payable to the
Administrative Agent, constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  In the event of any conflict between the
terms of this Agreement and any other Loan Document, and subject to the
immediately following sentence, the terms of this Agreement shall govern
(unless such terms of such other Loan Documents are necessary to comply with
applicable Requirements of Law, in which case such terms shall govern to the
extent necessary to comply therewith). 
Notwithstanding the foregoing, if any provision in this Agreement or any
other Loan Document conflicts with any provision in the Interim Order or the
Final Order, the provision in the Interim Order or Final Order shall govern and
control.  Except as provided in Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto.  Delivery of an
executed counterpart of a signature page of this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

(b)           Electronic Execution of
Assignments.  The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable Requirement of Law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform Electronic
Transactions Act.

 

SECTION 11.07.     Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 11.08.     Right of Setoff.  Subject to the last paragraph of Section 8.01,
if an Event of Default shall have occurred and be continuing, each Lender, the
Issuing Bank, and each of their respective Affiliates is hereby authorized
(notwithstanding the provisions of Section 362 of the Bankruptcy Code,
without any application, motion or notice to, hearing before, or order from,
the U.S. Bankruptcy Court) at any time and from time to time, to the fullest
extent permitted by applicable Requirements of 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 Bank or any such
Affiliate to or for the credit or the account of the Borrowers or any other
Loan Party against any and all of the obligations of the Borrowers or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document
to such Lender or the Issuing Bank, irrespective of whether or not such Lender
or the Issuing Bank shall have made any demand under this Agreement or any
other Loan Document and although such obligations of the Borrowers or such Loan
Party may be contingent or unmatured or are owed to a branch or office of such
Lender or the Issuing Bank different from the branch or office holding such
deposit or obligated on such indebtedness. 
The rights of each Lender, the Issuing Bank and their respective
Affiliates under this 

 

169

 

Section are
in addition to other rights and remedies (including other rights of setoff)
that such Lender, the Issuing Bank or their respective Affiliates may
have.  Each Lender and the Issuing Bank
agrees to notify the Borrowers and the Administrative Agents 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 11.09.     Governing Law;
Jurisdiction; Consent to Service of Process.

 

(a)           Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the State of New York and any
applicable laws of the United States of America (including the Bankruptcy
Code), without regard to conflicts of law principles that would require the
application of the laws of another jurisdiction.

 

(b)           Submission to Jurisdiction.

 

(i)            Each Debtor hereby consents and
agrees that the U.S. Bankruptcy Court shall have the exclusive jurisdiction to
hear and determine any claims or disputes between the Debtors, the
Administrative Agents and Lenders pertaining to this Agreement or any of the
other Loan Documents or to any matter arising out of or relating to this
Agreement or any of the other Loan Documents; provided that that Administrative
Agents, Lenders and the Debtors acknowledge that any appeals from the U.S.
Bankruptcy Court may have to be heard by a court other than the U.S. Bankruptcy
Court; provided, further, that nothing in this Agreement shall be
deemed or operate to preclude the Administrative Agents from bringing suit or
taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of either Administrative Agent.  Each Debtor expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court,
and each Debtor hereby waives any objections that such Debtor may have based upon
lack of personal jurisdiction, improper venue or forum non conveniens.

 

(ii)           Each other Loan Party hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof and any court of
competent jurisdiction in Ontario, Canada, in any action or proceeding arising
out of or relating to any Loan Document, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court, each
Ontario 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 any other Loan Document shall affect any
right that the Administrative Agents, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against any Loan Party or its properties in the courts
of any jurisdiction.

 

(c)           Waiver of Venue.  Each Loan Party hereby irrevocably and
unconditionally waives, to the fullest extent permitted by applicable
Requirements of Law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in Section 11.09(b).  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by applicable Requirements of Law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

170

 

(d)           Service of Process.  Each party hereto irrevocably consents to
service of process in any action or proceeding arising out of or relating to
any Loan Document, in the manner provided for notices (other than telecopier)
in Section 11.01.  Nothing in
this Agreement or any other Loan Document will affect the right of any party
hereto to serve process in any other manner permitted by applicable
Requirements of Law.

 

SECTION 11.10.     WAIVER OF JURY
TRIAL.  EACH LOAN PARTY, THE AGENTS
AND THE LENDERS HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
REQUIREMENTS OF LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 11.11.     Headings.  Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

 

SECTION 11.12.     Treatment of
Certain Information; Confidentiality.  Each of the Administrative Agents, the
Lenders and the Issuing Bank agrees to maintain the confidentiality of the
Information (as defined below) for a period of two (2) years following the
receipt thereof, except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and other representatives (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable Requirements of Law or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section 11.10,
to (i) any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrowers and their obligations or (iii) any
rating agency for the purpose of obtaining a credit rating applicable to any
Lender, (g) with the consent of the Borrowers or (h) to the extent
such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to the
Administrative Agents, any Lender, the Issuing Bank or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrowers.  For purposes of this Section, “Information” means all information received
from the Borrowers or any of their Subsidiaries relating to the Borrowers or
any of their Subsidiaries or any of their respective businesses, other than any
such information that is available to the Administrative Agent, any Lender or
the Issuing Bank on a nonconfidential basis prior to disclosure by Borrower or
any of its Subsidiaries; provided that,
in the case of information received from Borrower or any of its Subsidiaries
after the date hereof, such information is clearly identified at the time of
delivery as confidential.  Any person
required to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such person has
exercised the same degree of 

 

171

 

care
to maintain the confidentiality of such Information as such person would accord
to its own confidential information.

 

SECTION 11.13.     USA PATRIOT Act
Notice.  Each Lender that is subject to
the Act (as hereinafter defined) and the Administrative Agents (for itself and
not on behalf of any Lender) hereby notifies the Borrowers 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, which information includes the name, address and tax identification
number of the Borrowers and other information regarding the Borrowers that will
allow such Lender or the Administrative Agent, as applicable, to identify the
Borrowers in accordance with the Act. 
This notice is given in accordance with the requirements of the Act and
is effective as to the Lenders and the Administrative Agents.

 

SECTION 11.14.     Interest Rate
Limitation. 
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable
Requirements of Law (collectively, the “Charges”),
shall exceed the maximum lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable
Requirements of Law, the rate of interest payable in respect of such Loan
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

 

SECTION 11.15.     Lender Addendum.  Each Lender party to this Agreement on the
date hereof, shall do so by delivering to the applicable Administrative Agent a
Lender Addendum duly executed by such Lender, the Borrowers and the such
Administrative Agent.

 

SECTION 11.16.     Obligations
Absolute.  To the fullest
extent permitted by applicable Requirements of Law, all obligations of the Loan
Parties hereunder shall be absolute and unconditional irrespective of:

 

(a)           any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or the like
of any Loan Party;

 

(b)           any lack of validity or
enforceability of any Loan Document or any other agreement or instrument
relating thereto against any Loan Party;

 

(c)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations, or
any other amendment or waiver of or any consent to any departure from any Loan
Document or any other agreement or instrument relating thereto;

 

(d)           any exchange, release or
non-perfection of any other Collateral, or any release or amendment or waiver
of or consent to any departure from any guarantee, for all or any of the
Obligations;

 

(e)           any exercise or non-exercise, or any
waiver of any right, remedy, power or privilege under or in respect hereof or
any Loan Document; or

 

172

 

(f)            any other circumstances which might
otherwise constitute a defense available to, or a discharge of, the Loan
Parties.

 

SECTION 11.17.     Dollar
Equivalent Calculations.  For
purposes of this Agreement, the Dollar Equivalent of each Loan that is an
Approved Currency Revolving Loan and the Dollar Equivalent of the stated amount
of each Letter of Credit that is an Approved Currency Letter of Credit shall be
calculated on the date when any such Loan is made, such Letter of Credit is
issued, on the first Business Day of each month and at such other times as
designated by the applicable Administrative Agent.  Such Dollar Equivalent shall remain in effect
until the same is recalculated by such Administrative Agent as provided above
and notice of such recalculation is received by the Borrowers, it being
understood that until such notice of such recalculation is received, the Dollar
Equivalent shall be that Dollar Equivalent as last reported to the Borrowers by
such Administrative Agent.  Such
Administrative Agent shall promptly notify the Borrowers and the Lenders of
each such determination of the Dollar Equivalent.

 

SECTION 11.18.     Judgment
Currency.

 

(a)           The Borrowers’ obligation hereunder
and under the other Loan Documents to make payments in the applicable Approved
Currency (pursuant to such obligation, the “Obligation
Currency”) shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than the Obligation Currency, except to the extent that such tender or
recovery results in the effective receipt by the applicable Administrative
Agent or the respective Lender of the full amount of the Obligation Currency
expressed to be payable to such Administrative Agent or such Lender under this
Agreement or the other Loan Documents. 
If, for the purpose of obtaining or enforcing judgment against the
Borrowers in any court or in any jurisdiction, it becomes necessary to convert
into or from any currency other than the Obligation Currency (such other
currency being hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation Currency,
the conversion shall be made at the Dollar Equivalent, and in the case of other
currencies, the rate of exchange (as quoted by such Administrative Agent or if
such Administrative Agent does not quote a rate of exchange on such currency,
by a known dealer in such currency designated by such Administrative Agent)
determined, in each case, as of the Business Day immediately preceding the day
on which the judgment is given (such Business Day being hereinafter referred to
as the “Judgment Currency Conversion Date”).

 

(b)           If there is a change in the rate of
exchange prevailing between the Judgment Currency Conversion Date and the date
of actual payment of the amount due, the Borrowers covenant and agree to pay,
or cause to be paid, such additional amounts, if any (but in any event not a
lesser amount) as may be necessary to ensure that the amount paid in the
Judgment Currency, when converted at the rate of exchange prevailing on the
date of payment, will produce the amount of the Obligation Currency which could
have been purchased with the amount of Judgment Currency stipulated in the
judgment or judicial award at the rate of exchange prevailing on the Judgment
Currency Conversion Date.

 

(c)           For purposes of determining the
Dollar Equivalent or any other rate of exchange for this Section 11.18,
such amounts shall include any premium and costs payable in connection with the
purchase of the Obligation Currency.

 

SECTION 11.19.     Special
Provisions Relating to Currencies Other Than Dollars.

 

(a)           All funds to be made available to the
applicable Administrative Agent pursuant to this Agreement in Canadian dollars
shall be made available to such Administrative Agent in immediately available,
freely transferable, cleared funds to such account with such bank in such
principal financial center in Canada as such Administrative Agent shall from
time to time nominate for this purpose.

 

173

 

(b)           In relation to the payment of any
amount denominated in Canadian dollars, no Administrative Agent shall be liable
to the Borrowers or any of the Lenders for any delay, or the consequences of
any delay, in the crediting to any account of any amount required by this
Agreement to be paid by such Administrative Agent if such Administrative Agent
shall have taken all relevant and necessary steps to achieve, on the date required
by this Agreement, the payment of such amount in immediately available, freely
transferable, cleared funds (in Canadian dollars) to the account with the bank
in the principal financial center in Canada which the Borrowers or, as the case
may be, any Lender shall have specified for such purpose.  In this Section 11.19(b), “all relevant steps” means all such steps as
may be prescribed from time to time by the regulations or operating procedures
of such clearing or settlement system as such Administrative Agent may from
time to time determine for the purpose of clearing or settling payments of
Canadian dollars.  Furthermore, and
without limiting the foregoing, such Administrative Agent shall not be liable
to the Borrowers or any of the Lenders with respect to the foregoing matters in
the absence of its gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable decision or
pursuant to a binding arbitration award or as otherwise agreed in writing by the
affected parties).

 

SECTION 11.20.     Intercreditor
Agreements. 
Notwithstanding anything herein to the contrary, each Lender
acknowledges that the Lien and security interest granted to the Collateral
Agents pursuant to the Security Documents and the exercise of any right or
remedy by such Collateral Agents thereunder are subject to the provisions of
the Intercreditor Agreement.  In the
event of any conflict between the terms of the Intercreditor Agreement and the
Security Documents, the terms of the Intercreditor Agreement shall govern and
control.

 

SECTION 11.21.     Parties Including Trustees; U.S. Bankruptcy Court Proceedings.  This Agreement, the other
Loan Documents, and all Liens and other rights and privileges created hereby or
pursuant hereto or to any other Loan Document shall be binding upon each Loan
Party, the estate of each Debtor, and any trustee, other estate representative
or any successor in interest of any Debtor in any Chapter 11 Case or any
subsequent case commenced under Chapter 7 of the Bankruptcy Code, and shall not
be subject to Section 365 of the Bankruptcy Code.  This Agreement and the other Loan Documents
shall be binding upon, and inure to the benefit of, the successors of the
Agents and Lenders and their respective assigns, transferees and
endorsees.  To the extent provided in the
Order, the Liens created by this Agreement and the other Loan Documents shall
be and remain valid and perfected in the event of the substantive consolidation
or conversion of any Chapter 11 Case or any other bankruptcy case of any Debtor
to a case under Chapter 7 of the Bankruptcy Code or in the event of dismissal
of any Chapter 11 Case or the release of any Collateral from the jurisdiction
of the U.S. Bankruptcy Court for any reason, without the necessity that the
Administrative Agents file financing statements or otherwise perfect its Liens
under applicable law.  No Loan Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents
without the prior express written consent of the Agents and Lenders.  Any such purported assignment, transfer,
hypothecation or other conveyance by any Loan Party without the prior express
written consent of the Agents and Lenders shall be void.  The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of each
Loan Party, the Agents and Lenders with respect to the transactions
contemplated hereby and no Person shall be a third party beneficiary of any of
the terms and provisions of this Agreement or any of the other Loan Documents.

 

SECTION 11.22.     Pre-Petition Loan Documents.  Borrowers hereby agree
that, in respect of the Debtors, (i) this Agreement is separate and
distinct from the Pre-Petition Credit Agreement and (ii) to the extent any
“Obligations” (as such term is defined in the Pre-Petition Credit Agreement) of
the Debtors remain outstanding under the Pre-Petition Credit Agreement, the
Pre-Petition Credit Agreement is in full force and effect.  Borrowers further agree that by entering into
this Agreement, Lenders do not 

 

174

 

waive any Default or Event of Default of
the Debtors under the Pre-Petition Loan Documents or any of their liens,
claims, priorities, rights and remedies thereunder.

 

[Signature Pages Follow]

 

175

 

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

 

	
   

  	
  US BORROWERS:

  
	
   

  	
  LINENS ‘N THINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS CENTER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CANADIAN BORROWER:

  
	
   

  	
  LINENS ‘N THINGS CANADA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDINGS:

  
	
   

  	
  LINENS HOLDING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BLOOMINGTON MN., L.T., INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
							

 

 

	
   

  	
  LNT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT WEST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VENDOR FINANCE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT LEASING II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT VIRGINIA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
				

 

 

	
   

  	
  LNT MERCHANDISING COMPANY LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LNT LEASING III, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITADEL LNT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS INVESTMENT CANADA II

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS INVESTMENT CANADA I

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LINENS ‘N THINGS CANADA LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Linens ‘N Things Investment Canada II Company,

  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ FRANCIS M. ROWAN

  
	
   

  	
  Name: Francis M. Rowan

  
	
   

  	
  Title: Chief Financial Officer

  

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION

  
	
   

  	
  as US Collateral Agent, US Administrative Agent, US

  Swingline Lender and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ MARK J. FORTI

  
	
   

  	
  Name: Mark J. Forti

  
	
   

  	
  Title: Duly Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GE CANADA FINANCE HOLDING COMPANY

  
	
   

  	
  as Canadian Collateral Agent, Canadian Administrative 

  Agent, Canadian Swingline Lender and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ COLIN WOODYARD

  
	
   

  	
  Name: Colin Woodyard

  
	
   

  	
  Its: Duly Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]